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How to Buy Land as a Foreigner in Bali

20 December 2019 by Ade
How to Buy Land as a Foreigner in Bali

Researching potential business locations and gathering your financial resources is only half the battle. If you’re a foreigner, Indonesia’s stringent regulations on property ownership require you to scrutinize all the fine print. Sometimes the fine print isn’t even there! To avoid trapping yourself in fraudulent deals, we offer you some basic guidance.

 

1. Understand basic property laws in Indonesia

 

It’s a no-brainer, but many foreigners surprisingly skimp on this crucial first step. You don’t have to take a night course in law, but it’s good to have very basic knowledge of the various certificates that exist for property ownership, and which ones you can and cannot have. Hak Milik is a freeholder’s certificate, and Indonesia’s Agrarian Law prevents foreigners (even with a temporary or permanent residential permit) to own land -- with the exception of those who are married to an Indonesian citizen. However, you are eligible to apply for Hak Pakai, a right to use and capitalize property on land that is not yours.

 

2. Do not be tempted to arrange a nominee-ownership agreement

 

A foreigner who is not married to an Indonesian citizen cannot be granted a freeholder’s certificate, so many foreigners have found a semi-legal loophole by naming the property to a trusted Indonesian citizen, and then arranging the agreement through a notary to secure the investment. We say it’s semi-legal because the intent is illegal (and quite frankly insecure), but the means of obtaining the control of property is legal. We don’t advise you do this, unless that nominee is your spouse -- in which case you would obtain Hak Milik in the most legitimate way possible.

 

3. Choose a property agent early on

 

Find trustworthy agents who have your best interest at heart. They know your particular needs as a foreigner and can make excellent recommendations on properties that belong to trustworthy owners. The last thing you want is a landlord who even thinks about scamming you, to make false claims against you. Cases like these are rare, but the risk is still there. Choose a property agent who is backed by a solid property management brand. These are the people who help prevent you from dealing with difficult landlords, and who will actually help you get good deals.

 

4. Hunt for properties!

 

Hunting for properties involves getting out there on the road and doing the survey yourself. Again, it’s a no-brainer, but, quite surprisingly, many people don’t do this. This is especially common with people who buy from property developers, who sell you promises for down payments. While not all property developers are less than honest about the investment prospects of the land and location, it’s a good idea to survey again the surrounding points of interest and potential troubles (even if you’ve done your market research), like water and electricity shortages, or sea erosions.

 

5. Back yourself up with a notary

 

A notary who knows the ins and outs of property ownership, taxes, and other legally binding agreements is your second line of defense against fraudulent property deals. A property agent can only try their best to filter out shady profiteers. But they do not have authority when it comes to legal disputes and lawsuits. Save yourself the trouble and hire a notary -- even if you’re certain that you’ve met all legal requirements.

 

If you are looking for a property agent in Bali, look no further than Bali Coconut Living. We specialise in villas and holiday homes from people willing to sell or lease. Just tell us your budget and your prospective location, and we will lead you to our trusty clients on the other side of the table.

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