1. Leasehold: The Simplest Option for Most Foreign Buyers

For many foreign buyers, leasehold is the simplest, most economical and practical way to secure property in Bali.

Under a leasehold arrangement, the underlying land remains registered to its Indonesian owner, while the foreign buyer obtains contractual rights to use the property for an agreed period.

Typical Bali leases run for 20, 25 or 30 years, although longer periods can be negotiated. The agreement can also establish extension rights and the mechanism by which the extension price will be calculated.

A properly structured lease should be executed through an Indonesian notary and clearly establish matters including:

• Length of the lease
• Full payment and payment schedule
• Permitted use of the property
• Access rights
• Rights to construct or renovate
• Extension rights and pricing mechanism
• Rights in case the underlying land is sold or inherited
• Responsibility for taxes and expenses
• What happens to buildings at the end of the lease
• Rights to transfer or assign the remaining lease, where agreed

Is Leasehold Safe?

A properly prepared and thoroughly checked leasehold acquisition can provide a secure and fully legal way for a foreigner to control and use property in Bali for the agreed lease period.

The important distinction is that the buyer is purchasing contractual rights for a defined period rather than acquiring the underlying Hak Milik title.

This also explains why Leasehold Land and villas are generally considerably cheaper than purchasing the equivalent property on a freehold basis.

For a buyer planning to live in Bali, operate a property for a defined investment period or simply avoid the complexity and expense of establishing a company, leasehold can be an excellent solution.

The quality of the agreement and the due diligence behind it matter considerably. Before signing, the land certificate, registered owner, encumbrances, access, zoning and relevant development documentation should be independently verified.

2. Buying Freehold Property Through a PT PMA

Foreign investors who require a corporate ownership structure can establish or acquire an Indonesian foreign-investment company known as a PT PMA – Perseroan Terbatas Penanaman Modal Asing.

A PT PMA is an Indonesian legal entity even though its shareholders can be foreign.

This distinction is important because an eligible Indonesian company can hold certain registered land rights that an individual foreigner cannot hold directly.

Hak Milik vs HGB

Most Freehold Land in Amed offered for sale is registered under Hak Milik.

A PT PMA cannot simply be registered as the owner of somebody else’s Hak Milik title. Where appropriate, the land rights must instead be converted or structured into a title that the company is legally entitled to hold, commonly Hak Guna Bangunan (HGB).

HGB provides registered rights to build on and use land for a defined statutory period and can be extended and renewed subject to the applicable regulations.

The conversion and transfer process requires proper legal and land-office procedures and can take considerably longer than a straightforward leasehold transaction.

The Company’s Business Activities Matter

Establishing a PT PMA is not simply a matter of incorporating a company and placing property inside it.

Every Indonesian company operates under registered business classifications known as KBLI codes. The company’s KBLI classifications, NIB and additional licences or approvals must correspond with what the company actually intends to do with the property.

Owning or developing property, operating long-term rentals and running tourist accommodation are not necessarily the same regulated activity.

The correct corporate structure therefore needs to be established around the intended use of the property, rather than simply around the purchase itself.

Because Indonesia’s OSS licensing system and property regulations continue to evolve, the applicable KBLI classifications and licensing requirements should always be confirmed with a qualified notary or corporate/legal adviser immediately before proceeding with a transaction.

Buying an Existing Property Together With Its PT PMA

There is another structure that is particularly relevant for existing foreign-owned Villas for Sale in Amed.

Instead of transferring the property itself, a buyer may acquire the shares of the PT PMA that already owns the property.

The land therefore remains registered to the same Indonesian company. What changes is ownership and control of the company.

This can be particularly attractive where the PT PMA already holds:

• The property’s HGB title
• Appropriate registered business activities
• Its NIB and corporate documentation
• Relevant property licences and approvals

It can also avoid having to convert Hak Milik into HGB as part of a new acquisition.

Property Transfer Taxes

In a conventional property transfer, the seller will generally incur 2.5% final income tax on the transfer, while the buyer is generally responsible for BPHTB at a 5% rate, subject to the applicable taxable-value calculation and exemptions.

A share acquisition is fundamentally different because the underlying property itself remains registered to the same PT PMA.

This can create different tax consequences from a conventional land transfer. It should not, however, be considered a tax-free transaction: the sale and acquisition of company shares can have its own tax implications depending on the parties and transaction structure.

Professional tax advice should therefore form part of a PT PMA share acquisition.

The Important Downside: You Are Buying the Company Too

A share acquisition means purchasing more than the villa or land.

The buyer effectively steps into the existing company and potentially inherits its history, contractual obligations and liabilities.

For this reason, this structure is particularly attractive where the PT PMA was established specifically to own and operate the property and has not been used for unrelated business activities.

