Permits, zoning and visas. The legal landscape around buying a house in Bali

Shape Haus – Shaped by culture. Built with dedication.

1. Introduction

Bali has become more than a travel destination. It is a global magnet for digital nomads, wellness seekers and international property investors. In 2024 the island welcomed more than 6.3 million international visitors, returning to pre-pandemic levels. The momentum continued into 2025, with nearly 600,000 foreigners arriving in a single month. Australians remain the largest group, representing roughly a quarter of all arrivals.

That constant flow of visitors fuels demand for vacation villas, guesthouses and serviced apartments. For buyers, Bali offers not only a tropical lifestyle but also strong rental yields—often between 8 and 12 percent on short-stay operations, provided occupancy aligns with seasonal patterns.

But Bali is not a simple “buy and enjoy” market. Indonesian law still prohibits foreign individuals from owning land under Hak Milik (full freehold).

Does that mean foreigners should give up? Not at all. Several legal routes exist:

• Hak Pakai: a 30-year usage right for foreigners with valid residency, extendable twice.
  
  
• HGB via PT PMA: build and own through a foreign-owned Indonesian company.
  
  
• Leasehold (Hak Sewa): long-term private lease agreements, sometimes up to 80 years.
  
  

Each path comes with its own requirements: minimum transaction values, zoning rules (RTRW), permit obligations and visa alignment. Combined with new visa options like the Second-Home Visa and Golden Visa, buying property becomes a multidisciplinary project.

The key lesson is simple:

Work with a reliable notary (PPAT), an independent due-diligence advisor and a qualified legal specialist from day one. Regulations change frequently and interpretations differ by region. This guide offers a comprehensive overview but never replaces personal legal counsel.

In the chapters that follow, you’ll get a step-by-step blueprint—covering strategy, ownership structures, visas, due diligence, financing, operation and exit.

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2. Defining Your Goal and Strategy

Before you message an agent in Canggu, you need clarity.

Why are you buying? What purpose will the property serve?

Your motivation determines your legal structure, rental model, permits, timelines and risk level.

Four investor profiles

Lifestyle-first

Your paradise comes first. Location trumps return. You may rent occasionally, but not at the cost of serenity.

Hybrid user

Enjoy the winter months yourself and rent during high season. This requires disciplined property management and emotional flexibility.

Yield-driven investor

Everything revolves around occupancy, dynamic pricing and guest experience. With proper operations, 8–12 percent gross yield is realistic.

Developer or flipper

You build or renovate units on leased land and sell them within 18–36 months. Margins can be high, but timing and permits are unforgiving.

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3. Budgeting and Legal Thresholds

Determine your full budget, including mandatory requirements.

For a Hak Pakai title on a villa, you currently need a minimum property value of IDR 5 billion (roughly € 300,000).

For apartments: IDR 2 billion.

Operating through a PT PMA requires a minimum investment plan of IDR 10 billion and paid-in capital of at least IDR 2.5 billion.

A Second-Home Visa requires either IDR 2 billion in a local bank or ownership of a qualifying property.

Expect 9–12 percent in closing costs: transfer tax (BPHTB), notary/PPAT, agent fees and permits.

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4. Modelling Returns

A credible financial model starts with conservative assumptions.

Compare:

• Cap rate, your net rental yield
  
  
• IRR, essential for development or flips
  
  

Run stress tests:

What happens if ADR drops by 20 percent and interest rates jump by 10 percent?

These simulations look dull but save you from painful surprises when markets shift.

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5. Exit Scenarios

• Lease renewal: negotiate 5–10 years before expiration and set a clear indexation formula.
  
  
• Share sale: sell the shares of your PT PMA instead of the property to reduce tax.
  
  
• Hak Pakai resale: simple, provided the buyer meets minimum value rules.
  
  
• Refinance: Indonesian banks lend to KITAS holders with 35–40 percent down and rates around 10 percent.
  
  

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6. Reality Check Before Proceeding

Answer honestly:

• Do you know exactly what you want to achieve?
  
  
• Is your full budget (including a 10 percent buffer) available?
  
  
• Does your chosen ownership title match your goal?
  
  
• Does your model pass a pessimistic stress test?
  
  
• Is your exit strategy realistic?
  
  

If the answer is yes to all of these, you’re ready for due diligence. If not, recalibrate now.

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7. The Legal Landscape: Ownership Titles

Indonesian land law places strict boundaries around foreign ownership. The constitution reserves Hak Milik exclusively for Indonesian citizens.

Foreigners who attempt nominee structures take a legal gamble: if the relationship collapses, the courts will not protect their interest.

Four legal workarounds

Hak Pakai - Usage rights

The simplest official path for individuals.

Thirty years, extendable by 20 + 20 years.

Minimum values apply: IDR 5 billion for villas, IDR 2 billion for apartments.

Requires residency (KITAS or Second-Home Visa).

Ideal for personal use with light rental operations.

HGB via PT PMA - The business route

A foreign-owned company holds the title.

Same 30 + 20 + 30 structure as Hak Pakai but with full commercial freedom.

Minimum IDR 10 billion investment plan.

