A Guide to Leasing Land & Villas in Amed

Foreigners looking at property in Bali often hear one statement very early in their search: foreigners cannot personally own Indonesian freehold land.

While that distinction is important, it doesn’t mean foreigners cannot legally secure long-term rights to property in Bali.

Leasehold is an established legal structure that allows a foreign individual to lease land or property from an Indonesian landowner for an agreed period. Indonesia’s Basic Agrarian Law expressly recognizes lease rights for buildings (Hak Sewa untuk Bangunan) and permits foreign citizens residing in Indonesia to hold them.

For many buyers in Amed and East Bali, leasehold can therefore provide a relatively straightforward way to acquire long-term use of land or a villa without establishinga PT PMA simply to hold the lease rights.

But a good leasehold purchase involves much more than looking at the number of years remaining.

How Does Leasehold Property Work?

With leasehold, the underlying Indonesian land title remains with the landowner.

The leaseholder instead enters into a long-term agreement giving them contractual rights over the property for a defined period.

In the Amed and East Bali market, initial lease periods of approximately 25–30 years are common, although shorter and longer arrangements are possible depending on the property and agreement.

Payment is normally made upfront for the agreed lease period, although different payment structures can be negotiated. Indonesian law itself recognizes that lease payments may be made once or periodically, and either before or after use of the land.

For a foreign buyer, the important distinction is:

You are not purchasing the Indonesian freehold title. You are purchasing contractual rights to use the property for the agreed lease period.

This structure can apply both to vacant land that you intend to develop and to an existing villa or other property.

Do Foreign Buyers Need a KITAS or PT PMA?

A foreign buyer does not need to establish a PT PMA simply to enter into an ordinary leasehold arrangement.

This can make leasehold considerably simpler than a corporate property-holding structure.

It is equally important, however, to separate holding lease rights from operating a business from the property.

Acquiring a villa under leasehold does not automatically give the leaseholder the licences required to operate commercial tourist accommodation. Ownership structure, building compliance and business operation are related but separate questions.

Extending a Leasehold Property

The initial lease period isn’t necessarily the end of the arrangement.

A well-structured lease agreement should address whether the leaseholder can extend the lease, how the extension works and how the future extension price will be established.

There are several possible approaches.

A lease may specify a fixed extension price in advance. This can provide considerable certainty, particularly where the extension can be exercised within a practical timeframe.

Another structure is to determine the extension price according to prevailing market value when the extension takes place.

Where market value is used, the contract should ideally establish a method for resolving disagreements.

One practical mechanism ATP often recommends is for the landowner, leaseholder and an independent third party to each determine what they believe represents a realistic local land value, based on comparable land in the surrounding area. The median of the three valuations can then establish the extension rate per are.

Whatever mechanism is chosen, buyers should pay particular attention to when the extension can be exercised and when the extension payment becomes due.

A fixed price can be attractive, but considerably less useful if the entire payment has to be made too far in advance. Depending on the transaction, an extension payment schedule over two or three years may also be negotiated rather than paying the entire extension immediately.

The extension provisions should also address heirs and successors, so that the agreed contractual obligations don’t simply disappear because the original landowner passes away.

ATP Best Practice: The Landowner Relationship Matters

There is another side to leasehold ownership that doesn’t always appear in property guides.

A strong lease deed and a good relationship with the landowner are complementary protections — not substitutes for one another.

A 25- or 30-year lease creates a long relationship between you and the family whose land you are using.

In practice, landowners may approach a leaseholder about extending the lease when the family would benefit from another lump-sum payment. In Bali, that can coincide with significant family expenses such as education, weddings, cremations or other important ceremonies.

That can work positively for both parties: the landowner receives capital when it is useful to the family, while the leaseholder gets an opportunity to secure additional years.

ATP therefore recommends maintaining a friendly and respectful relationship with the landowner family throughout the lease.

That doesn’t mean agreeing to every request or assuming responsibility for the family’s expenses. It can simply mean keeping communication open, attending an important ceremony where appropriate, making a modest contribution around an important occasion, or potentially employing a family member where there is a genuine suitable position and it makes sense for both parties.

Over several decades, these relationships matter.

Don’t choose between a good contract and a good relationship. Have both.

Can You Sell a Leasehold Villa or Land?

A leasehold property doesn’t necessarily have to remain with the original leaseholder for the entire term.

Transfer and assignment rights should be clearly addressed in the lease deed. In the lease structures commonly used for ATP transactions, the agreement normally allows the leaseholder to transfer all or part of their lease rights to another party, subject to the notification or other procedure established in the deed.

This becomes particularly important when evaluating resale value.

