How to buy a property in Bali
When investing in property in Bali the top priority is to acquire a very thorough understanding of how real estate can be held buy a foreigner.
To own freehold land, you must be Indonesian. Foreigners are forbidden to own any property outright in Bali.
However, a series of foreign-investor friendly governors have ensured that attractive long leaseholds and right-of-use permits are in place to safeguard the island’s position as an investment haven. It is a road well trodden by investors, particularly Australians who are the island’s most common foreign investors.
An expatriate buying a property is allowed through a government issued right-of-use permit, which is a renewable document that typically lasts for 25 years.
The price of the permit varies depending on the size and location of the land, but the rule-of-thumb is that a permit costs 1 % of the purchase price. If the property is sold again to another foreigner before the permit expires, it is essentially a transfer of the permit – much like and Australian land title. Alternatively, a foreigner can buy a 50-year leasehold
Buying a right-of-use provides legal protection to the investor during the term of the lease, however, once the lease term has expired the agreement can be extended or the property reverts back to the local owner.
There are no known cases where a foreign investor has been diddled out of a holding when a permit expires.
Another way to secure your piece of paradise is through an Indonesian nominee, which means handing 100% ownership of your property, to an Indonesian national.
While this method sounds risky, it has long been the preferred method for many Australian property developers to secure land.
However, these millionaires usually possess a long list of contacts on the island and have huge wealth to help them through any potential legal wrangles, should they arise.
It is important to hire an experience notary to handle the transaction and the island has plenty of well regarded professionals.
Other important costs to keep in mind is the 10% transfer fee, which is equally shared by vendor and purchaser for right-of-use permits while for long-term leases, the seller pays the full 10%.
Another thing to watch out for is currency fluctuations. Many Australians have recently been stung by the fall in the Australian dollar, increasing an agreed sale price by ten of thousands of dollar.
