Buying a Villa in Bali as a Foreigner

by Jaswanth D

If you’re considering buying a villa in Bali as a foreigner, you should know a few things. First, the process is relatively straightforward. Second, you’ll need to be prepared to pay cash, as mortgages aren’t widely available. And third, expect to feel like a celebrity – Bali is one of the most popular tourist destinations in the world, and you’re likely to be treated like royalty!

Introduction: Why buy a villa in Bali?

Bali is one of the most beautiful places in the world. Its stunning beaches, lush rice terraces, and friendly people are known. So it’s no wonder that more and more people are interested in buying a villa in Bali.

There are many reasons to buy a villa in Bali. The climate is perfect, the scenery is gorgeous, and it’s a great place to retire or raise a family. Moreover, villas in Bali are relatively affordable, especially compared to prices in other popular expat destinations such as Thailand or Malaysia.

If you’re considering buying a villa in Bali, this guide will give you all the information you need to get started. We’ll cover the basics of the purchasing process, including what type of property you can buy, how to find a good deal, and what to expect during the closing process.

The process: what you need to know

If you’re thinking of buying a villa in Bali as a foreigner, there are a few things you need to know about the process.

The first thing to note is that, although Indonesia is a largely Muslim country, Bali is a majority Hindu. This means that the island has its own set of rules and regulations, which can be different from the rest of the country.

One of the most important things to know when buying property in Bali is that, as a foreigner, you are only allowed to purchase leasehold property. This means that you will not own the land on which the property is built but only have the right to use it for a certain period (usually 25-30 years).

You will also need to set up a local company to purchase your leasehold property. This company will be 100% foreign-owned and will require some initial investment. Once your company is set up, you can apply for your leasehold license.

Buying a villa in Bali as a foreigner can be complex, but with the help of an experienced lawyer or real estate agent, it can be relatively straightforward.

The benefits: what you gain from owning a villa

There are many benefits to owning a villa in Bali as a foreigner. Not only do you get to enjoy the beautiful weather and scenery, but you also get to experience the culture and way of life. In addition, owning a villa gives you a sense of security and privacy that you may not find in other holiday accommodation options. Here are some more specific benefits of owning a villa in Bali:

-You have a private space that is not shared with other guests or travellers. This means you can come and go as you please without worrying about disturbing others.

-A villa gives you more privacy and security than other types of accommodation, such as hotels or apartments. This is especially important if you are travelling with young children.

-Villas are often located in quieter, more peaceful areas than hotels or resorts, which can be beneficial if you are looking for a relaxing holiday.

-Owning a villa allows you to rent it out to other travellers when you are not using it. This can be a great way to offset the cost of ownership.

The costs: what you need to budget for

When looking at property in Bali, it’s important to remember that the price you see is not the price you will pay. Aside from the purchase price of the villa itself, many other costs must be considered, most of which are relatively easy to budget.

The first cost is stamp duty, a tax levied by the Indonesian government on foreign property purchases. The rate is 5% of the purchase price, so on a villa priced at $500,000, the stamp duty would be $20,000.

Another cost is the legal fee for a lawyer to handle the purchase process. This can vary depending on the lawyer you use but is typically around 1-2% of the purchase price. So, for our $500,000 villa, the legal fee would be $5,000-$10,000.

The third cost is the agent’s fee. Again, this can vary depending on who you use, but it is typically around 2,5-5% of the purchase price. So our agent’s fee for a $500,000 villa would be approximately $15,000.

The last major cost to consider is tax. When you buy a property in Indonesia, you are liable for a Property Acquisition Tax (PAT). This tax is 2% of the property’s cadastral value. For our $500,000 villa, this would be an additional $10,000.

In total, then, you can expect to pay around 10-15% of the purchase price on top of the advertised price for your villa in Bali.

The market: where to buy a villa

Whether you’re looking for a jungle hideaway or a modern beachfront property, there’s a villa for everyone in Bali. Now figure out where on the island to buy.

Bali’s real estate market is divided into four main areas: Ubud, Seminyak, Sanur and Canggu. Ubud is Bali’s cultural heart and is popular with artists, yogis, and nature lovers. Seminyak is Bali’s luxury hub, home to high-end resorts, designer boutiques, and upscale restaurants. Sanur is a quieter, more traditional area with a lovely beach and a laid-back vibe. Canggu is a laid-back surfing town that’s becoming increasingly popular with digital nomads and expats.