Annual reporting and audits required.

Strong for scaling and share-sale exits.

Hak Sewa - Leasehold

Private contract for 15 to 80 years.

Flexible, lower entry, suitable for rentals.

No state certificate; renewal risk must be managed contractually.

Strata Title (SHMSRS)

Foreigners can own apartments outright if the project sits on HGB land or in designated economic zones.

Emerging in Sanur, Jimbaran and SEZ areas.

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8. Regulatory Shifts and New Opportunities

In recent years, Indonesia has modernized its property and investment laws.

The Omnibus Law (UU Cipta Kerja) and Government Regulation 18/2021 clarified strata-title ownership and improved foreign participation.

Golden Visa

Two versions:

• 5-year: invest at least USD 350,000
• 10-year: USD 700,000 or PT PMA investment from USD 2.5 million
  
  

Benefits: long-term residency, fast-track entry and stronger banking access.

Second-Home Visa

Requires IDR 2 billion deposit or a qualifying Hak Pakai property.

Valid 5 or 10 years.

No work permit required.

PBG + SLF

The old IMB has been replaced by:

• PBG: building permit
  
  
• SLF: usability certificate post-construction
  
  

Digital, stricter and directly tied to zoning.

SEZ opportunities

Bali now hosts two Special Economic Zones, offering tax incentives and easier foreign ownership.

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9. Market Hotspots (2025)

Canggu & Berawa

Land price: IDR 3.4–4 million per m²

High ADR, competitive supply.

Uluwatu / Bingin / Nyang Nyang

Land: IDR 1.3–1.6 million per m²

Premium cliffside appeal, technical build considerations.

Ubud & Tegallalang

Land: ± IDR 3.4 million per m²

Wellness-driven demand; moisture control critical.

Sanur SEZ

Strata title possible; stable long-stay audience.

North Bali (Buleleng, Lovina)

Speculative; new airport planned; low entry price.

Location strategy = target audience + zoning + long-term vision.

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10. Zoning Due Diligence Checklist

1. Screenshot the RTRW map.
   
   
2. Request a written Recommendation Zonasi from BPN.
   
   
3. Obtain banjar approval.
   
   
4. Check water/drainage.
   
   
5. Add a contractual clause: incorrect zoning = full refund.
   
   

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11. Due Diligence: Your First Layer of Protection

A deal is only real once due diligence is complete.

Five layers to check

Legal

Verify the certificate at BPN.

Zoning

Confirm the permitted use and obtain banjar approval.

Fiscal & legal burdens

Check land tax, disputes, mortgages.

Physical

Boundaries, access, water quality, drainage, soil.

Contractual

Clear exit clauses and escrow protection.

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12. DD Timeline

• Day 0: LOI
  
  
• Day 1–7: escrow
  
  
• Day 8–25: certificates, zoning statements
  
  
• Day 26–30: surveys
  
  
• Day 30–35: go/no-go
  
  

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13. Buying Process — From LOI to Certificate

A structured, legally anchored process:

1. Orientation & negotiation
   
   
2. Letter of Intent
   
   
3. Escrow deposit (10 percent)
   
   
4. Due diligence (2–4 weeks)
   
   
5. Signing AJB / lease agreement
   
   
6. Registration at BPN
   
   
7. Key handover & utility activation
   
   

Total timeline: roughly 10–15 weeks, depending on holidays and regional workloads.

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14. Operating and Renting Out a Villa

Your villa is a hospitality business.

You need a valid licence before operating:

• PBG
  
  
• SLF
  
  
• Pondok Wisata (small-scale) or TDUP (hotel licence)
  
  

Risks and Reality

Bali offers beauty and potential, but only with strong risk management.

Legal

No nominee structures.

No construction in green zones.

Always secure PBG, SLF and rental licences.

Operational

A villa is a 24/7 business.

Backup staff, preventive maintenance and power solutions are essential.

Environmental

Seismic risk is real.

Flooding, moisture and drainage require proper engineering.

Community

The banjar affects daily operations.

Strong relationships create stability.

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Timeline & Ultimate Checklist

A complete 15-week roadmap:

• Week 0–2: strategy, budget, visa
  
  
• Week 3–4: viewings, LOI
  
  
• Week 5: escrow
  
  
• Week 5–8: due diligence
  
  
• Week 9: go/no-go
  
  
• Week 10: signing
  
  
• Week 10–14: BPN registration
  
  
• Week 15: keys, utilities, handover
  
  

Checklist includes: title verification, insurance, visa alignment, zoning proof, booking systems, banjar introduction, multi-currency setup.

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Conclusion: From Dream to Blueprint

By now you understand:

• how ownership works
  
  
• how visas align
  
  
• where you can legally build
  
  
• what you will pay
  
  
• how long each step takes
  
  
• how to avoid risks
  
  
• how to run the villa as a real business
  
  

Bali rewards disciplined romanticism: a warm vision combined with cool-headed structure.

Your next step?

A strategy call, a due-diligence plan or your first viewing trip.

Selamat berinvestasi - to investments that perform in both numbers and nights under the frangipani sky.

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