Leasehold property is a popular and legal option for foreigners in Bali, offering the right to use a villa or land for a fixed period—typically 25 or 30 years. But what happens when that period is about to end? Can you renew? Do you lose everything? This article breaks it down clearly.
Understanding Leasehold Basics
In Bali, a leasehold (Hak Sewa) agreement gives you the right to use the property for a specific period, without owning the land. It’s a contract between the property owner (usually an Indonesian citizen) and the lessee (you).
Most leaseholds are:
- 25 to 30 years long
- Extendable (if stated in the contract)
- Transferable (under certain conditions)
But all leaseholds have one thing in common: they come to an end.
So, What Happens at the End?
When your lease term ends, a few things can happen depending on your contract and your relationship with the landowner.
1. The Lease Ends, and You Walk Away
If there’s no extension clause in your agreement, you lose the right to occupy or rent the property. You must vacate, and any structures on the land (yes, even your villa) legally revert to the landowner.
2. You Negotiate a Lease Extension
If the owner agrees, you can renew the lease—usually for another 20 or 30 years. The cost is typically negotiated based on current market rates. This process must be written, signed, and ideally notarized to be valid.
Important: The right to renew must be stated in the original contract. If it isn’t, the landowner is under no obligation to extend.
3. You Sell the Remaining Time
If you still have several years left, you may be able to sell or transfer the lease to someone else. This depends on the terms of the agreement and the owner’s approval.
4. The Owner Sells the Freehold
If the freehold owner decides to sell the land before your lease ends, your lease agreement should remain valid. The new owner takes over as landlord. Again, it depends on how well the contract was written and registered.
What If You Built a Villa?
It’s common for foreigners to lease empty land, build a villa, and expect to enjoy it for the full lease term. But when the lease ends, ownership of the building typically reverts to the landowner—unless otherwise agreed.
Some contracts allow the lessee to remove the structure or negotiate compensation. But again, this depends entirely on what was signed.
How to Protect Yourself
- Always include clear extension terms in your lease
- Negotiate renewal rights and pricing in advance
- Register the lease at the Land Office if the duration is over 5 years
- Work with a lawyer or trusted notary
- Avoid handshake deals or verbal agreements
Final Thoughts
Leasehold in Bali offers flexibility, legality, and affordability—but only if managed correctly. The end of the lease can be a smooth renewal or an abrupt goodbye, depending on how the contract is written.
At Mata Property Bali, we ensure every lease is built on clarity, fairness, and future-proof planning. If you’re looking to lease a villa or extend an existing agreement, talk to our team first—we’re here to help you avoid surprises.
