Bali · Legal · 5 min
Bali: Long-Term Leases, Land Rights for Foreigners, and PT PMA
Foreigners in Bali cannot own land on a full ownership basis. There are three legal options: a long-term lease, Hak Pakai, or a PT PMA company. Since February 2026, using an Indonesian nominee to hold land has been expressly prohibited at the provincial level.
Key figures
Why not full ownership?
Full, perpetual ownership of land (Hak Milik) under the 1960 Basic Agrarian Law is available only to Indonesian citizens. Foreigners need to use other arrangements, each of which is for a fixed term.
Transactions in which land is registered in an Indonesian citizen's name while a foreigner controls it through loans, powers of attorney, and side agreements have long been common market practice. They now carry a direct legal risk, discussed below. The legal arrangements are clearer: the buyer receives a right for a set term, and the value of that right depends on its duration and conditions.
Three legal options
All three options are for a fixed term, so the property's value depends on the remaining term of the right and the terms for extending it.
Check exactly what is being purchased: a land lease with the right to build a villa, a completed villa on leased land, or an apartment in a development. In the latter two cases, it is important that the term of the right to the building matches the land lease term and does not expire earlier. If the term starts on the signing date and construction takes two years, part of the paid term will have elapsed before construction is complete.
- Long-term lease (Hak Sewa) - a long-term lease of land and a property for N years under an agreement with the owner. This is the most common option for villas.
- Hak Pakai - a right of use that can be registered to a foreigner who has the required immigration documents. Under PP 18/2021, on state land (HPL) it is available for up to 30 years, with a 20-year extension and a 30-year renewal (PP 18/2021). On private land, it is up to 30 years, after which only a new agreement with the owner is possible. 80 years is a maximum, not a guarantee: the extension and renewal require an application and a valid residence permit (KITAS/KITAP). Foreigners are subject to statutory restrictions on minimum price, land area, and the number of properties.
- PT PMA - an Indonesian company with foreign capital. It can hold a building use right (HGB), but this is a business structure with its own requirements.
PT PMA: what changed in 2025
BKPM Regulation 5/2025 reduced the minimum paid-up capital for a PT PMA to Rp2.5 billion, while retaining a minimum investment of more than Rp10 billion for each five-digit KBLI business code. For property development and accommodation businesses (short-term and long-term rentals), land and buildings now count toward this amount (Mori Hamada). A PT PMA may make sense if the villa is a genuine business with reporting obligations, not a way to circumvent the restriction on ownership.
The company has ongoing costs, including accounting, investment activity reports, taxes, and business licenses. For a single villa for personal use, this is usually excessive; for a portfolio of properties rented out short-term, it may be a workable structure.
Nominee arrangements are prohibited
On 24 February 2026, the Governor of Bali brought Perda No. 4/2026 into effect, prohibiting the transfer of control over land to a foreigner through a nominee holder ("pinjam nama"). Sanctions range from warnings and suspension of activities to revocation of permits, demolition of buildings, and fines; criminal liability is governed by general laws (NusaBali).
The law also targets intermediaries who arrange these schemes. If a seller suggests registering the land in a local resident's name "like everyone does," treat it as a signal to stop the transaction and choose a legal structure instead.
What to check in a land lease agreement
This article is for general information only and is not legal or tax advice. The terms should be reviewed for the specific property before a transaction.
- the owner's certificate (SHM) and whether the owner's name matches the lessor's; consent from the spouse and heirs;
- the land's zoning: whether residential use and tourist rentals are permitted;
- the building permit (PBG) for the villa or development;
- the lease term, and whether it starts on the signing date or when the property is handed over;
- the extension terms: the price or pricing formula and the notice deadlines, rather than simply "by mutual agreement";
- the right to assign and sublet without the owner's consent, which affects resale;
- notarization and what happens to the agreement if the land is sold or the owner dies;
- who pays the 10% tax on rental income and the local property tax.
What this means for buyers
- Foreigners can use a long-term lease, Hak Pakai, or a PT PMA - all are for fixed terms.
- Using an Indonesian nominee holder has been a direct risk of sanctions since 2026.
- The value of a long-term lease depends on its extension and assignment terms, which should be checked first.
- A PT PMA is appropriate for a business with genuine operations, not for a single villa.
Current as of . This is general information, not legal or tax advice.
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