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Real Estate8 Steps to Buy Property in Bali for Foreigners

November 8, 2023by Marketing Sales66

Previously, many foreigners believed that the only way of how to buy property in Bali was by using an Indonesian citizen, also known as a nominee, to obtain the ownership certificate on their behalf. However, this practice posed significant risks, as the local nominee could potentially take over the property, leaving the foreign buyer with little recourse to protect their investment.

Fortunately, recent years have brought about a positive shift in the property landscape for foreigners, making the process both easier and safer. This transformation is attributed to the introduction of foreign-owned companies called PT PMA (Perseroan Terbatas Penanaman Modal Asing). This significant change has created a more secure environment for international investors.

In this guide, we will delve into the process of purchasing property through a PT PMA, offering clear and precise guidance to ensure a secure and confident start to your property investment in Bali.

1. Establish a PT PMA

To embark on the exciting journey of property ownership in Bali, your first step is establishing a PT PMA. Through this company, you gain the rights to obtain both Hak Guna Bangunan (Right to Build) and Hak Pakai (Right to Use) licences, effectively making you the property owner. These licences not only grant you ownership but also allow your family members to inherit the property, and you have the option to sell it when desired.

It’s important to note that both licences initially have a validity period of 30 years, which can be extended for an additional 20 years and renewed for another 30 years, giving you a total ownership tenure of 80 years. 

However, note that Hak Pakai can only be held if the land already features a building. Additionally, since the purpose of Hak Pakai is to acquire property for personal use, an individual can possess only one Hak Pakai. On the other hand, multiple properties can be acquired under Hak Guna Bangunan.

The process of establishing a PT PMA begins with selecting a business field, followed by obtaining government approvals and ensuring strict compliance with investment regulations. This process typically takes several weeks to a few months to complete and involves costs of approximately $2,400 related to legal procedures and documentation.

To navigate this process smoothly, it is essential to seek guidance from legal experts specialising in PT PMA establishment. Their expertise will ensure that you meet all requirements seamlessly, making your foray into Bali’s property market a hassle-free and secure experience.

2. Find a Reliable Real Estate Agent

Understanding Bali’s real estate market can be a daunting task, especially for foreigners. To simplify your property buying experience as well as save you precious time and effort, it’s strongly recommended to enlist the services of a reliable real estate agent familiar with the local market.

A trustworthy agent not only speaks the local language but also possesses in-depth knowledge of the region’s property laws and customs. They can assist you in finding properties that match your requirements and guide you skillfully through the negotiation process, ensuring a smooth and informed purchasing journey.

3. Find the Property That Suits You Best

how to buy property in Bali

Bali offers a diverse range of properties to cater to various needs and preferences. Whether you’re in search of a beachfront villa, a serene rice field retreat, or a bustling urban apartment, Bali has a variety of options for you to explore.

When searching for your ideal property, consider factors such as location, size, amenities, and how well it aligns with your personal tastes and lifestyle. Your perfect property should not only reflect your dream but also comply with local zoning laws. Additionally, it’s worth evaluating its potential for rental income or capital appreciation, ensuring a wise investment for the future.

4. Property License Verification Process

To safeguard your investment and avoid potential fraud, it’s crucial to verify the property’s licences meticulously before entering into negotiations. Key documents to check include the Certificate of Property and Building Approval. Engaging legal experts to assist in this process can provide peace of mind and ensure that the property is legally sound.

5. Do Due Diligence

Conducting due diligence is a crucial step in the property acquisition process. Critical questions must be addressed during this stage, such as the property’s history, ownership, and tax obligations. Clarify if the property has been inherited and if all beneficiaries are willing to sell. Additionally, understand the type of property title and the associated tax liabilities. Working closely with a reliable real estate agent can help answer these questions comprehensively.

6. Accept the Sales Purchase Agreement and Make a Down Payment

how to buy property in Bali

Once you’ve found the right property and completed due diligence, the next step is to sign the Sales Purchase Agreement. This agreement outlines the terms and conditions of the property sale, including the purchase price and payment schedule. Typically, an initial down payment ranging from 10% to 30% of the total purchase price is required.

7. Finalise Payment

To formalise the property transaction, both parties must sign the Deed of Sale and Purchase in front of a public notary. Additionally, the transfer tax must be settled before ownership can be transferred. This step marks the completion of the legal requirements for property ownership.

8. Change the Ownership Status

Lastly, after fulfilling financial and legal requirements, the final step is to change the ownership status of the property. This involves registering the transaction with the local land office and ensuring that all related documentation reflects the new ownership. Only upon completion of this step does the property fully become yours, allowing you to enjoy your new investment in the tropical paradise of Bali.

In conclusion, learning how to buy property in Bali as a foreigner is a rewarding endeavour. By following these eight steps diligently and seeking professional guidance, you can navigate the process with confidence and make your dream of owning property in Bali a reality.

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