Are You Ready for a Yearly Villa Business in Bali?25 February 2020 by Ade
To prepare for safe investment in property in Bali, you need to have more than just a plentiful starting capital. Like any other country, Indonesia has its own regulations concerning land use and the set-up of businesses.
Bali Coconut Living provides in-depth consultation for navigating the legal process of obtaining your certifications and rights. However, in this article, we would like to share some of the basic things you should know to get started.
Consider the following:
1. Izin Mendirikan Bangunan (IMB)
IMB is a certificate which dictates the rightful use of the land and building, according to the local zoning law. For a villa business, you can opt for either an IMB Pondok Wisata or IMB Kost [translated: 1) Holiday home and 2) Rented rooms, respectively]
If you purchase a land with a property (on a commercial zone), by default it may have a residential type of IMB. The question is, is it necessary to go through the (often long and complicated) process of transforming the residential IMB into IMB Pondok Wisata?
To conduct business, it’s always safe to have the appropriate certification. However, if you can’t afford to wait until the right certificate comes through, you can choose to do what many have done before you: sublet your property for a yearly rental arrangement.
Make sure, at a minimum, you have a Hak Pakai or Hak Guna Bangunan certification so the government can expect you to pay your due tax from your investment income.
2. Owner’s willingness for subletting
If you are a foreigner (i.e. someone who does not have Indonesian citizenship), you are not entitled to a freehold (Hak Milik) certification. This means, your land and property is by default still owned by an Indonesian who simply rents out his or her asset to you.
There is a chance that the owner will not allow you to sublet without proper permissions (IMB), even if the property has been sold with a Hak Pakai or Hak Guna Bangunan certification. Therefore, the importance of an IMB cannot be emphasized enough.
3. Additional requirements for villa construction
If you have only purchased land and wish to construct a villa, be aware of the basic parameters. In general, the requirements for a homestay in Bali are as follows:
- Maximum 2 floors (ground floor and upper floor)
- Maximum room size: 32 m2
- Minimum building coverage ratio: 50%
- Have at minimum the following facility: bathroom, kitchen, common room, parking space.
The requirements above distinguish your property from hotels, which require a different permit, and a land title of Hak Guna Bangunan. Follow through the requirements, and you may operate with IMB Pondok Wisata and a land title of Hak Pakai.
Please bear in mind that the legal procedure is deep and complex, and simply reading this article will never be enough to achieve your investment goals. Therefore, it’s advisable to contact Bali Coconut Living and ask about 1) the default certificates of the property you have chosen to purchase and 2) how to legally operate a long-term villa business.