Acquiring Property in Bali: Through Rental or Leasehold?

Bali has long been a hotspot for tourists in Indonesia. It’s because the island offers many attractions, starting with its strategic location, breathtaking landscapes, and diverse travel options. As a result, foreign investors are increasingly eyeing this island as their prime choice for property investment. 

In 2019 alone, a staggering 6.3 million international visitors graced Bali through the Ngurah Rai International Airport. The surge in tourism translates to a growing demand for accommodations. Over the years, Bali’s property market has witnessed remarkable growth, surging by over 80%.

Although foreigners are not permitted to own freehold property, there are ways they can acquire property in Bali.

Property Ownership in Bali: Rental and Leasehold Options for Foreigners

Here’s an overview of rental and leasehold for foreigners who want to start their investments in property:

1. Long-term Rental Property

Foreigners can opt for long-term rental properties with lease periods ranging from 1 to 5 years. This arrangement involves property owners renting out their spaces and collecting annual rental fees upfront from tenants. Both parties and a witness sign a rental contract to formalize the agreement.

Long-term rentals are popular among groups, families on extended vacations, business travelers, those considering relocating to Bali, or individuals with ample budgets who would prefer something other than purchasing a villa. Key benefits of long-term rental properties include:

• 24/7 management assistance
• No need for frequent contract renewals
• Possible discounts for extended rental periods
• Fully furnished with top-quality amenities and interiors
• No maintenance costs
• Enhanced privacy
• Options for services like maids, personal cooks, nannies, or butlers
• Free WiFi and satellite TV
• Permission to sublet

2. Leasehold Property

Leasehold properties offer another long-term option, but the land ownership remains with the original landowner, not the foreigner. Foreigners can initially lease the land for 25 years and extend it for a maximum of 70 years with “Hak Sewa” (Right to Lease).

This arrangement allows foreigners to sub-lease the property and turn it into a profitable investment, making it an attractive form of Bali property ownership to boost passive income. To secure a leasehold property, foreigners need to sign an agreement with the landowner, often with the guidance of a third-party legal consultant.

The Importance of Due Diligence in Bali Property Ownership

Your dreams of owning property in Bali can quickly become a nightmare if you don’t exercise due diligence, especially when unsure about the people you’re doing business with. Foreigners seek assistance from trustworthy partners to conduct due diligence before finalizing any deals to avoid complications.

Attempting to cut corners on due diligence to save money is risky and could lead to financial losses and legal entanglements. Hire a due diligence professional to help you navigate potential pitfalls and legal complexities to ensure a seamless property purchase in Bali.

How InCorp Indonesia Can Assist

Property transactions in Bali that undergo comprehensive due diligence processes are the most successful. InCorp Indonesia, with its wealth of experience in due diligence, offers an all-in-one solution to assist you in your Bali property acquisition journey.

Our team identifies critical areas for due diligence and guides you through the process, from minor negotiation terms to significant deal-breakers. We ensure that every step complies with Indonesian law, mitigating legal and investment risks.

Contact us through the form below for professional land and property due diligence assistance. Let us help you turn your Bali property ownership dreams into a reality.