For many foreigners, the dream of owning a villa in Bali often turns into a legal nightmare due to outdated advice and risky “handshake deals.”
In 2026, the Indonesian government significantly tightened enforcement on property ownership, meaning the old method of using a local “nominee” to hold your title is now a direct path to losing your investment.
The excitement of finding the perfect property in Canggu or Uluwatu is quickly replaced by anxiety over zoning laws, tax obligations, and secure title structures.
Navigating this landscape requires more than just a real estate agent; it demands a rigorous adherence to legal protocols. Whether you are looking for a retirement home or a high-yield rental investment, understanding the distinction between Hak Pakai (Right to Use) and Hak Guna Bangunan (Right to Build) is critical.
A single misstep in the due diligence phase—such as failing to verify the new PBG building permit status—can leave you with an asset you cannot legally occupy or rent out.
This comprehensive guide provides a definitive Bali house buying checklist to help you navigate the market safely.
We move beyond the glossy brochures to cover the hard legal realities: valid ownership titles for foreigners, the dangers of nominee arrangements, and the exact tax calculations you need to budget for.
By following these steps and verifying details with the Ministry of Agrarian Affairs and Spatial Planning (ATR/BPN), you can secure your slice of paradise with full legal protection.
Table of Contents
- Legal Pathways for Buying Property in Bali : Hak Pakai, HGB, or Leasehold
- The Nominee Trap: Why You Must Avoid It
- Pre-Offer Due Diligence: Zoning and Certificates
- Building Permits Explained: IMB vs PBG and SLF
- Real Story: The "Nominee" Nightmare in Seminyak, Bali
- Transaction Structure: The Notary’s Role
- Taxes and Fees: BPHTB and PPh Final
- Step-by-Step "Safe Purchase" Flow
- FAQs about Buying Property in Bali
Legal Pathways for Buying Property in Bali : Hak Pakai, HGB, or Leasehold
The first item on your Bali house buying checklist is determining your legal standing. Hak Milik (Freehold) is strictly reserved for Indonesian citizens; foreigners are explicitly barred from holding this title.
If you inherit freehold land, you are legally required to dispose of it or transfer it within one year. Therefore, you must choose one of three safe, legal alternatives to secure your property.
For individual foreigners with a residency permit (KITAS or KITAP), the most secure route is Hak Pakai (Right to Use).
This title is registered directly in your name and is valid for an initial 30 years, extendable up to a total of 80 years. It provides virtually the same rights as freehold for residential purposes, allowing you to sell, mortgage, or bequeath the property.
For investors or those wanting to run a commercial rental business, establishing a PT PMA (Foreign Owned Company) to hold a Hak Guna Bangunan (HGB) title is the standard.
This allows the company to hold the “Right to Build,” facilitating development and commercial operations. Alternatively, the “Leasehold” (Hak Sewa) model allows you to rent a property long-term (typically 25-30 years), which is a contract-based right rather than a registered land title.
The Nominee Trap: Why You Must Avoid It
A decade ago, it was common for foreigners to use a “nominee” structure—paying for land but putting the title in the name of a local Indonesian friend.
In 2026, this is widely flagged as legally risky and unsafe. These arrangements are not recognized by Indonesian law, meaning the foreigner has no enforceable claim over the asset.
If the relationship with the nominee sours, or if the nominee passes away and their heirs claim the land, the foreigner is often left with nothing.
Furthermore, the government actively investigates these “sham” arrangements as potential tax evasion or violations of the Agrarian Law. The rule here is simple: never use a nominee. Always use a legal title structure like Hak Pakai or Leasehold that provides you with direct legal protection.
Pre-Offer Due Diligence: Zoning and Certificates
Before signing any offer letter, you must conduct a deep dive into the property’s documents. Start by obtaining a copy of the land certificate and checking the official records at the National Land Agency (BPN).
You need to verify the certificate type, boundaries, and ensure there are no mortgages or “overlapping certificates”—a known issue in areas like Denpasar and Badung where two titles exist for the same plot.
Equally important is verifying the zoning (Tata Ruang). Bali is divided into specific zones: Green (Protected/Agricultural), Yellow (Residential), and Pink (Tourism). Buying a property in a Green Zone usually means you cannot obtain a building permit or legally rent it out.
Always request a written statement from the local BPN or government office confirming the zoning designation matches your intended use as part of your Bali house buying checklist.
Building Permits Explained: IMB vs PBG and SLF
The documentation for buildings in Indonesia has evolved. While many older listings still refer to the Izin Mendirikan Bangunan (IMB), this has been replaced nationally by the Persetujuan Bangunan Gedung (PBG).
When verifying a property, you must ensure the existing structure matches the approved plans. A common issue is finding a villa with a permit for a small house that has been illegally expanded into a sprawling mansion.
