Guide
What you actually own when you buy in Bali
Leasehold, right of use, and company ownership, explained plainly for Australian investors and their advisers.
The short answer
You can invest in Bali property. You cannot hold Indonesian freehold in your own name. Freehold is called Hak Milik, and Article 21(1) of the Basic Agrarian Law of 1960 reserves it to Indonesian citizens, so a foreign investor holds one of three other rights instead: a lease of land and buildings (Hak Sewa), a registered right of use (Hak Pakai), or shares in an Indonesian company (a PT PMA) that holds the right to build (Hak Guna Bangunan). All three are ordinary parts of Indonesian land law, each has a term you can read before you commit, and each is created by a registered grant or by a deed drawn before an Indonesian notary.
That one sentence in Article 21(1) is why the paperwork on a Bali project looks unfamiliar to anyone whose experience of property is buying a house in Queensland, and it is why the word "ownership" in a brochure needs a follow-up question.
What I want you to get out of this page is enough to read a project's documents and say, in one sentence, what you would hold, for how long, and what happens when the term ends. Once you can say that sentence, everything after it is the ordinary work of assessing an investment, which is a conversation for you and an adviser who is licensed to have it with you.
The three structures a foreigner can hold
Which one a project uses depends on what is being built, where it sits, and whether it operates as a business. All three are recognised rights, and all three can be checked on paper before you decide anything.
| Structure | What it is | Term | What to check first |
|---|---|---|---|
| Lease of land and buildingsHak Sewa | A right to use land owned by another party for purposes connected with structures, in return for rent.2 It is created by contract and drawn as a deed before an Indonesian notary. The land certificate stays in the owner's name. | Set by the deed rather than by statute, so the initial period and any extension are whatever the parties agreed and wrote down. | That extension is granted on stated terms rather than left to later agreement, that you can assign the balance of the term, and that the deed binds the owner's heirs and successors. |
| Registered right of useHak Pakai | A right to use land, registered with a certificate issued in the holder's own name. The Agrarian Law lists foreign citizens domiciled in Indonesia among those eligible to hold it.3 | Thirty years, extendable by twenty and renewable for a further thirty under Government Regulation 18 of 2021, giving up to eighty years.4 | Your residence permit position, since eligibility turns on it, and that the certificate will issue in your name rather than someone else's. |
| Shares in an Indonesian companyPT PMA holding HGB | Hak Guna Bangunan is the right to construct and hold buildings on land that is not your own.5 It is available to companies incorporated under Indonesian law, which includes a foreign investment company, a PT PMA.6 You hold shares in that company. | Thirty years, extendable by twenty and renewable for a further thirty, on the same footing as a right of use.4 | Who controls the company and appoints its directors, what the shareholder agreement says about transfers and disagreements, and the annual cost of keeping the company compliant. |
Where the Australian side fits
Where an Australian trust or a self managed super fund is involved, it sits above one of these three rather than replacing it. The fund or trust holds the interest, the Indonesian structure underneath is unchanged, and the Australian rules then apply on top. My longer piece on SMSFs and overseas property works through what those rules ask for.
Why reputable projects do not use nominees
A nominee arrangement puts Indonesian freehold in a citizen's name, with a private bundle of documents saying the property is really yours. It is the single most useful thing to be able to recognise, and it takes one question to find.
The bundle usually looks thorough. A statement that you provided the funds, a loan agreement, a mortgage or charge over the land, a power of attorney to sell, and often a lease back to you as well. Presented together, they are meant to answer the obvious objection.
Indonesian law has already dealt with the point. Article 26(2) of the Agrarian Law provides that every sale, exchange, gift or bequest, and every other act intended directly or indirectly to transfer freehold to a foreigner, is nullified by law.7 Indonesian lawyers at RBP Asia set out how this has played through the courts: a nominee agreement fails Article 21(1) of the Agrarian Law and therefore lacks the lawful cause that Article 1320 of the Indonesian Civil Code requires for a valid contract, and the Supreme Court so held in Decision No. 3020 K/Pdt/2014.8 The documents intended to protect the foreign party are the evidence that the arrangement was designed to do what the statute forbids.