Before acquiring such a company, due diligence should cover:

• Articles of association and shareholder history
• KBLI classifications
• NIB and licences
• Tax filings and outstanding tax liabilities
• Bank and accounting records
• Existing contracts
• Employees and employment obligations
• Loans and company debts
• Litigation or disputes
• HGB title and property documentation

A clean, single-purpose property company can be considerably easier to evaluate than a PT PMA that has been conducting several unrelated businesses.

3. Hak Pakai: An Option for Personal Residential Use

Another legal option available to qualifying foreign individuals is Hak Pakai, or Right of Use.

Unlike leasehold, Hak Pakai is a registered land right that can be held in the foreigner’s own name, subject to the applicable eligibility, immigration and property requirements.

Hak Pakai can therefore be interesting for foreigners who intend to own and occupy a property as their personal residence, including long-term residents and retirees.

For landed residential property, foreign ownership under Hak Pakai is generally subject to restrictions including a minimum property value and limitations on the amount of land that can be held. In Bali, the applicable minimum value for a qualifying landed house is currently IDR 5 billion, while the general land-area limit is 2,000 m² (20 are), subject to limited exceptions.

Hak Pakai is primarily intended for residential use. It should not be treated as the appropriate structure for operating a commercially rented villa or guest accommodation.

For these reasons, Hak Pakai is encountered less frequently in the Amed investment market than leasehold or PT PMA/HGB ownership. However, for a qualifying foreigner looking for a long-term personal residence rather than a rental investment, it can be a useful option worth discussing with a notary.

4. The Nominee Structure

Foreign buyers researching buying property in Bali will inevitably encounter another structure: purchasing Hak Milik land using an Indonesian citizen as a nominee.

Under this arrangement, the Indonesian individual is registered on the land certificate as the legal Hak Milik owner, while separate private agreements attempt to establish that the foreign buyer provided the purchase money and controls the property economically.

These arrangements may include loan agreements, powers of attorney, mortgages or other contractual documents intended to protect the foreign investor.

Nominee structures have historically been used relatively widely in Bali.

That does not make them equivalent to direct legal ownership.

The Fundamental Risk

The central problem is simple:

The foreign buyer’s name is not on the Hak Milik certificate.

The Indonesian nominee remains the registered landowner.

Private agreements designed to circumvent restrictions on foreign ownership can be legally vulnerable, and disputes can become particularly problematic in situations involving:

• Death of the nominee
• Divorce
• Inheritance
• Personal debt
• Bankruptcy
• Family disputes
• Sale or mortgaging of the property
• Breakdown of the relationship between nominee and investor

For these reasons, Amed Treasure Properties does not recommend nominee ownership as the preferred structure for foreign buyers.

We nevertheless believe buyers should understand what nominee ownership means because it remains part of the Bali property market and is frequently presented to foreigners as an easy way to obtain “freehold.”

If somebody offers a foreign buyer a Hak Milik property through a nominee, it should never be interpreted as equivalent to legally holding Hak Milik personally.

So Which Structure Is Best?

There is no single structure that suits every foreign property buyer.

Leasehold is often the most straightforward choice for a private buyer. It is relatively simple, cost-efficient and can provide strong contractual security when properly structured.

PT PMA/HGB ownership can make sense for buyers seeking a corporate investment structure, longer-term registered land rights or a property connected to legitimate business activities. It involves greater setup, compliance and ongoing administration.

Acquiring an existing PT PMA together with its property can be particularly attractive where the company is clean, properly licensed and was established specifically for that property.

Hak Pakai can be suitable for qualifying foreigners seeking a personal long-term residence rather than a commercially operated investment property.

Nominee ownership remains encountered in Bali but exposes the foreign investor to risks that the other structures are designed to avoid. We therefore explain it, but do not recommend it.

For buyers still deciding where and what to purchase, our Amed Area Comparison Guide provides an overview of Amed, Bunutan, Bebayu and Tulamben and the different types of property opportunities found across each area.

Due Diligence Comes Before the Ownership Structure

Choosing between leasehold, Hak Pakai and PT PMA/HGB ownership is only part of buying property safely in Amed.

Before proceeding with a purchase, buyers should also verify:

• Land title and registered ownership
• Zoning and permitted use
• Legal road access
• Existing mortgages or encumbrances
• Building approvals
• Tax position
• Boundaries and land measurements
• Applicable coastal, agricultural or geological restrictions
• Intended commercial use and required licences

At Amed Treasure Properties, we help buyers understand the available ownership structures and coordinate property due diligence with experienced Indonesian notaries and relevant professional advisers.

The goal is not simply to find a way to acquire a property, but to establish a structure that makes sense for how the buyer intends to own, use and eventually sell it.

You can explore our current LAND FOR SALE IN AMED and VILLAS FOR SALE IN AMED, or CONTACT AMED TREASURE PROPERTIES to discuss a specific property or ownership structure.

This article provides general property-market information and should not be considered legal or tax advice. Indonesian property, investment, taxation and licensing regulations can change, and every transaction should be independently verified with a qualified Indonesian notary and tax or legal adviser.