Number 6

DETERMINING OF OWNERSHIP TITLE

Yes this is about legal things to have properties in Bali, so based of all things is to make this as first step to stand your right in Bali. This part I will not summarized because this is very important to get understand deeper.

Only Indonesian nationals may own land using a freehold title. Indonesian companies are not allowed to own freehold land.

Leasing from the Indonesian owner for an agreed period of time is easy to arrange, but once your lease term is up, the property - and any improvements you might have made to it - reverts to the owner. The term of lease is critical in terms of possessing a transferable asset that will appreciate with time and be attractive to others in terms of on-selling.

In addition, when you come to extend your lease (if it doesn’t contain fixed terms for extension) you may face a crippling rent increase unless the utmost care is taken in quantifying the extent of any rise when the initial contract is drafted.

In many very developed areas, such as the district of Seminyak, it may be very difficult to find a freehold title. Always remember that value is relative to the comparable market. In locations that offer many properties for sale in freehold, the market will view a leasehold as less desirable and this should be reflected in its value at purchase and definitely at its time of resale.

However, most purchasers prefer a method which not only offers security of occupation, but which also lets them benefit from the appreciating value of the property and the capital gains earned if and when the asset is sold on.

One of the most popular means of owning property in Bali for foreign individuals is the “Hak Pakai atas Tanah Hak Milik” structure. This is a structure specifically created by the Indonesian government for individual foreign buyers.

In essence, an Indonesian individual nominated by the buyer owns the freehold (’Hak Milik) title to the property - the right to own. Floating over the top of this title is Hak Pakai, which is issued in the foreigner’s name, and which is noted as an encumbrance of the Hak Milik title. An initial period of 25 years is granted, along with three pre-paid 25 year renewals, to a total of 100 years.

A foreign holder of a Hak Pakai, can sell, give, bequeath or otherwise dispose of the title as they wish.

As in all countries, a purchaser should seek independent legal advice and consult with professional counsel to determine what the best title is for their individual or company circumstances.

Reference: Elite Havens

Bookmark and Share

Related Investment Post