Leasehold vs freehold in Bali: what you actually own and what it costs

True freehold in Indonesia, Hak Milik, belongs to citizens only (Basic Agrarian Law 5/1960, Article 21). When a Bali agent says a villa is freehold, the land title is Hak Milik held by an Indonesian. For you, that villa can become one of two things.

One is Hak Pakai, a right-to-use title recorded in your own name, which requires a stay permit and a house priced at Rp 5 bn or more. The other is HGB, a right to build that your own PT PMA holds for you. On state land either can stretch to 80 years, granted as 30, extended by 20 and renewed for 30 under PP 18/2021.

So the real choice isn't forever versus temporary. It's a contract for 25 to 30 years against a registered title that can last most of a century. Our Hak Pakai guide covers the title itself.

Leasehold has no price floor and no visa requirement. You pay for years of use, so the same villa costs less on a 25-year lease than as a titled property. In our catalog the median base term is 27 years, and the bulk of leases sit between 22 and 30 years (our count, September 2026).

A registered title costs more before you've even chosen the villa. For Hak Pakai the 2022 price decree sets a floor of Rp 5,000,000,000 on a Bali house and Rp 2,000,000,000 on an apartment. The company route has no floor on the property itself, yet the PT PMA must be capitalized with Rp 2.5 bn and then kept alive with an accountant and quarterly filings.

Source: Decree 1241/2022, PP 18/2021, BKPM 5/2025 and our catalog count

Here's a worked example. Take a villa that nets Rp 360,000,000 a year after management, upkeep and vacant nights. On a 25-year leasehold it costs Rp 4,000,000,000. Titled through Hak Pakai, a comparable villa costs Rp 5,500,000,000. Both prices are our illustration, not quotes.

On paper the leasehold returns 9% net against 6.5% for the titled villa, and that gap is what the brochures sell. But the lease is worth nothing in year 25, so Rp 160,000,000 of each year's income is really your purchase price coming back. Strip that out and the leasehold earns about 5% a year on the capital you still have in it.

The titled villa keeps its land right when the calculation ends. Its 6.5% is income, and the asset is still there to sell. Compare leaseholds on total income over the remaining term, not on the headline percentage.

Buyers of a used leasehold pay for the years that are left, not the ones that are gone. In the first decade a villa sells like any other. With ten years or less remaining, fewer buyers can make the numbers work, and the price has to carry that.

This is our reading of how sales of used leases go in practice, not a published index. It's also why the extension clause matters so much. A lease that can be extended at a known price sells on the combined term.

Source: How our clients' lease sales have gone since 2023

If your plan is to earn back the purchase price plus a few years of profit, leasehold is usually the stronger deal. You put in less and the yield is higher. The exit is simple too: you sell the years that remain. If the villa is for your family, or you expect to hold it past 15 years, the entry price matters less and a registered title starts to pay for itself.

On a lease, the tax sits with the landowner: 10% of the lease payment, final, under PP 34/2017. When the tenant is a company, it withholds that 10% before paying. Developers sometimes pass the cost on, so find out whether your price already includes it.

Transfers of a registered title carry two taxes. The buyer pays BPHTB, capped at 5% of the value above a regional allowance under Law 1/2022, and the seller pays a 2.5% final income tax on the sale price (PP 34/2016). You'll meet both again when you sell a Hak Pakai or HGB property.

The form of ownership is whatever the documents say, not what the listing says. We check these points on every property before a client pays a deposit, free of charge. When they're clean, our property listings show the lease term and our net yield model side by side, and the area pages show where the rental numbers hold up.

• The land title and its term in the BPN register, matched to the person signing
• The extension clause: a right to extend, a price formula and a notice deadline
• Zoning (RDTR) that allows housing and, if you'll rent, tourist accommodation
• The building approval (PBG) and, for a finished villa, the certificate of occupancy (SLF)
• No unpaid land and building tax (PBB) on the plot

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