Buying real estate in Bali by foreigners

Author of the article:

Artem

Indonesia
Real Estate Specialist

Date:  24.04.2024

Reading time: 9 min.

Views:  450

Bali is the pearl of Indonesia, attracting foreigners with its picturesque scenery, rich culture and unique lifestyle. Because of this, buying real estate in Bali is becoming increasingly popular among foreigners. However, before investing in real estate on this tropical island, it is important to understand all aspects of the process.

Legal aspects

Buying real estate in Bali by foreigners does have its peculiarities. According to Indonesian law, foreigners cannot own land as property. This is due to the government's desire to keep the land in the hands of the local population. However, this does not mean that it is inaccessible for foreigners to buy real estate in Bali. There are alternatives that allow you to get around this ban.

Long-term lease (Leasehold)

The most common option is a long-term lease, or Leasehold. This option assumes that a foreigner leases land or real estate from a local owner for up to 25 years. At the end of this period, the lease can be renewed.

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Purchase through a local nominee (Nominee Agreement)

Another option is to purchase real estate through a local nominee owner. In this case, the foreigner enters into a contract with a local resident, who formally becomes the owner of the property, but all rights and obligations are transferred to the foreigner. This option requires a lot of trust in the nominee owner and legal support.

Establishment of a limited liability company (PT PMA)

Finally, the third option is to set up an Indonesian limited liability company (PT PMA). This allows a foreigner to become the owner of real estate as a legal entity. However, to establish such a company requires a significant authorized capital and it must be focused on certain commercial activities.

It is important to remember that each of these options has its own nuances and risks, so it is recommended to consult a professional lawyer or realtor before buying real estate in Bali.

Required documents and procedures

To buy real estate in Bali, foreigners need to prepare the following package of documents:

• Passport or other identity document. It must be valid for at least 18 months from the start of the purchase procedure.
• Documents proving your financial solvency. This may be a bank statement confirming that you have the necessary amount in your account, or other documents confirming your ability to pay the cost of the property.
• If you are buying the property through a nominee, you will need letters of recommendation from two guarantors to prove your trustworthiness.

Once all the necessary documents are prepared, the real estate purchase procedure begins, which can take from a few weeks to a few months, depending on the type of property and the chosen method of purchase. This process includes the following steps:

• Signing a preliminary contract with the seller or his representative.
• Checking the legal cleanliness of the object. At this stage it is found out whether there are any encumbrances or other obstacles to the transaction.
• Preparation and signing of the main contract.
• Payment of the cost of the facility and transfer of ownership.

It is important to remember that buying real estate is a serious step that requires careful preparation and a professional approach. It is recommended to seek the services of experienced realtors and lawyers who will help you avoid possible problems and risks.

Financial considerations

Real estate prices in Bali can vary depending on the location, type and size of the property. On average, the price per square meter in popular tourist areas such as Seminyak or Kuta can reach $2000-3000. But if you are willing to search, you can find options and for 1000-1500 dollars per square meter in less touristy, but no less attractive areas of the island.

In addition to the value of the property itself, there are other possible costs to consider. One important factor is taxes. Foreigners who own property in Bali are required to pay land and building tax, which is about 0.5% of the value of the property per year.

Insurance is also an important part of the budget when buying a property. The cost of insurance can vary depending on the size and type of property, but averages around 0.5-1% of the property's value per year.

Don't forget to also realtor and legal services. A realtor usually charges a commission of 2-5% of the value of the property, and a lawyer may charge either a flat fee or a percentage of the transaction.

It is important to remember that investing in Bali real estate - is not only the purchase of an object, but also its maintenance. Maintenance costs may include cleaning, repairs, pool and garden maintenance, utility bills, etc.

"When planning your Bali real estate budget, it's important to consider all possible costs to avoid unpleasant surprises in the future."

Best neighborhoods to buy in

Bali is not a single entity, but a mosaic of different neighborhoods with their unique features and advantages.

Seminyak - is a neighborhood for lovers of luxury and comfort. It is home to many upscale restaurants, boutiques and spas. Real estate here is expensive, but in return you get access to Bali's best beaches and clubs.

Ubud - is the heart of Bali's spiritual life. Many art galleries, workshops and marketplaces can be found here. Ubud is ideal for those seeking inspiration and peace surrounded by majestic rice terraces and jungle.

