Buying Land (Property) in Bali
Before any land transaction commences it is imperative to sight the original land certificate to ensure that it is not encumbered and that it denotes the correct land zoning.
When a house or a villa forms part of a land transaction you must also sight the IMB Certificate (Ijin Mendirikan Bangunan- Certificate granting a building design) and the IMB plaque, which is required by Indonesian law to be displayed on the property.
Currently Indonesian Law clearly states that foreigners are not allowed to hold a ‘freehold’ land title. There are however widely used practices in effect so that a Real Estate transaction can take place; thus enabling a foreigner to ‘indirectly’ hold a freehold title. All documentation pertaining to a property purchase must be executed in Indonesian for it to be legal and binding.
The systems for foreigners to utilize when they proceed to purchase a property are:
HAK MILIK (FREEHOLD TITLE)
HAK PAKAI (LEASEHOLD TITLE)
Nominee System for Hak Milik (Freehold Title)
A foreigner nominates an Indonesian citizen to hold the title of land and the nominee signs a combination of the following four (4) documents in conjunction with the foreigner in the presence of a Notary.
Loan Agreement: This acknowledges that the foreigner has lent the nominee funds equivalent to the purchase price of the land
Right of use Agreement: Enables the foreigner to use the land.
Statement Letter: The Nominee acknowledges the loan and intention to own the land.
Statement Letter: The Nominee acknowledges the loan and intention to own the land.
Power of Attorney: The Nominee signs an irrevocable Power of Attorney giving the foreigner the complete authority to sell, mortgage, lease or otherwise determine what goes on the land.
PMA-Penanaman Modal Asing-Foreign Investment Company Hak Pakai (Leasehold Title)
Changes to some Indonesian investment laws came into effect in 1997. At this time, the Indonesian Government introduced the PMA; (Penanaman Modal Asing) Foreign Investment
Company to enable a foreign investor to set up a company without an Indonesian Partner. This type of Company can own property in the company’s name and the Foreign Director becomes the holder of the title that is valid for a period of 25 years at which time this can be renewed via the government. As a Foreign Investment Company, a foreigner could then
purchase a property. When these laws were passed, it enabled 100% foreign ownership however new laws have recently been passed and the ownership rights are now as follows:
Foreign investor 50% – Indonesian Citizen 50%.
The period of ownership of any such property is currently still set at 25 years.
To establish a PMA you are required to:
- Submit a detailed business plan.
- Operate in a business that benefits the environment, employment statistics and enables Indonesians to gain foreign skills.
- Make ongoing appropriate cash deposits into an Indonesian bank account; these amounts are calculated from the capital assets of the business.
- Show a property as an asset of the company.
Visa Requirements
You are not required to obtain a visa to purchase a property in Indonesia; however, you are required to have a visa in your passport to gain entry into the country.
There are several types of visas’ and we have listed below the most common types that are required. It is also a requirement that your passport is valid for a minimum of six months after your arrival date.
- Tourist Visa
- Social Visa
- Business Visa
- Residency or Work Visa
- Retirement Visa
To obtain a visa we suggest that you contact the Indonesian Consulate or Embassy in your own country. These contact details are obtainable via the internet.
Please feel free to email us for more concise information as it is vital to understand the legal process before embarking on a property purchase. In that regard, we recommend that you seek independent legal advice.
“Don’t let what you cannot do interfere with what you can do” – John Wooden
