Leasehold, Hak Pakai or PT PMA: what a foreigner can own in Bali

In brief: Indonesian law reserves freehold title (Hak Milik) for Indonesian citizens. A foreigner cannot hold it, and any "nominee" workaround is void by statute. What a foreign buyer can hold is one of four well-established structures: a leasehold contract (Hak Sewa), a registered right-to-use title (Hak Pakai), strata title over an apartment (SHM Sarusun), or an Indonesian foreign-investment company (PT PMA) holding a right-to-build title (HGB). All four are legal, routine and widely used. The differences are in registration, duration, renewal mechanics and what you are allowed to do with the property.

Why can't foreigners own freehold in Bali?

The Basic Agrarian Law, Law No. 5 of 1960, states in Article 21 that only Indonesian citizens may hold Hak Milik, the perpetual freehold title. It has stood since 1960 and sits at the foundation of Indonesian land law.

The same law is why the "Indonesian nominee" arrangement, a local citizen holding freehold on your behalf, is not a grey area but a void one. Article 26(2) voids transfers designed to circumvent the citizenship rule, and Indonesian courts have applied it consistently: the land reverts, and the money paid through the arrangement is not protected. If a structure quietly routes to freehold through a local name, walk away.

What is a leasehold (Hak Sewa)?

A leasehold is a contract, not a title. Its statutory root is the Basic Agrarian Law itself, Articles 44 and 45: an Indonesian landowner grants you the right to use land and buildings for an agreed term. There is no statutory maximum. The widely marketed "twenty-five or thirty years plus extensions" is market practice, and the "ninety-nine-year lease" of the brochures is simply several contractual extension options stacked together.

One structural fact shapes everything else: a lease is not annotated on the land certificate. Someone inspecting the register in year fifteen sees the owner, not you. That is not a defect to be fixed; it is the nature of the instrument, and it is why the deed is the entire protection. A leasehold deed worth signing contains, at minimum:

• Extension terms fixed in the deed. A defined additional term on defined conditions, not a promise "to negotiate later" that hands all leverage to the landowner at the exact moment you have none.
• Succession language on both sides. The landowner's heirs must be bound to honour the lease and its extensions, and the deed should state what happens to your rights if you die during the term, because a lease passes to your heirs only as far as the contract says it does.
• A deed executed before an Indonesian Notaris. A notarial deed carries real evidentiary weight; a private bilingual PDF does not.
• Building and use rights spelled out, matching the zoning of the parcel.

Leasehold is the simplest entry route: no company, no residency requirement, the fewest moving parts. Its weakness is symmetrical. Your protection is exactly as strong as the paper.

How leasehold compares with the "freehold" offered in developer brochures is set out in leasehold vs freehold in Bali.

When does Hak Pakai make sense?

Hak Pakai, the Right to Use, puts a foreign individual's name on a land certificate registered at the National Land Agency (BPN). Under Government Regulation 18 of 2021 it runs up to eighty years in three stages: an initial thirty-year term, a twenty-year extension, then a thirty-year renewal.

The qualifying test under PP 18/2021 is holding valid Indonesian immigration documentation, a deliberate widening of the earlier rule that required a KITAS or KITAP residence permit. In practice a residence permit still makes the application materially simpler, and the detail sits in implementing regulations that are revised periodically, so confirm the current position with counsel before relying on it. Hak Pakai is designed for residential use; operating the property as a short-stay business requires a separate licensed structure.

Which visa or stay permit fits your plans is covered in our guide to Bali visas for property owners.

On death, a registered right can pass to heirs, but a foreign heir must themselves qualify to hold it, so succession planning belongs in the purchase conversation, not after it.

What about an apartment: strata title (SHM Sarusun)?

For units in a multi-storey development, Indonesian law provides a fourth route that buyers of villas never hear about: strata title, formally Hak Milik atas Satuan Rumah Susun. A qualifying foreigner can hold the certificate to an individual apartment in their own name, where the building stands on HGB or Hak Pakai land designated for it.

For a market like Nusa Dua, where much of the new premium stock is apartments and branded residences rather than standalone villas, this is often the most direct personal-title route available. The qualifying conditions mirror Hak Pakai (valid immigration documentation, designated developments), and the certificate is registered at BPN like any other title. Ask the developer which land right sits under the building and what the strata certificate will actually say; a serious one will answer in writing.

What does a PT PMA with HGB give you?

A PT PMA is an Indonesian limited-liability company with foreign ownership, the standard vehicle for foreign investment in the country. The company, not you personally, holds HGB, the Right to Build, which follows the same thirty-plus-twenty-plus-thirty structure of up to eighty years.

This is the structure built for doing things with property, not only holding it:

• The company can hold multiple properties under one legal and tax wrapper.
• With the correct business classification and licences, including the tourism licence required for short-stay operation, it can legally run the property as a business.
• Exit is cleaner at the professional end of the market: a buyer can acquire the property, or the company that holds it.
• No personal residency permit is required, because the company holds the title.

The obligations are real too: capital requirements set by the Ministry of Investment (BKPM), licensing through the OSS system, annual reporting, accounting and tax compliance. The thresholds are revised periodically (most recently under BKPM Regulation 5 of 2025), so treat any specific figure you read online as historical until counsel confirms it. A PT PMA is the right answer when the scale of what you are doing justifies an operating company, which is why serious developers use the same logic themselves. We build and contract through our own Indonesian entity, PT HQC: the same PT PMA reasoning, applied to the developer side. More on how we are structured.

So which structure should you choose?

There is no universally correct answer, but there is a correct order of questions:

• Will you live in Indonesia? A resident planning long personal use should have Hak Pakai on the table. For an apartment, ask about strata title first.
• Is this a business? If the property will operate commercially, the compliant path runs through a licensed company structure. Trying to run a business on a personal-use right is where owners meet regulators.
• Is this one property with a defined horizon? A rigorously drafted leasehold, with extension terms fixed, succession covered on both sides, and a notarial deed, remains the most direct route, provided you treat the contract as the asset it is.

Whatever the structure, the constant is verification: the underlying certificate at BPN, the zoning of the parcel, and the identity of the counterparty. We cover that process step by step in the due-diligence checklist.

This article is general information, not legal advice, and reflects the rules as commonly applied in mid-2026. Engage an independent Indonesian Notaris (and, for any registrable land right, a PPAT) together with legal counsel before committing to any structure.