Leasehold status

What is the difference between the freehold and leasehold status in Bali

The primary difference between freehold and leasehold status when buying or investing in property in Bali lies in the nature of ownership and the duration of control over the land.

Freehold:

• In a freehold arrangement, the buyer owns the land and any structures on it outright.

• The ownership is indefinite and does not have a set expiration date.

• Freehold properties are typically passed down through generations and provide a sense of long-term stability.

• However, in Bali and Indonesia in general, freehold ownership is generally not available to foreign buyers for residential or commercial purposes. The law restricts foreign ownership of land, and as a result, freehold titles are usually held by Indonesian citizens.

Leasehold:

• In a leasehold arrangement, the buyer has the right to use and control the land for a specified period, often ranging from 25 to 30 years, with an option to renew.

• While the buyer doesn't own the land outright, they have exclusive rights to use it for the duration of the lease.

• Leasehold properties are a common alternative for foreign investors in Bali, offering a legal and secure way to have an extended presence without the ability to hold freehold title.

• The terms of the lease, including renewal options and potential rent increases, are typically negotiated and documented in a lease agreement.

For foreign investors in Bali, understanding these distinctions is crucial when considering property options:

• Ownership Duration:

  • Freehold offers indefinite ownership, providing long-term stability and the ability to pass the property to heirs.

  • Leasehold provides a set period of control, making it suitable for those looking for a shorter-term investment or residency.

• Legal Considerations:

  • Freehold is often restricted for foreigners in Bali, making leasehold or alternative ownership structures more viable options.

  • Leasehold provides a legal avenue for foreign investors to have a significant presence in the Bali property market.

• Flexibility and Control:

  • Freehold provides complete control over the property, enabling the owner to make decisions without lease constraints.

  • Leasehold offers a degree of flexibility during the lease period but is subject to the terms outlined in the lease agreement.

Ultimately, the choice between freehold and leasehold depends on the investor's goals, the intended duration of ownership, and adherence to Indonesian property regulations. Seeking advice from legal professionals familiar with Indonesian property laws is crucial to making informed decisions and ensuring a secure and compliant property transaction in Bali.