Buying property in Bali as a foreigner comes with a few extra steps.
For foreigners looking to buy or invest in property in Bali, understanding how a leasehold (AKA: Hak Sewa) works is essential.
This simple guide covers everything you need to know for leasehold agreements in Bali.
What is a leasehold in Bali?
A leasehold in Bali is the most common way for foreigners to own property in Bali. A leasehold gives buyers full legal rights to use, renovate, rent out, and sell for an initial term of 25-30 years with the right to extend.
The leasehold duration is negotiated between the owner of the land and the owner of the property and while there is not a universal standard leasehold duration in Bali, most agreements begin with a term of 25-30 years with a clause that allows the property owner to extend at the end of that period.
The good news is that the vast majority are structured from day one to run much longer than that – most Bali leaseholds are built to reach a total of 50 to 99 years across two or three extension periods.
Those extension terms are written into your original contract, so by the time renewal comes around it is largely a straightforward process rather than starting from scratch.
What are the benefits of a leasehold in Bali?
The key benefit of a leasehold in Bali is that it’s the most straightforward legal route for foreigners to own property, with terms of 25-30 years and renewable extensions.
Indonesian law prohibits foreigners from owning property outright. The leasehold laws which came into effect back in 1996 allow foreigners to lease property for an initial period of 25 to 30 years, with the option to extend for a further 25 to 30 years. As mentioned above, the exact terms depend on what’s written into the contract and agreed upon by the land owner and the property owners.
The alternative for foreigners is a freehold arrangement, which typically requires the use of a nominee (an Indonesian citizen) who holds the title on your behalf. While freehold arrangements are a genuine alternative to leaseholds, they add an extra lawyer of legal complexity and risk that a straightforward leasehold avoids.
In most cases, the choice between leasehold and freehold is made for you by how the seller lists the property. Understanding both options helps you know what you’re buying into before negotiations begin.
What are your rights when extending a leasehold?
When extending a leasehold in Bali, your rights are largely what you negotiate in your initial agreement – which is why getting the original contract right matters more than most buyers realise.
Under a leasehold title in Bali, the terms of any extension are determined by negotiation between you and the landowner.
That means you have the right to push for a fixed extension rate based on the original purchase price, set payment timelines, and define the duration upfront.
Most landowners will agree to this if it is raised before signing. The mistake we see constantly is buyers treating the extension as a future problem. It is not – it’s something that needs to be addressed from the outset to protect future rights.
What happens at the end of a leasehold in Bali?
When a Bali leasehold ends, the property reverts to the landowner by default. That said, most people choose to extend, and doing so is straightforward if your contract is structured correctly from the start.
Once the original leasehold term expires ownership reverts to the owner of the land (freeholder).
At the end of your leasehold agreement you essentially have two options:
Option 1: Extend the lease
This is what most people do. It can be done formally through a legal process or informally by negotiating directly with the landowner. Renewal costs tend to rise as land values increase, so negotiating a renewal clause before signing your original lease is strongly recommended.
Option 2: Return or sell the property
If you decide not to extend the leasehold, you can negotiate a sale of the remaining lease years to another buyer and recover part of your investment.
Aren’t you just renting if you own a leasehold property?
No – if you own a leasehold property, you own the property and the rights to the land for the full term of the lease.
This is one of the most common questions (and biggest misconceptions) when it comes to buying a leasehold property in Bali.
The truth is that owning a leasehold in Bali is not renting – you have full legal rights to use, renovate, rent out, and sell the property for the duration of your lease.
A renter needs permission to make changes to the property. Conversely, when you own a leasehold property in Bali you can make changes to the interior or exterior of the property without asking anyone. The property is yours to use however you choose for the full lease term.
Most importantly for those looking to invest in property in Bali, you also have the right to generate income from a leasehold property. You can list it on Airbnb, sign long-term rental agreements with tenants, and keep every dollar of that income. A renter cannot do any of this.
If your plans change, you can sell the remaining lease years on the open market (often at a profit if the property has a strong rental track record and the area has grown in value). Conversely, a renter has no asset to sell.
The key difference between a leaseholder and a renter comes down to control and asset value. A renter has neither. A leaseholder has both.
Are leasehold agreement extensions regulated by law in Bali?
While there is no government-regulated process for extending a leasehold in Bali, the reality is that the vast majority of leasehold agreements are structured to run well beyond the initial term.
Most agreements are built to reach a total of 50 to 99 years across two or three extension periods. In most cases that means a 25-year initial lease followed by one or two further 25-year renewals.
The extension terms are agreed and written into the original contract, meaning by the time renewal comes around, the process is largely administrative rather than a fresh negotiation which reduces pushback and ensures leasehold owners are treated fairly.
The most common arrangement ties the renewal price to an average of three independent market valuations at the time of extension. This approach protects both parties and keeps the cost grounded in actual land values rather than the landowner’s discretion.
The most important thing to understand about leasehold extensions in Bali is that the extensions are not the uncertain, high-risk event they are sometimes made out to be. With a well-drafted contract in place, most leaseholders renew without issue. The risk comes from vague contracts, not from the process itself.