Leasehold in Bali: A Pocket Guide for Foreigners
Buying a leasehold in Bali is a promising investment. But, foreigners don’t really understand the rules. Having a leasehold title is simple – as long as you know the rules. If you’re a foreigner who’s looking for a property leasehold opportunity in Bali, you’re in the right place.
Here, you’ll get a brief pocket guide to start your property investment journey in Bali.
Intro: Leasing Properties in Bali
Before we start discussing leasehold in Bali, we need to know, what is leasehold?
Leasehold is a kind of contract that allows you, as a foreigner, to use and live in the property.
Not only for living, leasing properties is a good option for you who wants to invest in Bali, whether it’s villa or land. Why?
Here are the reasons:
- Depending on the rental licences or zoning of the land or villa, some commercial leasehold titles allow you to rent it out or even run the property as a holiday rentals business.
- The process of leasing villas or land is fairly straightforward. You don’t need certificates like Hak Guna Bangunan (HGB), Hak Pakai (HP), and PT. Penanaman Modal Asing (PT. PMA) setups in order to complete the process of leasing a part of paradise.
- When you settle on the perfect villa or land, the sellers are liable to pay leasehold taxes and the buyers pay the notary 1% fee.
Understanding Leasehold Title in Bali
Understanding the rules about leasehold in Bali is critical. Especially, if you want to start your investment journey and earn money through leasing a villa or land in Bali. You’ll find that property leasehold investment is much easier if you know the rules that are applied.
One thing you have to note – every country has different rules and regulations regarding property leasehold laws, including in Bali.
Leasehold is a contract term used to describe an asset that is being leased – usually, properties like villas or lands, commercial spaces and some hotels are on leasehold titles as well.
This title allows you to own a property for a certain period of time, usually for 30 up to 80 years – it’s a long-term contract.
There are two parties involved in this agreement – you, as the user of the property (lessee) and the rightful owner of the property (Landlord/lessor).
You (lessee) agree to a contract with the rightful owner (lessor) for the right to use the property. This agreement also includes the payment and the period of the lease. The lessor still has the full ownership of the property.
Due to this being a long leasehold you will never hold the actual title of the property, and this is only for the number of years stipulated on your master lease agreement.
Most leasehold contracts have “option to extend the land lease period” written into the agreement at market related prices at the time of extension.
When the contract expires or you do not exercise your right to extend the lease, the property rights will be reverted to the rightful owner.
Price Expectations on Leasehold in Bali
Price expectations on leasehold in Bali varies depending on many factors such as location, size, facilities, and lease duration.
For instance, if you want to lease a villa in Bali, the price expectations of villa leasehold in Bali ranged from USD 100.000 to USD 4.000.000 for periods up to 30 years.
Make sure to know and consider all the factors of the villa (location, size, facilities, price, and lease duration) before making a single agreement with the landlord or seller.
Despite the various prices, leasing properties in Bali for investment still promises you to yield a profitable ROI. You can run a short-term rental business through a property you lease – like a villa. As long as you and the landlord have an agreement for using the villa for vacation rental business and/or you get the leasehold title through PT. PMA, you're able to run the business legally.
Please note that all legally run villas need to have the correct rental licences in place, as well as a legally registered business should you wish to rent the villa out yourself.
Another easy way is to involve a management company to take care of the rental side of the property.
This industry is growing in some sought-after areas in Bali. For instance, in Uluwatu, Seminyak, Sanur, Canggu, and Pererenan.
Top 5 Tips for Leasehold Purchase in Bali
Everyone loves convenience, including when doing a leasehold purchase in Bali. Here are top five tips that make your leasehold deal easier. Let’s start!
1. Learn About Leasehold Title
The first thing you need to do is learn and understand the property market. Specifically, on leasehold in Bali.
You have to know what a leasehold title is, the rules applied in Indonesia, and the price range. Do more research and pay more attention to areas like Uluwatu, Seminyak, Sanur, Canggu, and Pererenan.
Luckily, you've learned about that in this article!
2. Define Your Budget
After you familiarise yourself with the property market in Bali, you can finalise your budget.
3. Collaborate with a Trustworthy Real Estate Agency
Collaborating with a trustworthy and fully integrated property agency in Bali is highly recommended for you. Why?
A trustworthy property agency will help you to choose the best properties suited to your needs and budget requirements. They will help you negotiate and plan ahead.
More than that, a property agency can help you to do research on leasehold property prices in Bali, help you with contract management, and give you advice whenever you need it.
Contract is a critical part of your leasehold negotiation. Make sure that the contract is clear, unambiguous, and has a win-win solution between you and the lessor.
5. Make the Deal
Once both you and the lessor feel satisfied with the terms in the leasehold contract, you can go ahead with the deal.
A legal due diligence will be done by your chosen notary to ensure all the legal paperwork is in place, that the property or land has access. Once this is cleared you can settle the final amounts and receive the keys to your new home.
Get Your Dream Villa!
Bali not only promises you beautiful landscape and culture, but also an investment opportunity. Having a short-term rental business in Bali is a good choice, remembering Bali is one of the most popular destinations for holiday makers.
If you are only starting out, and want to know about property leasehold in Bali, we will assist best we can.
Contact us today to start your journey towards leasing your dream villa.