Foreigners cannot own freehold land in Bali. The legal ways to hold land for a villa are a long leasehold (Hak Sewa, usually 25–30 years), a foreign-owned PT PMA company holding Hak Guna Bangunan (HGB), or — for foreigners living in Indonesia on a KITAS — Hak Pakai for their own home. Nominee arrangements, where an Indonesian holds freehold on your behalf, are void under Indonesian law.
Before you spend anything on design or construction, settle how you will hold the land: it decides which plots you can buy, how long you can earn from the villa and how the PBG permit is issued. Here is what we explain to every client before a build — not legal advice, but the practical version from a builder who works with the notaries and permits every week.
The core rule: freehold is for Indonesian citizens only
The strongest form of ownership in Indonesia is Hak Milik (freehold), and by law it can only be held by Indonesian citizens. As a foreigner you cannot own freehold land in your own name anywhere in Bali. Anyone selling you “freehold” as a foreigner is either misinformed or steering you towards a nominee workaround. The real question is which of the legal routes fits your goal — a holiday home, a rental investment, or a home you live in.
Leasehold terms: 25–30 years and extension clauses
By far the most common route for foreign villa owners is leasehold: you lease the land from its Indonesian owner for a fixed term, usually 25 or 30 years, typically paid upfront, and you build and use the villa for that term. It is simple, fully legal in your own name and needs no company.
The value of a leasehold sits in its clauses. Before signing, make sure the notarised lease covers:
- Remaining years. A 30-year lease with 18 years left is a different asset. Check the start date on the deed, not in the listing.
- Extension option and price. Either a fixed extension price or a clear formula, agreed now. “To be negotiated” means the landowner sets the price later.
- Right to build, renovate and demolish — explicitly, with the right to apply for the PBG in your name.
- Right to rent to guests and to sublease, which a rental villa needs.
- Right of first refusal if the landowner sells the land, and what happens to the lease if the owner dies.
- End of term: who owns the building when the lease ends. By default it goes with the land.
- Taxes: who pays the annual land and building tax (PBB) and the lease tax.
The lease is signed as a notarial deed, and the landowner's certificate should be checked at the land office through the notary before any payment; some owners also have the lease noted on the certificate, which makes it visible to anyone who later checks the land. We check the certificate behind the lease, the remaining term and these clauses in land due diligence, together with the zone the plot sits in.
PT PMA and HGB, step by step
For an investment villa or a rental business, the more robust route is a PT PMA — an Indonesian company with foreign shareholders — which can hold Hak Guna Bangunan (HGB): the right to build on and use land for an initial 30 years, extendable by 20 and renewable for 30 more, up to about 80 years in total.
- Set up the company. A notary drafts the deed of establishment, the Ministry of Law approves it, and the company registers in OSS for an NIB with the right business codes — for a rental villa usually the villa accommodation code.
- Meet the investment rules. A PT PMA must plan an investment above IDR 10 billion per business line and location, excluding land and buildings, and put in paid-up capital; the paid-up minimum was lowered in 2025. Confirm the current figures with your notary before you commit.
- Acquire the land as HGB. If the land is freehold, it is converted to HGB when the company acquires it, at a notary (PPAT). The buyer pays the acquisition tax (BPHTB, 5% of the value above a small allowance) and the seller pays 2.5% income tax on the sale.
- Keep the company compliant. Monthly tax filings, quarterly investment reports (LKPM) and annual accounts — plan for an accountant from day one.
The set-up costs a few thousand US dollars in notary and consultant fees, and the company then has running costs every month. That only makes sense if the villa is a genuine business or a long-term hold.
Hak Pakai for foreigners with a KITAS
A foreigner who lives in Indonesia on a residence permit (KITAS or KITAP) can hold Hak Pakai — a right of use — over one house and its land for their own residence. The term matches HGB: 30 years, extendable by 20 and renewable for 30. There is a minimum purchase price set per province, which in Bali is several billion rupiah for a landed house, and the right is tied to your residence status. Hak Pakai is designed for a home you live in, not for a rental villa business; if you plan to rent to guests, compare it with the PT PMA route first.
Nominee arrangements — why not
A nominee structure puts freehold in the name of an Indonesian citizen while side agreements (loan, power of attorney, lease back) are meant to give the foreigner control. It is cheap and common — and legally void. Article 26 of the Basic Agrarian Law says any transfer that directly or indirectly passes freehold to a foreigner is null, and the land can fall to the State. In a dispute with the nominee or their heirs, the side agreements do not hold. We do not design or build on nominee land; leasehold, PT PMA with HGB or Hak Pakai are the routes that hold up.
Leasehold vs PT PMA vs Hak Pakai: side by side
| Leasehold (Hak Sewa) | PT PMA + HGB | Hak Pakai (KITAS holders) | Nominee freehold | |
|---|---|---|---|---|
| Who holds the land | You, under a notarised lease from the Indonesian owner | Your foreign-owned Indonesian company | You personally, as a resident foreigner | An Indonesian citizen, on paper |
| Term | Usually 25–30 years, extension by agreement | 30 years + 20 extension + 30 renewal | 30 years + 20 extension + 30 renewal | Unlimited — but not yours |
| Rent the villa to guests | Yes, if the lease allows it and the villa is licensed | Yes — the standard structure for a rental business | Meant for your own home, not a rental business | Legally void structure |
| Set-up effort | Low: notary deed, land checks | High: company, capital, reporting | Medium: residence permit, minimum price rules | Low on paper, high risk |
| Main risk | Value falls as the term runs down; extension price | Running costs and compliance | Only one home, set price thresholds | Loss of land and building |
Buying an existing leasehold villa: what changes
Many foreigners buy a villa that already stands on a lease rather than building from scratch. The same rules apply, with extra checks:
- Price per remaining year. Divide the asking price by the years left on the lease. A villa with 15 years left should cost far less than the same villa with 28, and the extension price decides what happens after.
- Assignment of the lease. Transferring the lease to you usually needs the landowner's written consent and a new notarial deed. Confirm the landowner will sign before you pay a deposit.
- Permits in whose name. The PBG or IMB, the SLF and the rental licence may sit with the seller or a management company. They need to follow the villa to you — see how to check a villa's PBG, SLF and NIB.
- Building versus permit. Extra bedrooms or a pool added after the permit mean the villa is larger than its PBG, and fixing that is the buyer's cost after completion.
How the choice changes your villa build
The structure is not only paperwork — it shapes the project. On a leasehold, size the build so it pays back comfortably within the remaining term; over-investing on a short lease rarely returns. A PT PMA with HGB justifies a larger, higher-spec investment villa because the horizon is long enough to earn from it for decades. With Hak Pakai you build a home, not a hotel. In every case the land structure must be settled and notarised before design and the PBG permit, because the permit and later the SLF are issued against a clear legal holding. The full sequence is in how to build a villa in Bali: 12 steps.
Check the plot before the structure
A perfect lease on a plot in a green agricultural zone is still unbuildable. Before you sign anything, confirm the zone, building ratios and setbacks with a zoning and ITR check (USD 200–450 per plot, results in three to ten working days), then run full land sourcing and due diligence on the certificate, access and flood risk. Both fees are credited if we then build for you.