Hi,

This is a common approach some investors consider, but it’s important to understand the risks involved.

Using a local nominee to hold property on behalf of a foreigner is not legally recognized under Indonesian law, and can leave the investor vulnerable, since the nominee is the legal owner on paper. Even with supporting agreements, these structures are not enforceable in court if disputes arise.

Transferring the property later to a locally established company (PT PMA) is a safer and legal route for foreign investors. However, this only applies to certain property types, like Right to Build (HGB) on commercial-zoned land, not freehold (Hak Milik). Leasehold rights can also be held under a PT PMA.

We highly recommend consulting with a legal advisor to set up the right structure from the beginning—whether that’s leasehold or through a PT PMA—so your investment is protected long term.

Hi,

If the property is leasehold (which is the typical structure for foreign ownership in Bali, as foreigners cannot legally own freehold land), then yes, the leasehold rights can generally be inherited by the beneficiary’s children, as long as it’s stated in the lease agreement and the lease period is still valid.

It’s important to make sure the lease agreement includes clear succession or inheritance clauses, so the rights can smoothly transfer to the named heirs. We always recommend reviewing or drafting your lease agreement with a legal advisor to ensure your intentions are fully protected.

Hi,

If you are using a nominee structure to hold property in Indonesia, it’s important to understand that the nominee is the legal owner on paper. This means that they technically have control over the property, including the right to sell it—unless there is a strong legal agreement in place that clearly outlines your rights and protections.

Without proper legal safeguards (like a loan agreement, power of attorney, or a nominee agreement), yes, the nominee could potentially block or interfere with a sale. This is why nominee arrangements carry legal risk and should always be backed by carefully drafted legal documents prepared by a trusted notary or legal advisor.

Hi,

Yes, an Indonesian passport holder—regardless of where they reside—can legally own freehold (Hak Milik) property in Indonesia. Residency abroad does not affect their ownership rights as long as they retain their Indonesian citizenship.

In the event the Indonesian owner passes away, the freehold title can be inherited. The property would typically be passed on to the next of kin (heirs), following Indonesian inheritance law. The heirs must also be Indonesian citizens to retain the Hak Milik status. If any heirs are foreign nationals, the status of the land may need to be converted or transferred accordingly, based on applicable laws.

Hello, sorry for the late response.
Please send us an email at info@excelbali.com with your rental requirements (e.g., number of bedrooms, proximity to the beach, price range, etc.). We’ll be happy to assist you further.

Great question!
If a building already has an IMB (Building Permit) and has been constructed without any changes, then you do not need to apply for a PBG. However, if you’re applying for an SLF (Certificate of Proper Function), the existing IMB can still be used.
If the building had an IMB but construction had not yet started when the new regulations (PP No. 16/2021) came into effect, you will need to apply for a PBG through SIMBG before moving forward.
We just added a FAQ section at the end of the article.

Is it possible to buy freehold by an indonesian passport holder that lives abroad. Also, what would happen if the indonesian passport holder living abroad is to pass away. What happens with the land and freehold? Is it passed on to next of kin?

Does a building that already has an IMB need a PBG/SLF?
Your article doesn’t make this clear.

I live now in Singapore and planning to relocate temporarily to Bali, maybe 1 year to Bali. I am looking for someone to be able to show me around the different neiborhoods and can advice me on where and which properties are best for rental.

It’s wonderful to hear about your deep connection with Bali! It’s always lovely to hear about how Bali touches people’s lives. Thank you for sharing.

Hi, thanks for pointing that out. You’re right, the transformation in Sanur with the new ICON mall and the upcoming international hospital is significant. The Sanur Economic Zone indeed has been a focal point for government initiatives. Our coverage tends to be broad, but we’ll make sure to highlight these developments in future posts. We’re not West Coast-centric, just trying to cover a wide array of developments across Bali.

The nominee must consent to any sale, a key issue is that the nominee retains legal ownership and must sign any transfer documents if a foreigner wishes to sell. This requirement can complicate or even hinder the sale process if the nominee is unwilling or unable to cooperate, such as in cases of illness or death.

Property under a nominee agreement does not automatically transfer to heirs; it remains with the nominee unless there are clear legal agreements or arrangements in place that stipulate how the property should be handled upon the foreigner’s death

The timing for acquiring land ownership when purchasing an off-plan villa in Bali typically depends on the agreement between the buyer and the developer. However, it is generally advisable to secure ownership as early as possible—ideally at the start of construction or after a significant initial payment—through a binding agreement facilitated by a notary. This ensures your legal rights to the property are established and protects your investment.

If the property is leasehold, there will be no land ownership, as the land remains under the landlord’s ownership. Instead, you will have a lease agreement granting you the rights to use the land for a specific number of years.

