Leasehold Properties or Freehold Villas: Where Should You Invest in?
When you are an outsider and thinking of investing in Bali properties for sale, you need to think of everything before making such a huge investment. And, here is where you need to understand the differences between freehold and leasehold villas and make the right choice.
Being a foreigner looking to invest in any property in Bali, a leasehold is a better investment option. In this case, using the right to use (hak pakai) and right to build (hak guna bangunan or HGB) certificates, you can lease the land or villa for a certain amount of years, known as Hak Sewa. Thus, you may not be the legal owner of a Bali home but gain the right to use the property for a certain period, such as initially 25 years and a total of 80 years if extended.
And, the best part is it has lower upfront costs while allowing you to sell the property to pass on to your next generation as an inheritance. Also, you can rent it out or sub-lease it on short-term.
Freehold properties in Bali are the lands or villas owned by an entity or individual, and the ownership doesn’t include any time limit. It means when you buy a freehold property, it’s yours for an indefinite time until you pass it down to your next generation or sell it to someone else. Yet, you can have complete control over your property with no restrictions on using it.
However, according to the Indonesian Constitution and Agrarian Law – Undang-Undang No.5 Tahun 1960 article 16 (1), only Indonesian citizens can have freehold land and property ownership. Hence, when you are a foreigner, it’s impossible to obtain a freehold land or villa with a right to own (hak milik) title.
Yes, you can use a reliable Indonesian nominee to go around this regulation and acquire the hak milik title on your behalf. Anyway, we recommend doing so only when the trusted nominee is your legal husband to ensure a little protection for your investment. Otherwise, there remains a risk of overtaking the property anytime!
Note: Being a foreigner, it’s a good idea to register a PT PMA to acquire a freehold property in Indonesia using the right to build (Hak Guna Bangunan or HGB) certificates.
In a Nutshell
As a foreign investor, you can’t directly buy freehold properties in Bali. But, you can easily invest in following the approaches mentioned above. And, the most common ones are spending onleasehold villas for sale under long-term contracts or setting up a PT PMA company with 100% foreign ownership to buy the freehold property on your behalf. So, the choice is yours!
However, regardless of choosing a leasehold or freehold land, you need careful consideration before making an investment in properties for sale in Bali. That’s why it’s wise to work with experts,like Prestige Property Bali. With us, you can access a wide range of Bali homes and vacation properties. We can help you identify your favourite location for villas and property legislation as per Indonesian laws and regulations.
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