Property Sales
Bali Ownership: Freehold vs Leasehold
February 27, 2023 •
7 min read
villa in pererenan with stunning view

Knowing Bali ownership is essential. If you are a foreign property investor, whether you choose to buy which title will depend on your particular needs.

Freehold properties in Bali are still the most requested and purchased properties by foreigners. Even though using Indonesian entity (nominee) as a titleholder for the land certificate might be necessary. However, it is announced as completely illegal by Indonesian law & land regulations to purchase property in Indonesia.

When choosing freehold or leasehold, you should be aware of ramifications with regards to the potential value of the investment.

Freehold Bali Ownership Title

Purchasing freehold allows you to enjoy overtime, value appreciation, which has been fairly dramatic in Bali in past years. With freehold, any appreciation, either through improvements you have made to it, or through the rise in land prices, you gain the benefit of any increase in value.

Hak Milik or Freehold is the most complete and strongest form of land title ownership in Indonesia. Only individuals of Indonesian Nationality are entitled to own land under Hak Milik title.

Consequently, neither limited liability companies (PT/Perusahaan Terbatas) nor foreign individuals may obtain land with a Hak Milik title. Subject to zoning restrictions, the Hak Milik title owner can use the land for any purpose. Although it does not entitle the owner to exploit the natural resources found on or under the land. The title has no limit and may be sold, gifted, exchanged and bequeathed and may also be used in the form of a mortgage.

Foreigners may acquire property in another form of entitlement called Hak Pakai or Right of use.

Leasehold Bali Ownership Title

Leasehold title means that after a certain period of time, the property and whatever improvements the leaseholder may have made, will revert back to the owner.

In very simple terms, as time passes, your investment in leasehold property depreciates in value. It is because as the term of the lease gets shorter, the lease is less attractive to a buyer.

The terms and conditions of any extension to a lease, are usually built into the original agreement. Most lease agreements have some sort of extension option. Although you should be careful to fully understand the means by which the extension may be activated.

Sometimes, the extension can only be activated by mutual agreement. It means when time extension discussions begin, it must also be agreed upon mutually by the landowner and the leaseholder. This can lead to problems if landowner does not agree to give an extension when leaseholder requires it.

Leasehold still has some advantages (and in some areas these days such as Seminyak, freehold is difficult to obtain). The main advantage being that it is a more affordable option.

For example: If there were two identical villas side by side, one leasehold over a 40 year period and the other freehold, the leasehold villa would generally be about 2-3x less of the price of the freehold option.

Leasing Bali property

If you decide buying leasehold Bali ownership, drafting agreement should be carried out with assistance of third party legal advisor. Since guaranteeing renewals and limiting rent increases is the key to a cost-effective leasehold structure.

A lease agreement/contract must be documented at a notary public (PPAT). Then, the notary will do a full due diligence on the property, so that the agreement and all property documentation meets the legal requirements for the transaction to progress.

This is a long-term lease contract. Although the land title is not under the foreigner’s name and remains under the ownership of the original owner, the land can be rented for an initial period of around 25 years and can then be extended up to a period of 70 years, though it is very rare but possibly even until 99 years. After the lease begins, the owner’s title of Hak Milik (Right to Own) will be legally transferred to the foreigner under the Hak Sewa title (Right to Lease).

If the leasehold is not renewed once it expires, all rights go back to the original owner. It becomes a freehold property again.

FAQ regarding leasehold property in Bali

  • Do I have the right to sell my lease?

Yes, you have full control of the leasehold title if you do not wish to continue leasing it. However, you should be aware if the less years left on the lease, the less the property value.

  • Do I have restrictions on selling, if I can in fact sell the lease?

As far as our understanding, you are entitled to sell the lease agreement at anytime. However, if the leaseholder departs from Indonesia permanently, the property must be sold or transferred within one year after departure. If the foreigner or his family does not use the property for more than 12 consecutive years, then the foreigner forfeits the “being domiciled” status, for the purpose of owning residential property.

  • Can I pass the lease to my family member?

Yes, you can pass the lease title to your family or ‘will’ it to a family member. You own the rights of the lease for the duration that you paid for. The landowner cannot break the lease agreement with you and must fulfill the terms and conditions of the lease agreement.

  • Can I sublease the property or rent it out?

Yes, you can rent or sublease the property when you are not staying in it. Meaning it can also be a very lucrative investment. However, if want to make it as a short-term rental, you must first acquire a Pondok Wisata (rental license).

So, are you ready to purchase a Bali property whether for residential or investment? Get started by browsing our selected properties or send us a message at:

Instagram @tealestateco

Facebook @tealestateco

WhatsApp: +62 813-3717-1690


More Articles

bali property investment
Unlocking Bali's Investment Potential: A Guide for Property Portfolio Expansion
Bali's Economic Outlook for 2024
Thriving Prospects: A Comprehensive Overview of Bali's Property Market and Economic Outlook for 2024
All 2024 Color Trends Revealed: Perfect Choices for Your Bali Villa
bali is getting crowded
Bali's Growing Popularity: Why the Island of Gods is Getting Crowded

Teal Estate Whatsapp Chat

Hey buddy, how can we help you?


Type of property ownership dedicated for local investors or foreigners under legal cooperation in Indonesia. The freeholder of a property owns it outright, including the land it is built on. If you buy freehold, you’re responsible for maintaining your property and land, so you’ll need to budget for these costs and taxes.


Surat Hak Milik (SHM) / Surat Hak Guna Bangunan (SHGB)


Lifetime, or until it’s sold to a new owner

owner status

Indonesian individual only or foreigner who has a company in Indonesia (PMA) to buy the property under that company’s name



Type of property ownership for foreign investors who are willing to purchase the property as an individual. With leasehold, you own the property (subject to the terms of the leasehold) for the length of your lease agreement with the freeholder. When the lease ends, ownership returns to the freeholder, unless the contract states guaranteed lease extension at future market price.


Akta Sewa / Right to use – Right to rent


Average 20-30 years, with possible extension. Maximum 99 years

owner status

All people including Indonesian and foreigner with KITAS-Visa status