Bukit - A surfer's paradise. It is home to Bali's best wave points and real estate prices are relatively lower than Seminyak or Ubud.

Sanur - Is a neighborhood for family vacations. You can find plenty of family restaurants, quiet beaches and bike paths. Sanur is a great place to buy real estate if you are planning to move to Bali with children.

Jimbaran and Nusa Dua - are neighborhoods with luxury villas and 5-star hotels. Here you can find beautiful white sand beaches with crystal clear water. Real estate here is expensive, but in return you get access to the best golf courses, restaurants and spas.

"Choosing a neighborhood to buy property in Bali is first and foremost a lifestyle choice. It's important to understand exactly what you're looking for: raucous nightlife, peace and privacy, exhilarating surfing or family comfort. Either way, there is a place in Bali that can fulfill your needs."

Purchasing process

• Searching for an object. When choosing a property, it is important to consider such factors as its location, proximity to infrastructure, condition of the property, availability of all necessary amenities. In addition, it is worth taking into account your individual preferences: someone is looking for a secluded place in the mountains, and someone prefers to be in the center of events.
• Determining the form of ownership. Although direct ownership of land by foreigners is prohibited, there are options to circumvent this restriction. For example, a long-term lease agreement for 25-30 years with an option to extend, or purchase the property through a local nominee.
• Negotiating and signing a preliminary contract. It is important to remember that the price listed in the ad is often a bargain. Feel free to discuss the terms of the deal and try to negotiate a better price.

• Checking the legal purity of the object. This stage involves checking all documents for the property, including title deeds, building permits, tax returns, etc. It is also worth checking whether there are any encumbrances or lawsuits related to the property.
• Preparation and signing of the main contract. This document must contain all the terms of the transaction and be signed by both parties. It is important that the contract is bilingual (in Indonesian and in the language of the buyer) and notarized.
• Transfer of rights to the object and payment. The transfer of rights usually takes place in the presence of a notary. After signing the contract, the buyer transfers money to the seller's account, and upon confirmation of receipt of payment, the seller transfers all documents and keys to the object to the buyer.

Tips for making a safe purchase

• Choose trusted realtors and lawyers who specialize in Bali real estate. Check their online reviews and ask for recommendations from people you know.
• Never transfer money directly to the seller without signing a contract. It is better to use the services of a notary or a law firm that provides escrow account services.
• Make sure that all the details of the deal, including price, payment terms and transfer terms, are clearly spelled out in the contract. If something is not clear to you, do not hesitate to ask questions.
• Conduct a thorough check of the object and all related documents. If you are not confident in your abilities, it is better to turn to professionals.
• Even if you trust your realtor or lawyer completely, it's always worth getting a second opinion from an independent expert. It may be a little more expensive, but you will get more confidence in your decision.
• Be prepared that the buying process may take several months. There is no need to rush, as it is a significant investment.

Life in Bali after buying

After buying a property in Bali, a new chapter of your life begins. Adapting and integrating into the Balinese community can be both an exciting and challenging process.

Balinese people are known for their hospitality and friendliness, but it is important to respect local customs and traditions in order to fully integrate. For example, participating in local festivals and ceremonies, learning the Balinese language and cuisine will help you to better understand and embrace the culture of this unique island.

Managing real estate from abroad can present certain difficulties, especially when it comes to renting it out. In this case, it is advisable to seek the services of a property management company. Professionals will be able to take care of keeping your property in perfect condition, as well as help with finding reliable tenants.

It is also worth considering that life in Bali has its own peculiarities. For example, the island's infrastructure may be different from what you are used to. But it is these differences that make life in Bali so unique and appealing.

In conclusion, buying real estate in Bali is not only an opportunity to enjoy life in a tropical paradise, but also a chance to become part of a unique culture and lifestyle.

"Your dream of owning a property in Bali can become a reality. Don't put it off - start taking action today!"

Buying real estate in Bali is not only an opportunity to enjoy life in a tropical paradise, but also an excellent investment. However, this process requires a careful approach and study of all aspects, from legal nuances to the peculiarities of life on the island. We hope that our article helped you to get a full understanding of what awaits foreigners when buying real estate in Bali.

If you have any questions or need help with the process of buying real estate in Bali, you can always contact us.