Imagine buying a villa with a 30-year lease and deciding to sell it 12 years later. A future buyer would then be considering a property with approximately 18 years remaining.

The villa may still be excellent, but remaining lease duration is an important component of leasehold value and marketability.

One strategy before resale can therefore be to top up the lease first.

For example, the existing leaseholder could negotiate another 10 or 15 years with the landowner before marketing the property. The villa can then be offered with a substantially longer remaining lease.

That requires additional investment, but may improve both buyer appeal and resale value.

And once again, this demonstrates why maintaining a constructive relationship with the underlying landowner can have practical commercial value.

Can You Rent Out a Leasehold Property?

Potentially yes, but there is an important distinction between residential use and operating tourist accommodation.

The lease agreement itself should provide the appropriate rights for the intended use, including subleasing where required.

For residential or longer-term rental, the property can be structured accordingly.

Daily or short-term tourist rental is different because it constitutes an accommodation business and requires the appropriate business and operational compliance.

Indonesia’s current OSS classifications specifically categorize short-term accommodation. Under the current KBLI transition, the former KBLI 55193 Villa classification is being converted to KBLI 55203 under KBLI 2025; OSS describes short-term accommodation as accommodation generally provided to visitors and travellers rather than ordinary residential occupation.

The exact requirements depend on the property and operating structure, but buyers intending to run a daily-rental villa should investigate, among other matters:

• appropriate zoning and permitted use;

• the property’s building documentation and approved function;

• PBG and SLF status;

• the entity/person legally operating the accommodation business;

• NIB and the appropriate KBLI/business licensing through OSS; and

• applicable tourism, health, tax and supporting requirements.

Current tourism standards, for example, establish specific standards for villa businesses, while OSS also identifies supporting licensing requirements for the activity.

Buying a leasehold villa and obtaining the right to commercially operate that villa are therefore two separate issues.

What About the PBG and SLF?

Buyers should also check the building documentation separately from the land lease.

A PBG (Persetujuan Bangunan Gedung) concerns approval of the building in accordance with applicable technical standards, while an SLF (Sertifikat Laik Fungsi) confirms that a building is fit for its approved function before use. Current PUPR regulations define the applicant as the building owner or an authorized party acting on the owner’s behalf, so it is too simplistic to say that PBG/SLF can only ever be applied for personally by the underlying landowner.

For an existing villa, buyers should therefore verify what documentation exists, whose name it is under, the approved building function and whether that position is appropriate for the buyer’s intended use.

How Much Does Leasehold Land Cost in Amed?

There is no single Amed leasehold price.

Location makes a substantial difference.

Based on ATP’s current market observations, asking rates can broadly fall around IDR 4–9 million per are per year in parts of the wider Amed market, but this should be treated as an indicative working range rather than a definitive market valuation.

Beach proximity, ocean or mountain views, road access, neighbourhood, zoning, land shape, topography, infrastructure and the particular village can all materially influence pricing.

For example, at an illustrative rate of IDR 6 million per are per year:

5 are × IDR 6 million × 30 years = IDR 900 million

That simple calculation is useful when comparing vacant leasehold land, but buyers should avoid evaluating opportunities solely on the headline rate per are.

A cheaper plot with difficult access, unsuitable zoning or significant development constraints may ultimately offer less value than a more expensive but development-ready site.

What Should You Check Before Buying Leasehold Property?

Before committing to a leasehold property, the underlying documentation and commercial terms should be properly reviewed.

Important points include the registered landowner and underlying certificate, boundaries and land size, legal access, zoning, existing encumbrances where relevant, lease duration, extension provisions, transfer rights, sublease rights, inheritance and successor provisions, building ownership/use provisions, PBG/SLF position, payment responsibilities and the intended residential or commercial use.

For developed property, buyers should also verify whether the actual building and its use correspond sufficiently with the available documentation.

The quality of a leasehold investment depends not only on the property itself, but also on the quality of the lease behind it.

Is Leasehold a Good Structure for Foreign Buyers?

Leasehold should not automatically be viewed as an inferior alternative to corporate property ownership.

For the right buyer, it can offer a lower capital commitment, relatively simple acquisition structure and long-term use of land or a villa without establishing a company solely to hold the lease rights.

The better question is therefore not whether leasehold is universally “better” or “worse” than HGB or another structure.

It is:

What am I paying for the remaining years, what rights does the lease give me, what are my extension and resale options, and does the overall structure suit how I intend to use the property?

For buyers considering land or villas in Amed and East Bali, ATP can help evaluate the property, remaining lease term, extension structure and practical market position before proceeding.