Each area has its unique character and vibe, so deciding which one you’re most drawn to before beginning your search for a villa is important. Once you have a general idea of where you want to buy, you can start narrowing down your options by price point, size, style, and amenities.

If you’re unsure where to start your search, we recommend working with a reputable real estate agent who knows the Bali market inside and out. They can help you find properties that match your specific criteria and budget.

The location: choosing the right area

When you start looking for a villa in Bali as a foreigner, you must take the time to find the right location. There are many things to consider, such as the type of neighbourhood you want to live in, the proximity to schools and other amenities, and the cost.

The island of Bali is relatively small, so you must choose an area that is convenient for you. For example, if you work in downtown Denpasar, finding a villa closer to that area makes sense. If you have children who go to school in Ubud, then you will need to be closer to that town.

Once you have decided on the general area where you would like to live, it is time to start looking at specific neighbourhoods. Again, there are many things to consider, such as the quality of schools in the area, the crime level, and the neighbourhood’s overall atmosphere.

Some popular areas for foreigners buying villas in Bali include Seminyak, Canggu, Oberoi, and Jimbaran. Each of these areas has its unique characteristics and offers different amenities. You must take the time to visit each one before making a decision.

Of course, the cost is always a consideration when purchasing the property. In general, villas in Bali are more expensive than in other parts of Indonesia but still relatively affordable compared to many other countries around the world. The price will depend on various factors such as location, size, and features.

Take your time and do your research so that you can find the perfect location for your needs.

The type: picking the perfect villa

It’s important to know exactly what type of villa you are looking for before you start your search. That way, you can narrow your options and focus on properties that fit your needs. Do you want a one-bedroom villa for a romantic getaway or a five-bedroom property to accommodate your extended family? Maybe you’re looking for a luxurious oceanfront estate or a more budget-friendly villa inland. Once you know what type of property you want, your search will be much easier.

Here are some things to consider when deciding on the type of villa you want:

-How many bedrooms do you need?

-Do you want an en-suite bathroom in each bedroom?

-Do you want a private pool?

-You Want a Villa with a View?

-Do You Want a Beachfront Villa?

-Do You Want a Villa with staff?

The team: who will help you buy a villa

When buying a villa in Bali as a foreigner, it’s important to have a good team to help you with the process. Some of the involved people are:

-A Bali property agent: Some people prefer to use a local agent, while others use an international agent. There are pros and cons to both. Make sure you interview a few different agents before making a decision.

-A lawyer: It’s important to have a lawyer who is familiar with the laws in Indonesia and can help you navigate the process.

-A financial advisor: If you’re not familiar with the currency in Indonesia, it’s a good idea to have someone who can help you understand the conversions and make sure you’re getting the best deal possible.

-A builder or contractor: If you’re planning on doing any renovations or construction on your villa, you’ll need to hire a builder or contractor. It’s important to get someone who is reputable and has experience working in Bali.

The paperwork: what you need to know

It’s no secret that Bali is a bit of a bureaucratic minefield. But don’t let that put you off. It’s possible for foreigners to buy property on the island, provided you go about it the right way. Here are some things you need to know about the paperwork involved in purchasing a villa in Bali as a foreigner.

The first thing to note is that, as a foreigner, you are not allowed to buy land in Bali. However, you are allowed to buy a building constructed on the land (i.e. a villa), and you will be the building owner. The land on which the villa sits will be leased to you by the Indonesian government for 25 years, with an option to extend for 25 years. There are various conditions attached to this lease, such as maintaining the property in good condition but provided you comply with these conditions, there should be no problems.

One of the most important things to do when buying a villa in Bali as a foreigner is to use a reputable lawyer specialising in property law. They will be able to help you navigate the paperwork and make sure that everything is on board. They will also be able to advise you on the best way to structure your purchase – for example, whether it would be better to set up a PT PMA (foreign-owned limited liability company) or buy through an Indonesian nominee.

Another thing to remember is that you must have proof of funds before purchasing a villa in Bali as a foreigner. This means providing bank statements or other documentation showing you have enough money to cover the purchase price and any associated costs (such as stamp duty and legal fees). You also need to show proof of income if your bank requires this. Again, your lawyer is able to advise you on the requirements.

Finally, don’t forget that you will need insurance for your villa – both building and contents insurance. Your lawyer should be able to help you arrange this or put you in touch with someone who can.

Conclusion

Buying a villa in Bali as a foreigner is possible. You just need to be prepared to Jump through a few hoops!

 

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