Freehold vs Leasehold in Bali: What Foreigners Need to Know
When it comes to buying property in Bali, one of the first and most important decisions you’ll face is whether to choose freehold or leasehold ownership. Understanding the difference is crucial—especially for foreign buyers navigating Indonesian property laws.
What is Freehold?
Freehold (known locally as Hak Milik) gives the owner full rights over the property with no time limit. However, this type of ownership is reserved exclusively for Indonesian citizens.
Can foreigners buy freehold property?
Not directly. Some foreign buyers enter into nominee agreements where an Indonesian citizen holds the title on their behalf. While still common, this approach carries legal risks and is not officially recognized by the government. Another method is to establish a PT PMA (foreign-owned company) which may own land under different titles like Hak Guna Bangunan (Right to Build).
What is Leasehold?
Leasehold (Hak Sewa) grants the right to use a property for a fixed period, typically 25 to 30 years, with possible extensions. Leasehold is entirely legal and accessible for foreigners and involves less legal complexity.
Leasehold agreements are commonly used for villas, commercial properties, and land, especially in popular areas like Canggu, Ubud, and Uluwatu. Many investors choose leasehold for holiday rentals or medium-term living, as it allows legal occupancy without land ownership.
Key Differences
| Aspect | Freehold | Leasehold |
|---|---|---|
| Ownership duration | Unlimited | 25–30 years (renewable) |
| Who can own it | Indonesian citizens only | Foreigners allowed |
| Legal complexity | High for foreigners | Low |
| Upfront cost | Generally higher | More affordable |
| Resale flexibility | Strong | Limited near end of lease |
| Risk for foreigners | High if nominee used | Low |
Which One Should You Choose?
- If you are Indonesian or married to an Indonesian, freehold might be available to you.
- If you are a foreigner, leasehold is the safest and most straightforward way to acquire property rights.
- If you plan to open a business or invest via a company, setting up a PT PMA may unlock other legal pathways.
Final Thoughts
Freehold and leasehold each offer advantages depending on your personal or investment goals. For most foreigners, leasehold provides a legal and secure way to live or invest in Bali—without the legal grey areas of nominee structures.
At Mata Property Bali, we specialize in helping buyers understand the options and make the right decision based on their needs. Feel free to reach out if you’d like to discuss your project with our team.
