Property Rental
Subletting Rental Property in Bali
February 27, 2023 •
3 min read
Subletting Rental

We often receive the question: ”Is it possible to rent a villa and then subletting rental it as a holiday rental when the property is not being used”?

The issue on subleasing is quite controversial. Some claims that the tenant has the right to legitimately it. Others oppose this assumption and allow the sharing of leased or subleased properties. Hence it is violating the terms of the rental agreement.

As long as it is stated in the contract between the landlord and the tenant that the property can be subleased or that the tenant gets written permission from the landlord to sublease, then it is allowed!

Some people think subletting rental is okay. They assume the first tenant has the power to freely use the unit they have leased. The tenant assumes that includes subleasing some or all of their rental property to gain returns.

Whereas if referring to the Civil Law (KUHPerdata), subleasing can be categorized as unlawful.

Article 1559 of the Civil Law states: “Tenants are not allowed and should not abuse their leased goods or release their leases to others”.

The prohibition of re-leasing a leased unit is also contained in Government Regulation No. 44/1994.

The rule is clearly stated, “The renters are in any way prohibited from subleasing and/or transferring the occupancy rights of their rental house to a third party without written permission of the owner.”

Before subletting rental, you must understand that you have to make a sublease contract agreement between you and the subtenant. The original contract between you as the original tenant and the landlord is still valid.

If you want to sublease a property, we advise that you clearly understand relevant rental regulations. This is to avoid any illegal ramifications between you, property owner or authorities in the future. One should think twice before subleasing without proper licensing or agreement.

Indeed there are still some tenants who secretly sublease their properties without prior consent from their landlord. It results in additional tenants, animals, noisy and unruly occupants in the property.

We should not implement a ‘secret’ practice because it can cause problems in the future.

If you are planning to open a guesthouse or rent a villa to tourists in a legal way, you can obtain Pondok Wisata license. Pondok Wisata is a license which allows you to rent out a small property or homestay.


As we are not qualified legal advisers, we can only provide a general information. For those wanting full legal advice, you need to get qualified legal advice.

If you wish further information, we recommend that you contact a lawyer/legal adviser or speak with a notary. They are a professional who can help answer any legal questions you may have.

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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