Can You Own Land in Indonesia As a Foreigner? Exploring Your Options for Land Ownership

If you're looking to make Indonesia or Bali your home, then understanding how property ownership works here is a necessary step in your journey. Although Indonesian law restricts foreign ownership of freehold land, there are other options available. Let's explore the ways you can legally own land in Indonesia, so that you can make an informed decision about building your dream home or creating the right property for your business or investment needs.

Bali has many types of properties for different budgets. You can find beachfront villas, traditional homes, modern apartments, and commercial spaces, all amid beautiful landscapes and rich culture.

PT PMA and HGB: The Most Secure Option

Opening a PT PMA will allow you to obtain what is known as a HGB title (Hak Guna Bangunan or Right to Build). An HGB title grants the right to own buildings on land, and it secures you the rights to the strongest form of property ownership available to a foreigner in Indonesia. 

Key Benefits of HGB:

• Initial HGB terms run for 30 years, with the possibility to extend up to 80 years in total, which means you get longer term security over your property 

• There’s greater flexibility, as you can develop both residential and commercial properties

• Unlike personal arrangements, a PT PMA allows you to pass land ownership rights to family members by adding them as a shareholder 

• Can be converted back to Hak Milik (freehold ownership) under certain conditions if the potential buyer is an Indonesian citizen

• HGB is stronger than a leasehold because it allows the holder to legally own the building and use the land for a long term

• Issuance of HGB Certificate – PT PMA will obtain a land certificate proving your its right to use and build on the land

The PT PMA-HGB structure enables you to get as close to freehold ownership as is possible for a non-Indonesian. As you age, you can transfer ownership to your children through the company (as long as they are aged 18 or older), ensuring your family maintains control of the property. 

Lease Rights: Good For Personal Use 

There are other legal options besides opening a PT PMA, and one of these is securing lease (long-term rent) rights. Whilst this is a good option, and one that is much less complicated than opening a PT PMA, it will also mean that your property rights are somewhat more limited.

Personal Residential Use:

• The lease can be held in your name as an individual, although only for private residence purposes

• Much simpler structure than opening a PT PMA

Commercial Use:

• For commercial properties or land, including rentals or AirBnb, the lease still must be held by a PT PMA

• You must maintain compliance with immigration and tax laws

As you can see, if you plan to use your property or land for commercial purposes, then you need to do so by opening a PT PMA. If you don’t, it can lead to legal issues and problems with immigration, which is why it’s so important to structure your business and plans correctly from the start. 

Bali is also attractive to investors who want to purchase property for short-term rental as a villa or holiday home. The demand for short-term rentals like villas in tourist areas is often stable, especially during holiday seasons.

Right to Use: A Limited Option

Although Hak Pakai (the Right to Use) is technically a possible legal option, it does come with many restrictions:

• It's actually only available through a government invitation

• It's limited to residential properties only

• It's not viable for commercial properties

• It has a complex application process

With all of these limitations, Hak Pakai is probably not either a practical or appealing option for most foreigners who wish to own land or build a property in Bali. 

Finding An Indonesian Nominee: Something to Avoid

In Bali, there are many stories of this kind of arrangement - namely, finding an Indonesian person to put their name on the land title for you so that you can, in theory, keep it as freehold. Nevertheless, having an Indonesian nominee to hold a land title could be risky. 

That's because it is:

• Not technically legal

• Not actually recognized by Indonesian courts

• Wouldn’t protect you in the case of disputes 

Although many people who sell land may suggest this, it actually provides you with no legal protection and could end up in you practically purchasing land for someone else. As such, we would strongly advise against this. 

Due Diligence Steps

Before proceeding with any kind of land acquisition, it's of utmost importance that you follow these steps:

Get a Professional Land Survey:

• The survey should verify the exact boundaries of the land that you're purchasing

• It should confirm physical characteristics that match with the documentation

Review All Documents: 

• Validate the land certificates and check for ongoing disputes, as well as the tax payment status

Verify the Zone Your Land is in: 

• Make sure that you confirm that the land zoning matches with its intended use

• Check building regulations and development restrictions related to the zone the land is in

Conduct a Title Search: 

• Make a thorough investigation about ownership history to confirm the legal status of the land

• Check for any claims on the land

Due diligence is very important to conduct because each area has zones, and each zone has its own land use.

How to Know You’re Making the Right Choice

Buying land rights in Indonesia can be a confusing experience for many purchasers, especially with the different land ownership frameworks available. That’s why it’s always advisable to work with qualified legal and business professionals who have proven experience. Make sure that you familiarise yourself with all the options available to you, and make sure any limitations won’t jeopardise your future plans. When buying land, keep your long-term goals in mind so that you can make decisions that financially and practically serve you both now and in the future.  

If you do need more help or further insights into the current property market, then our team of business consultants would be more than happy to help you understand your options and make sure that your investments are sound. As one of Bali's premier business consulting and visa agents, we've helped numerous individuals and investors with their purchase of land or property in Bali. Feel free to reach out to us via WhatsApp or drop by our office to arrange a meeting with one of our friendly consultants.

Written by Team Bali Solve

04 March 2025