Property in Bali for Foreigners: Hak Pakai, Leasehold, and the Risks of Nominee Arrangements

Limits on land ownership for foreigners

Foreign nationals generally cannot hold freehold title (hak milik) to land in Indonesia. The right most often used is hak pakai over particular land, which may be granted to qualifying foreigners, including those with a valid stay permit in Indonesia, under the applicable rules. The status and terms of any hak pakai should be verified directly against the certificate and the land office records.

A common alternative is a long-term lease (leasehold) over land or a building, with a term and renewal options set out in the agreement. This structure is widely used for villas, but its value and certainty depend on the wording of the contract and on the legal status of the land being leased.

Risks of nominee arrangements

Some parties offer nominee arrangements, under which property is bought in the name of an Indonesian citizen while a foreign party pays the costs and enjoys the benefits. Such arrangements carry high risk, because legal ownership rests with the named party, and private side agreements may be difficult to enforce in court.

Beyond disputes between the parties, nominee structures can create problems when the relationship ends, when heirs challenge the asset, or when the nominee dies or divorces. For this reason, ownership should be structured in a lawful and transparent way from the outset.

Steps before buying or leasing

Before any transaction, carry out due diligence on the certificate, land status, transfer history, spatial plan designation, and building permits. Confirm that the deed is prepared by an authorized official and that all payments are clearly recorded.

Consider also taxes and transaction costs, and any licensing requirements if the villa will be rented to guests. This article is general information, not legal advice; discuss your plans with a legal adviser who understands Indonesian land law.