Bali is not only a full destination for travel and vacation, but a growing number of foreigners are also investing in the island and buying buildings in Bali.
Foreigners, however, often find themselves in a precarious position. It is not uncommon for foreign traders to acquire buildings using a designated local person which gives the foreigner any protection against their investment. In this section, we will show you how to buy property in Bali in a secure way – by setting up a foreign company (PT PMA).
Bali property owners and foreigners
The fifth law of 1960 governs buildings and structures in Indonesia, with three types of rights attached to this document:
- Copyright (Hak Milik)
- Copyright (Hak Guna Bangunan)
- Copyright (Hak Pakai)
Many foreign traders in Bali are considering a way to buy buildings in Bali using an Indonesian (named) citizen to represent them to obtain a Hak Milik ID.
Thus, it is a very risky practice as a local nominee can take over and there is not much one foreigner can do to save their money. Later in this article, we will discuss some cases of foreigners who lost their money or their right to use the land with such a scheme.
How to buy land in Bali safely?
The safest way for a foreigner to make money in bali real estate is to do so through a foreign company (PT PMA) and get a ‘Right to Build’ (Hak Guna Bangunan) certificate. A PT PMA is a foreign company with very low income in Indonesia. With PT PMA, you will be eligible for the Copyright (Hak Guna Bangunan /HGB) and Copyright (Hak Pakai / HP) certificates.
Most importantly the licenses make you the owner of the property. Your family members can take them and you can sell the property. If the customer is an Indonesian citizen they can also convert the ID to Hak Milik (copyright).
If you want to own this building after 80 years (probably about the 22nd century at that time), you can get a new or old certificate expired.
Note that you can only hold Hak Pakai if the land has a building on it and there is an impossibility to use a building with a Right to Use (Hak Pakai) certificate as a business. There is also very little value to the area and it should be in a tourist, residential, or commercial area as you cannot find a place in Bali in the agricultural or greenbelt areas.
Since the purpose of the Hak Pakai is to take over the building for personal use, one can only occupy Hak Pakai (meaning one treasure). Thus, it is possible to acquire several buildings with a Copyright. If you want to learn more about PT PMA companies, read our previous article on establishing a foreign company in Indonesia. The procedure usually takes 2-10 weeks in Bali and our consultants handle the procedure fully.
How to buy land in Bali
To obtain a Copyright or Use Deed, you will need:
- Submit the completed forms to the Indonesian National Land Office (BPN) requesting a certificate of location, including supporting documents. This is usually done by your agent like Emerhub.
- Provide proof of land payment and the status of Hak Guna Bagunan or Hak Pakai meets
- Obtain a building right with a real building permit (IMB)
- The BPN issues a certificate under your company name.
- As the founder of PT PMA, Emerhub coaches are here to assist you in all aspects of life. Also, make a conscious effort to track down the soil for a check check when buying a building in Bali.
Why not buy a building in Bali using a locally selected one
Since foreign nationals (or local companies) cannot afford Hak Milik (landowner, also known as free), many foreign investors believe they should use local selectors.
Hopefully, we have been able to prove that it does not matter as you can buy Hak Guna Bangunan and Hak Pakai through your PT PMA company which is a safe way to plant buildings in Bali. Sometimes foreigners believe they have found a local person they can trust 100% and that it is better or easier to buy a property under that person’s name.
Although you can have all the confidence and the local person can have good intentions, it is still planting in an unstable environment as you will not have the legal rights to control the building. Relationships can take the wrong turn, or something can happen to your trustee. Divorce, marriage, death – all of these events involving external parties may not have the same purpose for your property as yours may be a trustee.
So, unless you are ready to admit that in the worst-case scenario you will lose your entire investment, don’t go for that trustee option. In fact, trusting the dishonest person chosen is one of the highest mistakes made by foreign investors in Indonesia. As you read these articles thoroughly, you understand why establishing a PMA is the only safe way to plant a building in bali investment as a foreigner as it will give you legal rights over your property.
Want to buy a place in Bali?
The purpose of this article is to show you the proper way to buy property in Bali as a foreigner. The only way foreigners can invest in property or buy property in Bali is to have an official Indonesian agency – PT PMA. Foreign properties may not be free of charge, but the Copyright and Title Deeds give you clear legal reasons. By setting up PT PMA, you save your money, and you will have more time to enjoy the house yourself or sell it again.