For more details on Freehold vs Leasehold, please refer to our articles here:
https://excelbali.com/bali-freehold-vs-leasehold-property/
https://excelbali.com/can-a-foreigner-buy-property-in-bali/

Hi, since you are planning to lease the property, you will have full control over it with a leasehold agreement, which typically lasts for 15-25 years, although sometimes you may find shorter period (5 years). However, if you opt for an annual rental agreement with the intention of subleasing or using Airbnb, the terms might differ. For more detailed information, we recommend checking our blog on comparing long-term rental and leasehold options in Bali: https://excelbali.com/bali-real-estate-comparing-long-term-rental-and-leasehold-options/.

Hi, that’s a good point! Thanks for sharing your advice.

Hi, when a property is sold to an Indonesian citizen before the expiration of the leasehold date, the Indonesian citizen does not automatically own the property as a freehold. The property remains a leasehold property unless the lease is extended or converted into a freehold title. Consequently, Indonesian citizens often prefer freehold properties.

So, if I consider a property of (say) USD 500,000 leased under Hak Sewa, with a rental equivalent of USD 19,000 per year (rent is cheaper than lease), the math would be as follows. If I lease I am 500K out of pocket, whereas if I rent I can reinvest the USD 481,000 in the stock market and earn USD 29,000 in investment income per annum at 6% return. As such, I struggle to see how Hak Sewa can make financial sense if property appreciation is eventually a benefit that only the landowner can benefit from?

We have been looking for commercial land of around 3-5 Are freehold in Pereranan Cemagi area. Let us know if you have any properties to view

Thanks for the crucial Bali building tips! Being on-site often and verifying completed phases before moving forward are excellent points. I’ll definitely add this info to the Bali property resources.

This sounds like a stressful situation! While we can’t directly confirm land ownership, there are two options that might help:

1) Talk to a Lawyer: Given the missing documents and your partner’s disappearance, a lawyer specializing in Bali property law is your best bet. They can review your sales agreement and advise on the best course of action.
2) Visit the Land Office (BPN): The National Land Agency in Bali, Badan Pertanahan Nasional (BPN), keeps land ownership records. You can visit them and explain your situation. Bring the plot drawings you have – they might be able to verify ownership details through a land title search.

Upon lease expiration, the land owner regains full ownership of the entire property, including the house built by the lessee.
Compensation for the house is not guaranteed. There might be a clause in the lease agreement outlining compensation, but it’s not standard.

We purchased a land in Bali a few years ago and it was managed by my partner who has now disappeared abroad. I don’t have access to most documents and the agency is refusing to share the notary details who supposedly hold the land ownership documents because I am not the company Managing Director. I am afraid of having been scammed. I have access to the sale and purchase binding agreement which states the land freehold title as well and some plot drawings. Are you able to assist in confirming land ownership?

Yes, Bali leaseholds can terminate at expiry (set date) or potentially early with written notice and following terms in your lease agreement.
Common scenarios include:
– Mutual Agreement: Both parties agree to end the lease early.
– Breach of Contract: Significant violations by either party, such as non-payment or property damage.
– Force Majeure: Events like natural disasters or changes in law may allow termination.
For specifics, consult a lawyer specializing in Balinese property law.

Hi, please check the following article:
https://ppbali.com/tax-costs-incurred-property-seller-buyer-bali/

In Bali, changing sponsors on a freehold property typically involves certain legal procedures. This may include documentation related to the transfer of ownership and registration with the relevant authorities. It’s advisable to seek guidance from legal professionals familiar with Indonesian property regulations to ensure compliance with all necessary requirements.

Regarding your question about adding an Indonesian signature to a leasehold contract where the main signature is a foreigner, it is possible. Including an Indonesian signature can provide additional security and compliance with local regulations.

However, if the foreigner named on the leasehold contract passes away before the leasehold period expires, the rights and obligations regarding the lease would depend on the specific terms outlined in the contract and Indonesian law. Typically, the leasehold rights may not automatically transfer to the Indonesian signature, especially if they were added as a secondary signer.

In such cases, it would be advisable to seek legal advice from a qualified Indonesian lawyer who specializes in property law to understand the rights and obligations of all parties involved, including any options for the Indonesian signer in the event of the foreigner’s death.

Whether the property reverts back to the owner upon the lessee’s death depends on the terms of the lease agreement. If the lease is held jointly by two parties, the surviving lessee may be able to continue the lease agreement. However, if the lease was solely in the name of the deceased party, the lease agreement may be terminated, and the property may revert to the owner. The estate of the deceased lessee may have specific rights under the lease agreement, such as the right to sublet the property or to terminate the lease early.

Would having more properties increase my tax rates like it does in the United Kingdom?

My understanding is that you have 2 options. Set up a ” charity” business with a national and they are the front for your business. You risk the chance that they will take the business from you and you have no legal standing.
The option that I know several expats has taken is to set up a company, costing over $20,000au that gives them the right to work and security. If you go down the path of being illegal you will be found.