Is it safe to own property in Indonesia?

The bars for expats in Bali are a treasure trove of secret knowledge and hidden wisdom.

This is where the mysterious oracles live. If you need an answer to any question, any question at all, all you have to do is go to the nearest expat bar and ask the noisiest guy very politely. But be careful, because he might take offense and sass you for no reason. But that's his right, as he's been on the island the longest and has the attitude and "love handles" to prove it.

The Oracle is bound to know:

• the best way to illegally extend your visa
• tax avoidance
• where to get the cheapest Bintang beer in town.
• the best way to buy a house

Wink, wink, wink. He doesn't actually have his own house himself because he says he prefers to rent, but he sure knows the law. All the laws! However, he thinks he does, but he really doesn't, so don't listen to his hilarious advice. Especially if you like to look around and live in constant paranoia or if you have more money than common sense.

Real estate in Bali: rules and restrictions for foreigners

There is no denying that real estate is big business in Bali. This island paradise seems to have it all: amazing architecture, beautiful beaches, picture postcard images of places. But it's risky, right? After all, everyone knows that laws don't make sense and they were made to be broken, right? Everyone says that foreigners have no legal framework, right?

No!If you listen to the oracle, you are preparing for your downfall. Therefore, it is better to find professionals who know the real story about real estate in Bali.

One of the first things to understand is the rules and restrictions regarding foreign ownership. Find out what they are. They may not be exactly the same as in your country, but we are not in your country; we are in Indonesia. And if you don't like the local rules, then don't play the game.

The oracle, however, will try to convince you that it's perfectly fine to break the rules, hide them, and lock them away in a closet. But that's not okay. In fact, it's really not okay. You wouldn't consider such a possibility at home, so why try to do it here? The invisibility cloak that the oracle speaks so highly of doesn't exist.

The Indonesian land law, known as Agrarian Law No. 5 of 1960, Article 16 (1), is based on the Indonesian constitution. It covers seven types of property structures, but only four of them are applicable for our purposes. These are Hak Milik or ownership rights, Hak Guna Bangunan or building rights, Hak Pakai or usage rights, and Hak Sewa or lease.

An Indonesian citizen has the right to use any of these structures. A foreigner does not.

In December 2015, the government updated the laws regarding property ownership, making it easier for foreigners to own land and real estate under usage rights and lease for residential properties, as well as construction rights for commercial properties. If someone tells you otherwise or suggests using a middleman to obtain Hak Milik ownership, don't turn around and walk away, run!

In all cases, you need to show that you are partially living, working, retired, or investing in Indonesia. A tourist visa is not suitable! And employment agreements are illegal!

Hak Pakai certificates are valid for 80 years with automatic extensions after 30 and 50 years. Hak Sewa certificates can be issued for a period ranging from one year up to the same maximum term as Hak Pakai, totaling 80 years.

If you find it inconvenient to use Hak Pakai or Hak Sewa, another option is to establish a foreign company (known as PMA). This company can legally hold a Hak Guna Bangunan certificate. You own the company, and the company owns the property. Simple, straightforward, and most importantly, legal!

Conclusion

Ultimately, if you follow the rules, playing in the real estate market in Bali is not only fun but also has the potential to be very profitable. If you don't like the rules because of a spoiled neo-colonial attitude that says you can do whatever you want because you are [insert nationality here], then go and find your oracle. He is waiting for you between glasses of Bintang. Let him confuse you in the maze of imaginary shortcuts. You can hold onto his cold, sticky hands and dive into his rather murky world of bilingual "I want to be king." If that scares you, then it should.

It's important to remember that there are professionals; people dedicated to making your stay in Bali as memorable as possible.So don't hesitate to call us for realistic advice. You won't regret it. The oracle might, but in the end, we really don't care what he thinks.

If you are interested in purchasing real estate in Indonesia, we recommend contacting Andy (the founder of Seven Stones Indonesia). He knows everything about this matter and will be happy to help. His email is: [email protected].

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