Buying a suitable holiday villa in Bali comes with its own challenges whether its land ownership certificate or hunting for the right villa it all gets confusing.
We cover all those aspects in this article to help you make it easier to understand the process of buying a villa in Bali. s
Can a foreigner buy a villa in Bali for personal use?
PURCHASE OF A HAK PAKAI VILLA (RIGHT TO USE)
In
Indonesia, there are numerous land certificates. But the Hak pakai Certificate
(right to use) should be used by foreigners who want to purchase property for
their particular use.
A
legal permit to purchase a property with Hak Pakai includes (KITAS) (right to
use).
Your
property must meet these requirements:
Residential
property
Not
larger than 20 acres
A
value of at least IDR 5 billion
The
land must already have an existing building (cannot be land only)
Initially,
you have the right to use the credential for 30 years. This will first be
extended by 20 years and then again by 30 years over 80 years. You will benefit
from these terms and conditions before you have retired and sell your villa at
any point in your life.
Total of 80 years
However,
please note that your residency permit needs to be valid. You have one year to
have a new one or sell the property if you do not renew your stay permits.
It
is necessary to note the profit cannot be generated by a villa purchased with a
"right to use" permit. You can't rent your Bali vacation home at
Airbnb. If this is your intention, you must buy or lease the land via a firm in
the relevant industry.
Long-term
leasing of properties in Bali:
For
someone wishing to move to Bali, a long-term lease of a property is also a
common choice. Foreigners usually lease properties with the option of extending
them for 25 years. It is necessary to negotiate on terms in the lease agreement
when leasing land. To minimize unnecessary issues with the owner, you must
consult a licensed property advisor.
In
a leasing agreement, there are several relevant points to state:
Building
on the land. In the leasing agreement, the terms and conditions for development
on the property should be clear. The lease arrangement must therefore
specifically demonstrate the assistance of landlords in the implementation of
construction permissions. The deal may also specify what happens after the
lease ends.
Sub-leasing
the property. If you wish the land to be subsidized, you must claim your right
to do so in the leasing agreement. Moreover, the contract must also specify
what the rules and procedures are for that reason. For example, do you have to
seek your landowner's written approval or is it enough to give notice?
Terms
for extending the lease agreement. The names of expansion in the lease
agreement must be specified. Also, pay the extension fee promptly, as the
extension occurs only after payment. In the event of ownership changes in the
future, even with specific terms in the lease, termination terms are impossible
to execute, and the new landowner does not wish to meet the agreement.
Usage
of access roads and communal areas. Check on all matters relating to roads and
communal areas to be included under the leasing agreement. Many disputes will
occur and even can involve prosecutors and police.
Right
of first refusal for buying property. The rental arrangement must say If the
landowners wish to sell the property, he/she must first sell the property to
the lessor.
Usage
of the land. The purpose and usage of the land are also significant. However,
we suggest that you keep this choice available for business purposes, even
though you intend to use it as your residence at the moment. In this way, you
are entitled to use the land for business purposes.
Why
you shouldn't use a local person's name to buy property in Indonesia
One
common mistake is to use an Indonesian national such as a friend or companion
as the ideal way to own a property in Bali. It is inherently dangerous, though
it is also easy. Only choose this option if you recognize that your property
can be lawfully withdrawn at any time.
Moreover,
it is illegal since there is no freehold for foreigners. If authorities catch
you concealing foreign ownership under the nominee scheme, they will seize your
property.
Another
issue is the death of the local citizen. The owners of the family shall inherit
the land and make no legal claims over it.
If
a villa with a right to use a certificate is bought, ownership is secure and
legitimate, so the unsafe nominee scheme is unnecessary. The new owner will
still convert the certificate when you sell the house.
Safely
Buying a Villa in Bali
Get
a Stay Permit
A
villa with the right to use the certificate has to be given a legal stay. There
are two kinds of stay permits for foreigners, the limited stay permit (KITAS)
and the permanent stay permit (KITAP).
A
KITAS enables you to live in Bali for a long but short period. Depending on
your KITAS, you will live in Bali for six months to two years, and this license
is renewable. There are a variety of options to do that. KITAS eligible persons
include:
·
Retired persons
who are at least 55 years old
·
Employees of an
Indonesian company that is willing to sponsor KITAS.
·
Investors in a
foreign company (subject to specific criteria).
·
Spouses of an
Indonesian citizen.
Checklist
Before Buying a Villa in Bali
A
very critical step in purchasing a property is the full analysis or due
diligence of the property. This guarantees that after buying the property and
in the future, you will have no complications. For this purpose, the long-term
leasing of the property has related risks and possible concerns.
The
process of conducting due diligence includes the following steps.
Verify
Land Ownership
Make
sure that you speak to the true landowner or an appointed official before
anything else. You will have to understand how many people own the land. In
some instances, the land title may be out of date and may not be identified
among all existing legal owners. Be sure both owners acknowledge the
transaction.
Check
the Zoning and Property Requirements
You
need not waste time or money bargaining with the property owner to then find
out that it does not fit the requirements for a certificate right to be used.
Check
for Unpaid Taxes
Before
purchasing the house, check if the property has any unpaid taxes. If landowners
have outstanding taxes, the property's price should be lower, so you take
responsibility for it. The tax check also gives you an indication of how much
to pay in the future.
Access
to the Property
Access
roads can be publicly or privately owned in Bali. Conflicts with your neighbors
in your residence will ruin your mood. By planning before you purchase the
house, you can avoid access to road problems.
Fees
and other expenses
Find
out if your property has any other expenditures. The purchasing of a property
in Bali implies typically additional costs, not restricted to:
·
Village donation
·
Legal fees
·
Taxes