Bali, the enchanting Island of the Gods, beckons with its allure of tropical beauty and cultural richness. For foreigners eyeing investments in Bali’s real estate, the complexities of land ownership can be overwhelming. Fortunately, there are two standout land titles tailored for foreigners: Hak Guna Bangunan (HGB) – Right to Build and Hak Sewa (HS) – Right to Lease.

Leasehold Title (Hak Sewa) – A Preferred Choice 

Foreign investors with a leasehold title can enter into long-term lease agreements for land in Bali. These leasehold agreements are typically 25-30 years long, with the option to extend for an additional 30 years. However, you can lease the land for up to 100 years or more because there are no legal restrictions on leasehold duration; it is entirely dependent on how long the landlord is willing to lease it for.

This option enables foreigners to reap the benefits of property ownership without actually owning the land, as well as rent out the property for profit through a management company. If you prefer, you can sublease the land or build on it.

Keep in mind, if you want to manage it yourself rather than using a management company, you must first establish the PT PMA Company.

As a result, leasehold ownership is the most common type of property ownership among foreigners in Indonesia, whether you want to build a villa or an apartment complex on it for business or personal purposes.

What makes a leasehold property an appealing choice?

• Lower initial costs
• Straightforward overseas purchase process with passport

Right to Build Titel (Hak Guna Bangunan – HGB)?

Hak Guna Bangunan (HGB) is your golden ticket to creating your vision on Balinese soil. This title grants foreigners the exclusive right to develop and construct structures on the land for an initial period of 30 years, with the possibility of extending it up to 80 years.

In general, the extension fee for HGB titles is commonly set at a percentage of the current market value of the land. This percentage can range anywhere from 2% to 5% or more, depending on the prevailing regulations and local practices.

However, keeping in mind purchasing land with HGB title requires establishing a PT PMA Company.

What are the benefits of HGB? 

HGB titles are transferable, meaning you can sell, buy, or even pass them down to your heirs, ensuring your legacy lives on in this tropical paradise. Just bear in mind that the transition from Hak Guna Bangunan to Hak Milik is an exclusive privilege for Indonesian nationals.

Transferring the ownership from HGB title to Hak Milik title simply means selling the land back to Indonesian citizens.

What is Hak Milik?

For those seeking complete ownership, Hak Milik – Right to Own is the ultimate prize. This title grants full and unrestricted ownership of both the land and any structures on it. Hak Milik, which is exclusively reserved for Indonesian citizens, represents the pinnacle of Bali property ownership.

What are the main differences between HGB  and Leasehold titles?

• With HGB, foreigners have exclusive ownership rights to the structures built on the land including the land. They have autonomy over the property and can sell, transfer, or inherit their rights
• Leasehold grants the right to use the land for a specified duration, but the ownership of the land remains with the lessor. Foreigners holding leasehold titles have limited ownership rights compared to HGB.

In conclusion, Hak Guna Bangunan (HGB) – Right to Build and Hak Sewa (HS) – Right to Lease emerge as the champions of Bali’s real estate arena for foreigners. These titles don’t just offer ownership; they promise a gateway to your dreams in this tropical paradise. With the right guidance and a dash of enthusiasm, investing in Bali’s property market becomes an exhilarating journey toward fulfillment and prosperity.

Starting a Bali investment journey is an exciting venture, and we’re here to make it easy for you. Baliest Real Estate provides expertise at every stage of the process, from understanding land titles to final property transfer. Allow us to guide you through the process of making your Bali investment dreams a reality.

Contact us today and make Bali your ultimate investment destination.