Guide · Bali · Updated October 2026
Leasehold in Bali: what the contract doesn't say
A leasehold does not buy land, it buys time. What it is worth depends on five clauses and a few checks made outside the contract, which the listing almost never mentions.
Antoine Sailly · Founder of Latitude
Eight years in property development in France, projects delivered in Bali and Lombok
- Reading
- 7 min
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- Sources
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Contents 7 sections · 7 min
The short answer
A leasehold is a long lease, often 25 to 30 years, signed with an Indonesian landowner. When it expires its value falls to zero, and the buildings usually revert to the landowner. Before signing, check five clauses: the extension, the right to assign, what happens to the buildings, the tax on the rent and the consent of everyone with a claim. Then check the land itself: title, zoning, permits, access.
The four ways to hold property in Bali
Freehold (Hak Milik) is reserved for Indonesians. A foreigner therefore chooses between three legal routes and one illegal route that is still offered.
| Route | For whom | Term | Key point |
|---|---|---|---|
| Leasehold (lease) | Any foreigner, no residence requirement | Usually 25 to 30 years, extensions negotiated | Simple and accessible, but it is a contract: it is only as solid as its clauses |
| Hak Pakai (right of use) | Resident foreigner (KITAS, KITAP) | 30 years, then extensions, up to 80 years in total | One property, for residential use, on eligible land |
| PT PMA + HGB (company and right to build) | Commercial or tourism project | 30 years, then extensions | Minimum paid-up capital of IDR 2.5 billion and an investment plan of IDR 10 billion per project |
| Nominee (local name-holder) | Avoid | — | Breaches the agrarian law, so void: legally, you own nothing |
Since 2026, short-term rental carries an extra constraint: a foreign individual cannot hold the tourism licence the platforms require in their own name. You need either a PT PMA, or a compliant local operator or owner. If your project relies on Airbnb or Booking, choose the structure before the land.
The real price: what each remaining year costs
Two leaseholds listed at the same price are not worth the same if one has 30 years left and the other 18. Always bring the price back to the number of years remaining, then compare that annual cost with the rent the villa can actually earn.
Lease B, the “cheaper” one, costs 39% more per year of use.
Two effects widen the gap. Below twenty or so years remaining, resale becomes markedly harder. And the price of an extension is usually set on the value of the land at the time you ask, not on the original price: waiting for the end of the lease means negotiating from weakness.
The five clauses that make a lease worth something
- The extension, with a price or a pricing formulaAn extension that is "negotiable" is worth nothing in law. Look for a written right to extend, with a fixed price or a formula (an indexed amount, for example), and a right of first refusal if the landowner wants to lease again.
- The right to sublet, assign and pass onWithout a right to sublet, there is no legal holiday letting. Without a right to assign, there is no resale without the landowner's consent. Check inheritance by your heirs as well.
- What happens to the buildings at expiryBy default, the villa reverts to the landowner, usually without compensation. If a buy-back or compensation is intended, it must be in writing.
- The tax on the rent, and the costsRenting out land carries a 10% final tax on the gross rent, owed by the lessor. The contract must say whether the price is net or gross of this tax and who pays it over, along with the land tax and the notary's fees.
- The consent of everyone with a claimA married landowner needs their spouse's consent. Inherited land requires the written consent of every heir. A lease signed by a single family member can be challenged by the others.
What to check outside the contract
A perfect lease on land you cannot build on is still a bad investment. These checks are made on documents and on site, not on the agent's word.
- The land title (BPN)The certificate is in the lessor's name, with no mortgage or dispute pending.
- The zoningThe spatial plan allows your use. An agricultural or protected zone rules out the villa, and a residential zone may rule out tourist rental.
- The moratoriumBali has frozen permits for projects that convert rice fields, and a moratorium is reported in several regencies in the north and east. Check the exact status of the plot.
- The permitsThe building permit (PBG) has been obtained or can be, and the certificate of fitness (SLF) is planned for handover.
- The accessThe road is public or registered as an easement. A track a neighbour tolerates is not access.
- Water, soil, villageA mains connection or a borehole that is reliable all year, a soil survey, and the contributions owed to the village community (banjar).
Buying an existing leasehold: the chain before the price
Many offers are assignments: you take over the lease of a foreigner who took it over themselves. The risk then moves to the chain of contracts. Rebuild each lease back to the original landowner, work out the real remaining term from the date of the first contract, and get the landowner's written consent to the assignment, with proof that all the rent has been paid.
Two French investors were taking over a lease whose chain and remaining term were unclear. The first step was to rebuild the history of the contracts before discussing the price, then to choose a holding structure suited to their budget rather than a PT PMA. The project was delivered for €125,000 in total; it runs at 85% occupancy, with a projected payback on capital of 5 to 6 years.
Read the full case →When leasehold is the right choice
Leasehold still makes sense for a rental project with a 10 to 15 year horizon: the capital should pay back well before expiry, and the residual value is only a bonus. It makes much less sense if you want an asset to pass on, or if the remaining lease drops below twenty years with no written extension.
Frequently asked questions
Can a foreigner buy freehold land in Bali?
No. Freehold is reserved for Indonesians. The legal routes are leasehold, Hak Pakai for a resident, and a PT PMA with a right to build.
Can a leasehold be resold?
Yes, if the contract expressly allows assignment. Otherwise you need the landowner's consent, which they can refuse or charge for.
What happens to the villa at the end of the lease?
Unless the contract says otherwise, land and buildings revert to the landowner, usually without compensation.
Who pays the tax on the rent?
The 10% final tax on the gross rent is owed by the lessor. The contract must state whether the price is net or gross of this tax.
Is an Indonesian nominee an option?
No. A nominee agreement that lets a foreigner hold land breaches the agrarian law and is considered void.
Free checklist
The 25-point checklist before you sign
Title, zoning, contract, structure, operation: the 25 checks I run on every file in Southeast Asia, on two pages. Free, sent by email.
A lease to check before you sign?
The Opportunity Review is a written go or no-go opinion on a specific plot or lease: title, clauses, zoning and costing. From €750.
Book a 30-minute callSources
- Emerhub, Property due diligence in Bali: usual lease terms, consent of spouse and heirs, access, zoning.
- Own Property Abroad, Hak Pakai in Indonesia: residence conditions and the 80-year cumulative term.
- ASEAN Briefing, PT PMA paid-up capital: IDR 2.5 billion paid-up capital, IDR 10 billion investment plan.
- Horwath HTL and C9 Hotelworks, Bali Hotel & Branded Residences 2026: short-term rental compliance and the tourism licence.
- PwC Indonesia, TaxFlash 2017-15: 10% final tax on renting out land and buildings.
- Novelty Journal, Nominee contract practice: nominee agreements void under article 26(2) of the agrarian law.
- Bali Villa Realty, How to renew a lease: types of extension clause and how they are priced.
- Jetsetter Guide, Bali halts new tourist builds: permit freeze on agricultural land.
This guide gives general information, current as of October 2026. It does not replace advice from an Indonesian notary or lawyer, whom Latitude coordinates on every file.