How Can an Expat in Singapore Buy a Property or Villa in Bali or Lombok – Indonesia

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Indonesia, particularly Bali and Lombok, is a popular destination for expats looking to invest in property. However, Indonesia has strict foreign ownership laws, making it challenging for non-Indonesians to buy freehold property. In the past, expats often used PMA (Foreign-Owned Company) structures to acquire real estate, but rising capitalization requirements have made this option less feasible.

For expats in Singapore considering property investment in Indonesia, understanding the legal framework, available ownership structures, and key considerations is crucial. This guide outlines the steps expats can take to legally acquire property in Bali or Lombok.

Legal Framework for Foreign Property Ownership in Indonesia

Under Indonesian law, the right of ownership (Hak Milik) is the most extensive form of land title in Indonesia that can be indefinitely owned by Indonesian citizens. The Hak Milik does not allow foreigners to own freehold property. Instead, expats can acquire property through alternative legal structures:

    1. Right to Use (Hak Pakai / HP) – Leasehold ownership for up to 80 years.  Foreign citizens residing in Indonesia / Indonesian legal entities including foreign investment (PMA) companies may be granted HP subject to certain requirements.
    2. Right to Build (Hak Guna Bangunan / HGB) – This is the most common and recommended option for foreigners to acquire land in Indonesia by setting up a PMA (foreign-owned company) and using the PMA company to purchase land. The buyer and seller then enter into a land sale and purchase agreement (Akta Jual Beli) and other documentation to transfer the land title to the company.  HGB allows its holder to build, construct and use the land and is valid for 30 years with multiple extensions.
    3. Indonesian Nominee Ownership – This refers to a private contractual arrangement entered into by the foreign investor and an Indonesian citizen to hold title to the land on trust for the foreigner as beneficiary.  This is generally not recommended as it may expose the foreigner to risks and the contractual arrangement may not be legally enforceable under a civil law jurisdiction like in Indonesia.

Expats must always ensure they comply with Indonesian property regulations to avoid legal risks.

Key Considerations for Expats Buying Property in Bali or Lombok

  • Foreigners can own land under Hak Pakai (Right to Use) for up to 80 years (initial 30-year lease, extendable for 20 + 30 years).
  • The property must be designated for residential use and cannot be rented out as a commercial villa.
  • Only applicable for properties built on Hak Milik (Freehold) land converted into Hak Pakai.
  • You must hold a KITAS/KITAP (residency permit) to be eligible.
  • A PT PMA (Foreign-Owned Company) can own commercial property under Hak Guna Bangunan (HGB).
  • Minimum capitalization requirement of IDR 10 billion (~SGD 870,000), making it costly for personal purchases.
  • The company must have active business operations, not just hold property.
  • Some foreigners use an Indonesian citizen (nominee) to hold property in their name.
  • This is not legally enforceable, and the nominee can legally claim ownership.
  • Some buyers use power of attorney and shareholder agreements, but these do not guarantee full control.
  • Luxury Property Tax (PPNBM) – Applies to properties valued above IDR 30 billion (~SGD 2.6 million).
  • Annual Land & Building Tax (PBB) – Based on property value.
  • Income Tax (PPh Final) on resale – 2.5% for individuals, 1% for PT PMA companies.
  • Legal and notary fees (~1-2% of property value).

Steps to Buying Property in Bali or Lombok as an Expat

  • For residential use: Hak Pakai leasehold.
  • For commercial investment: PT PMA ownership under Hak Guna Bangunan.
  • Avoid nominee arrangements due to legal risks.
  • A PPAT (Land Deed Official) and lawyer can verify land title and zoning compliance.
  • Ensure the property has IMB (Building Permit) and SHM (Freehold Title).
  • Foreigners cannot get Indonesian mortgages, so financing must come from Singapore or personal funds.
  • Confirm land certificate legitimacy with the National Land Agency (BPN).
  • Check for zoning restrictions (some areas prohibit foreign ownership).
  • Sign a Hak Pakai lease agreement or HGB title under PT PMA.
  • Pay relevant taxes and fees at the time of purchase.

Conclusion

While foreigners cannot own freehold property in Indonesia, legal pathways such as Hak Pakai leases and PT PMA ownership offer options for expats. However, nominee structures are risky and should be avoided. By conducting proper due diligence and structuring transactions in compliance with Indonesian law, expats can invest securely in Bali or Lombok without unnecessary legal complications. Buying property in Indonesia as a foreigner requires careful structuring to ensure compliance with local laws. Please note that the content above is for general information purposes only and is not intended to be legal advice. Do reach out to us at Legal Expat SG if you require professional advice.

Do reach out to us at Legal Expat if you require professional advice. We have a team of qualified lawyers that can assist you. Email us at: info@legalexpat.sg or drop us a WhatsApp at: +65 8093 4393 if you require assistance.