What Happens at the End of a Leasehold Agreement in Bali
Leasehold property is one of the most common and legal ways for foreigners to enjoy property rights in Bali. A leasehold (Hak Sewa) gives you the right to use and benefit from land or a villa for a fixed period—typically 25 to 30 years, sometimes longer.
But what happens when that period runs out? Can you renew the lease? Do you lose everything you’ve built? Here’s what really happens when a leasehold reaches its end.
Understanding Leasehold Basics
A leasehold in Indonesia is a binding contract between the landowner—usually an Indonesian citizen—and the lessee. It grants full usage rights for the agreed term but doesn’t transfer ownership of the land itself, compared to a freehold title.
Most leases are 25 to 30 years long, extendable if renewal terms are written in the contract, and transferable with the owner’s approval. What they all share is an expiration date. What happens next depends entirely on the terms you negotiated.
Scenario 1. The Lease Expires
If your contract has no extension clause, your lease simply ends when the term expires. You lose the right to occupy or rent the property, and any fixed assets revert to the landowner.
Under Indonesian law, anything permanently attached to the land becomes part of the land itself. Here’s how it usually breaks down:
What reverts to the landowner:
- The villa or any permanent building
- The swimming pool
- Landscaping, garden, and fixed outdoor structures
- Fences, gates, access roads built on the property
What you may remove or sell separately:
- Furniture and removable fittings
- Appliances and equipment
- Decorative or movable outdoor items (umbrellas, pergolas, lighting)
If the contract doesn’t specify otherwise, you must hand back the land as is. Any compensation or removal rights must be explicitly written in the agreement.
Scenario 2. You Negotiate an Extension
If your lease includes an option to renew, you can extend it for another period—commonly 20 to 30 years. The cost depends on what was agreed in your original contract.
If a fixed renewal price is written:
You simply follow the agreed formula, usually paid before or at the expiry of the current term.
If the renewal is based on “market price”:
The new price is determined by comparing current land values in the same area. This can be done through:
- A professional appraisal from a local valuer or agent
- A mutual comparison of recent lease transactions nearby
When to start negotiating:
It’s best to begin renewal discussions at least 12 to 18 months before your lease expires. Early negotiation gives both sides time to reach fair terms and avoid price pressure close to the deadline. The earliest the best to make sure to secure a long term leasehold.
Payment timing:
Renewal payments are typically due once the new agreement is signed and notarized. Never pay a renewal fee without a written, signed extension agreement.
Scenario 3. You Sell the Remaining Lease Term
If several years remain on your lease, you may transfer it to another buyer—provided the contract allows it and the owner agrees. The new buyer takes over the remaining years under the same conditions.
Here how to sell your leasehold property in Bali, Indonesia.
Scenerio 4. The Landowner Sells the Freehold
If the owner sells the land before your lease ends, your lease remains valid until its expiry date as long as it was properly notarized and registered. The new owner simply becomes your lessor.
How to Protect Yourself
Include clear extension terms and renewal pricing in your lease. Register the contract with BPN if it exceeds five years. Always use a bilingual (Indonesian–English) notarized agreement, avoid verbal deals, and work with a qualified real estate agents and notary.
Final Thoughts
Leasehold ownership in Bali offers flexibility and affordability—but only when structured correctly. The end of a lease can be a smooth renewal or an abrupt exit, depending on how your contract is written.
At Mata Property Bali, we ensure every lease is built on clarity, fairness, and future-proof planning. If you’re leasing, renewing, or buying, our team makes sure your investment is secure and compliant.
Written by Mata Property Bali.