Set against that, the three structures above exist for exactly this purpose. Indonesia has provided lawful ways for foreign money to hold hospitality assets, they are used by substantial operators, and a developer working within them has no reason to reach for a nominee.
Ask: whose name is on the land certificate, and which of the three structures am I in?
A good answer names the structure, produces the certificate and the deed or the company documents, and is comfortable with your own lawyer reading them. It takes about a sentence.
An answer that involves a local friend, a partner's spouse, or shareholders described as passive is the point at which to stop and take independent Indonesian legal advice before any money moves.
Why the years remaining matter
Each of the three structures runs for a defined period. That is normal, it is not a defect, and it is manageable once you know how the clock works and have read what the documents promise about extending it.
A right with a fixed term behaves differently from a Queensland freehold. Every year that passes takes a year off the period you hold, so the interest you could pass to a buyer in year twenty is a shorter interest than the one you bought in year one, even where the building is immaculate and the location has improved. Investors and advisers who have worked with Australian leasehold or retirement village interests will recognise the shape of it.
A registered right of use and a right to build both run on the statutory pattern of thirty years, an extension of twenty and a renewal of thirty.4 A lease runs on whatever the deed says. Those three stages are not the same kind of promise. The initial term is the period you have actually bought. The extension is conditional, and yours only where the deed or the regulation provides for it. The renewal is a later application, made in its own right, under the rules then in force.
In each case the sensible approach is the same: find out how many years remain on this specific parcel today, read the extension provision yourself, and establish who decides, on what basis, and what the extension will cost.
What this means for anyone reporting a value
Where the interest is held inside a structure that has to report a value each year, and a self managed super fund is the common example, the shortening term is one of the things a valuation has to account for. Australian funds must value their assets at market value each year under regulation 8.02B of the superannuation regulations, and the Tax Office expects a valuation to rest on objective and supportable data.9 That is a practical reason to keep the lease documents, the certificate and the operator's reporting somewhere your accountant can reach them.
There are two lines worth asking for in writing: the remaining term on this parcel today, in years and months, and the clause or article number that deals with extension. Both come from documents that already exist, so a project can send them the same day, and between them they answer most of what this section is about.
Sources
- Law No. 5 of 1960 on Basic Regulations of Agrarian Principles (Indonesia), Article 21(1): only Indonesian citizens can have a hak milik. English translation, Flevin legal translation library. flevin.com
- Law No. 5 of 1960, Article 44(1), defining hak sewa as the right of an individual or corporate body to use land owned by another party for purposes related to structures, and Article 45, listing those eligible to hold it.
- Law No. 5 of 1960, Article 41(1), defining hak pakai, and Article 42, listing those eligible, including foreign citizens domiciled in Indonesia.
- ABNR Counsellors at Law, New Omnibus Law Regulation Makes Significant Changes to Indonesian Land Law Regime, on Government Regulation No. 18 of 2021: right to build and right of use each run 30 years, extendable by 20, renewable for 30, giving 80 years in total. abnrlaw.com
- Law No. 5 of 1960, Article 35(1): a hak guna bangunan is a right to construct and possess buildings on land which is not one's own, for a period of at most 30 years.
- Law No. 5 of 1960, Article 36(1): those eligible for a hak guna bangunan are Indonesian citizens and bodies corporate incorporated under Indonesian law and domiciled in Indonesia.
- Law No. 5 of 1960, Article 26(2): every sale, exchange, gift and bequest by will, and every other act intended directly or indirectly to transfer a hak milik to a foreigner, is nullified for the sake of law.
- R. Bayu Perdana, Shabrina Hanifa and Ali Mutthahari, RBP Asia, Nominee Agreement for Buying Property in Indonesia, Is it Legal?, citing Article 21(1) of Law No. 5 of 1960, Article 1320 of the Indonesian Civil Code, and Supreme Court Decision No. 3020 K/Pdt/2014. rbplaw.asia
- Superannuation Industry (Supervision) Regulations 1994 (Cth), regulation 8.02B, and Australian Taxation Office, Valuation guidelines for self-managed super funds. ato.gov.au
Law stated as at 30 July 2026. Sources accessed 29 July 2026. Indonesian and Australian requirements change, so verify the current position before acting.