‘Freehold’ and ‘leasehold’ are simple words that cover very different realities in Bali. Before comparing villas, it helps to understand what you can really own, for how long and under what conditions. Here are the key points for asking the right questions.
Freehold, leasehold: two words for distinct rights
In France, the word ‘freehold’ suggests full ownership. In Bali, the situation is different. The full ownership title, the Hak Milik, is in principle reserved for Indonesian citizens. A foreign national cannot hold it directly. You should therefore set aside the idea of buying land ‘in your own name’ as you would in France. A ‘leasehold’, by contrast, is a lease or right-of-use contract for a defined period. You have the use of the property during that period, in accordance with the rights set out in the contract. It is a right limited in time, not perpetual ownership. Between these two extremes lie other regulated routes, and the rights they confer are not equivalent. A listing that uses the word ‘ownership’ does not tell you which title is actually involved. That is why the starting point is never the sales vocabulary, but the registered document and its remaining term.
The leasehold: what lies behind a lease
A leasehold can be a suitable solution, provided you read all its terms. The first check concerns the owner of the land and the underlying title on which the lease is based. A lease built on a weak title does not offer the same security as a lease backed by a clear title. Next come the rights attached to the contract: can you build, renovate, sublet, assign your lease to a future buyer? What happens at the end of the agreed term? A renewal may be presented to you as a given. Yet it must be analysed separately from the right you hold today. An announced renewal is not a right already acquired: it depends on future conditions and on the framework applicable at the time. As a matter of principle, we rule out the use of a nominee intended to circumvent the restrictions. This practice exposes you to serious risks and does not create a solid right. A clear right, even a limited one, is preferable to a fragile arrangement presented as ownership.
The Hak Pakai: a right of use subject to conditions
The Hak Pakai is a regulated right of use. It differs both from a simple lease and from the Hak Milik. For a foreigner, access to a home through this route depends on several factors: your immigration documents, the nature of the property and the regulatory limits that may apply to the price, the floor area, the number of properties and the authorised use. This right is not open to everyone in every situation. A notary or local lawyer must confirm your precise eligibility and check the title actually registered. The word ‘ownership’ in a listing does not mean perpetual ownership of the land, nor that holiday letting would be permitted. The rules in this area evolve. What was possible at one time may change. Second-hand information is no substitute for an up-to-date check of your specific case by an independent professional based locally.
The PT PMA and the HGB right: a corporate logic
For a project that goes beyond strictly personal use, one often hears about the PT PMA. This is an Indonesian foreign investment company. An eligible company can hold a Hak Guna Bangunan, a right to build that is limited in time. This point deserves to be clearly understood: the company holds a right, but this does not turn its foreign partners into personal owners of the land. You hold shares in a company, not a land title in your own name. Setting up a PT PMA also involves a genuine business project. It assumes an eligible activity, investment and capital requirements, authorisations and ongoing operating obligations. The conditions depend on the framework applicable to the intended activity and must be validated before any incorporation. A PT PMA is not a mere administrative wrapper for a personal purchase. If you are offered shares rather than a direct property right, also ask for the accounts, the debts, the powers of the directors and the exit arrangements.
Living in or operating: the model changes everything
The right you hold only makes sense in relation to your actual use. A personal residence and an accommodation business are not prepared in the same way, and do not call for the same authorisations. For a project geared towards hosting travellers, the checklist grows longer: zoning, construction and use permits, business licences, insurance, management contract and the identity of the recipient of the revenue. Simply setting up a company does not replace these authorisations. Holding a right over a property does not mean that holiday letting is permitted there. As our guidance points out, it is better to start from your use before choosing an address. Describe an ordinary week on site. What you expect from the property guides the type of right to seek, and the questions to ask before comparing villas in Ubud or on the coast. A right ill-suited to the use can block an entire project.
Building the file in the right order
A common mistake is to discuss financing before identifying the title. The reverse order is safer: first the right, its duration and the authorised use, and only then how to finance it. On the financing side, several options can be compared: available deposit, documented family support or a loan accepted by a French bank. Do not assume that a local property loan will be available to a non-resident French buyer. A cautious scenario keeps a cash reserve and does not assume constant occupancy of the property. On the tax side, the analysis depends on what you actually receive and on your tax residence, in light of the France–Indonesia tax treaty. Keep all your contracts and supporting documents. We work with you on the complete budget, the payment schedule and the comparison between the rights on offer. The independent lawyer checks the rights and the contract, the tax adviser analyses the flows, and the bank decides on the financing. In our simulations, the remaining term of the right remains an essential point, and an uncertain renewal is never valued as if it were already acquired. To prepare for your first conversation, set out your objective, your areas of interest, your timeline and the points that currently prevent you from deciding.
To verify before committing
- Identify the underlying land title and its actual owner
- Confirm the duration of the right and distinguish a renewal from the right already acquired
- Clarify the authorised use: residence, letting or operation
- Examine building, subletting and transfer rights as well as end-of-term conditions
- Check your eligibility according to your immigration situation
- Have the contracts reviewed by an independent local lawyer or notary