Freehold vs. Leasehold in Bali: Which Option is Right for You? Introduction
Bali’s real estate market offers incredible opportunities for investors but understanding the difference between freehold and leasehold ownership is crucial before making a decision. Each option has its advantages and legal implications, especially for foreign buyers. This guide will help you determine which ownership structure best suits your investment goals.
What is Freehold (Hak Milik)?
Freehold ownership (Hak Milik) is the strongest land title available in Indonesia, granting full ownership rights indefinitely. However, freehold property is only available to Indonesian citizens. Foreigners are restricted from direct freehold ownership but may explore alternative legal structures such as:
PT PMA (Foreign-Owned Company): Establishing a legally recognized business entity in Indonesia allows ownership of land under a Hak Guna Bangunan (Right to Build) title.
Nominee Agreements: Some foreigners use an Indonesian nominee to hold land on their behalf, but this carries risks and is not legally recommended.
Pros of Freehold:
Full ownership rights with no time limit.
Higher property value and resale potential.
Can be passed down as an inheritance.
Cons of Freehold:
Not legally available to foreigners.
Requires complex legal structuring for foreign investors.
What is Leasehold (Hak Sewa)?
Leasehold ownership (Hak Sewa) allows individuals (including foreigners) to lease land for a fixed period, typically 25-30 years, with the option to extend up to 80 years. Leasehold agreements are legally recognized and widely used by foreign investors.
Pros of Leasehold:
100% legal for foreigners.
Lower upfront costs compared to freehold.
Secure and renewable long-term agreements.
Ideal for investment properties and rental income.
Cons of Leasehold:
Limited duration, requiring renewal agreements.
Lower resale value compared to freehold.
Extensions may involve renegotiation.
Which Option is Right for You?
The best ownership structure depends on your long-term goals:
If you are an Indonesian citizen or have a legal business entity in Indonesia, freehold is the preferred option for long-term security.
If you are a foreign investor looking for a secure and hassle-free way to own property, leasehold is the most practical and legal option.
If your primary goal is generating rental income, leasehold provides a more flexible and cost-effective solution.
Eyecon Group specializes in guiding investors through both freehold and leasehold property acquisitions, ensuring a smooth and secure process.
Conclusion
Both freehold and leasehold have their benefits, but the right choice depends on your residency status, investment goals, and long-term plans. Understanding these key differences ensures you make an informed decision when investing in Bali’s thriving real estate market.
Need expert advice? Contact Eyecon Group today to explore your best property options in Bali.