Even more critical in 2026 is the Sertifikat Laik Fungsi (SLF), or Certificate of Functional Worthiness. This document confirms the building is safe and suitable for use.
Operating a commercial villa without an SLF is increasingly viewed as non-compliant by authorities. Your checklist should include a mandatory “permit audit” to verify if the IMB needs to be converted to a PBG/SLF, and who will pay for that regularization.
Real Story: The "Nominee" Nightmare in Seminyak, Bali
Marcus (45, Perth) thought his “friendship” with his landlord was stronger than a contract. In 2023, the architect bought a Seminyak villa using a nominee structure, trusting his local friend to hold the title. It was a handshake deal that worked perfectly—until the funeral.
When his friend passed away unexpectedly, the family heirs didn’t care about Marcus’s friendship. They cared about the land certificate that legally belonged to them. Overnight, Marcus went from “villa owner” to “trespasser,” facing eviction from a home he had fully paid for.
Desperate, Marcus contacted a legal consultant in Bali for emergency assistance. The team reviewed his documentation (or lack thereof) and managed to open a dialogue with the heirs.
It wasn’t easy; without a valid title in his name, Marcus had zero leverage. The only way to save the property was to negotiate a new agreement from scratch.
Eventually, they converted the arrangement into a secure, long-term Leasehold agreement registered properly in Marcus’s name. It cost him an additional $40,000 in legal fees and settlement costs—a steep price for skipping due diligence.
His advice to others creating a Bali house buying checklist? “Never rely on a handshake. Get your name on the paper legally, or don’t buy it at all.”
Transaction Structure: The Notary’s Role
Every legitimate property transaction must go through a Pejabat Pembuat Akta Tanah (PPAT), a specialized land deed official or notary.
They are responsible for drafting the sale or lease deed (Akta Jual Beli or Akta Sewa), verifying the identities of all parties, and checking certificates with the BPN. Attempting to bypass a PPAT to save money is legally unsafe and renders the transfer invalid.
The notary also acts as a gatekeeper for taxes. They will ensure that all relevant taxes are paid before the transfer is recorded.
It is standard practice to route funds through the notary’s escrow account or a similar transparent mechanism to ensure the seller only receives payment once the title transfer is securely in progress. This step is a non-negotiable part of any safe Bali house buying checklist.
Taxes and Fees: BPHTB and PPh Final
Hidden costs can derail your budget if you aren’t prepared. The buyer is responsible for the Bea Perolehan Hak atas Tanah dan Bangunan (BPHTB), which is a land acquisition tax generally set at 5% of the property value (minus a non-taxable threshold determined by the local regency).
The seller is responsible for the Final Income Tax (PPh Final), which remains generally at 2.5% of the gross sale price. However, you must also check if the seller is a taxable entrepreneur (PKP), in which case Value Added Tax (VAT/PPN) might apply.
Your checklist must include a detailed tax simulation from your notary to avoid surprises at the closing table.
Step-by-Step "Safe Purchase" Flow
To simplify the process, follow this high-level sequence to ensure safety:
- Clarify Status: Decide if you are an individual resident (Hak Pakai), an investor (PT PMA/HGB), or seeking Leasehold.
- Select Advisors: Engage a reputable Bali-based PPAT/Notary and a legal consultant.
- Preliminary Checks: Run BPN checks for overlapping certificates and confirm the “Pink” or “Yellow” zoning.
- Due Diligence: Inspect the building’s condition and verify the PBG/SLF status.
- Documentation: Draft the Binding Sale and Purchase Agreement (PPJB) or Lease Deed.
- Tax Payment: Calculate and pay BPHTB and ensure the seller pays PPh Final.
- Closing: Sign the final deed (AJB) before the PPAT and register the transfer at BPN.
FAQs about Buying Property in Bali
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Can foreigners owning a KITAS buy freehold property?
No. Foreigners are legally barred from Hak Milik (Freehold). The safe alternative for residents is Hak Pakai (Right to Use).
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Is Leasehold considered safe?
Yes, long-term leasehold is a recognized legal contract. However, it is not a registered land title like Hak Pakai, so the security depends heavily on the quality of the lease contract drafting.
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What happens if I buy land in a Green Zone?
You will likely be unable to obtain a building permit (PBG). If you build illegally, you risk demolition and significant fines.
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How much are the notary fees?
Notary/PPAT fees typically range from 0.5% to 1% of the transaction value, but this is often negotiable depending on the complexity of the deal.
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Can I rent out my Hak Pakai home?
Hak Pakai is primarily for residential use. If you want to run a daily rental business, you generally need a PT PMA with a tourism license, which often requires an HGB title.
