Freehold in Bali is Hak Milik, a title with no expiry that only Indonesian citizens can hold. Leasehold is Hak Sewa, a contract that gives the use of land and building for an agreed number of years, usually 25 to 30. A foreigner weighing one against the other is comparing something they can buy with something they can’t.
The comparison that exists for a foreign buyer is between rights that all run out. There are three: a lease, a right of use (Hak Pakai) registered in the buyer’s name, and a right to build (HGB) held through a company. They differ in who can hold them, what they cost to acquire and where they are recorded. The third has been closed to new foreign-owned real estate companies in Bali since May 2026, which leaves most buyers with two.
Leasehold vs freehold in Bali: the difference
The table sets the two words from the listings beside the two rights a foreigner is more likely to end up holding. “State land” means land owned by the State and not by a private person.
| Freehold (Hak Milik) | Leasehold (Hak Sewa) | Hak Pakai (right of use) | HGB through a PT PMA | |
|---|---|---|---|---|
| Who can hold it | Indonesian citizens | Individuals and companies, foreigners included | Foreigners with Indonesian immigration documents | An Indonesian company, which can be foreign-owned |
| Term | No expiry | Set by the contract; 25 to 30 years is the market habit | On State land up to 30 years, then up to 20, then up to 30. On Hak Milik land up to 30 | Up to 30 + 20 + 30 on State land |
| Where it is recorded | Land certificate (SHM) at the land office, BPN | Notarial lease deed. No certificate is issued | Certificate in the holder’s name at BPN | Certificate in the company’s name at BPN |
| Can it be mortgaged | Yes | No | On State land, yes | Yes |
| Price floor | None | None | IDR 5 billion for a house in Bali (about USD 280,000) | Investment plan above IDR 10 billion (about USD 560,000) |
| Open to a new foreign buyer, October 2026 | No | Yes | Yes, above the price floor | New Bali companies blocked for real estate since May 2026 |
The “Term” row undoes the usual framing. Leasehold is described as temporary and everything else as permanent, yet every right a foreigner can hold has an end date. The “80 years” attached to Hak Pakai and HGB is the sum of three stages, each a maximum that the land office grants on application, and it applies on State land only. On land that stays someone’s Hak Milik, a Hak Pakai lasts up to 30 years and continues through a new deed that the landowner has to sign. That is the same clock as a lease, and the same person at the other end of it.
How each right works in law, and what a nominee arrangement does to a foreigner’s position, is covered in Can foreigners buy property in Bali?
What “freehold” means in a Bali listing
A villa listed as freehold stands on Hak Milik land. An Indonesian citizen can buy it and hold that title. A foreigner looking at the same listing has two lawful ways in and one unlawful one.
The first lawful way is Hak Pakai. A foreigner who meets the conditions can hold a house under a right of use, granted by deed over the owner’s Hak Milik land or registered over State land. The house has to cost at least IDR 5 billion, the plot is limited to 2,000 square metres, and one person or family may hold one. The second is a company that already holds the right licences: a foreign-owned company (PT PMA) licensed before the 2026 block keeps its licence, and a company can hold land as HGB. In both cases the right the foreigner ends up with has a term. The word “freehold” describes what the seller has, and it stops being true at the moment a foreigner buys.
The unlawful way is to put an Indonesian’s name on the certificate and hold side agreements. The Basic Agrarian Law voids that transfer and says money paid cannot be reclaimed, and a provincial regulation of February 2026 bans both the arrangement and acting as a go-between for one.
The freehold villas for sale in Bali on our site carry the seller’s title. A foreign buyer should read each one as a candidate for Hak Pakai and check the price against the IDR 5 billion floor first.
What each right costs to acquire
Leasehold is said to be the cheap one to close, and the tax table half supports that. A lease carries no acquisition duty. The title routes do.
| Cost | Leasehold | Hak Pakai or HGB | Who owes it by law |
|---|---|---|---|
| BPHTB, acquisition duty | Does not apply | Up to 5% of the price, or of the assessed value if higher, above a local allowance | Buyer |
| Final income tax on rent of land or buildings | 10% of the gross amount, including a lease paid upfront | Does not apply | Landowner |
| Final income tax on a transfer | Does not apply | 2.5% of the transfer value | Seller |
| VAT on a new build from a registered developer | 12% on 11/12 of the price, an effective 11%; the full 12% on luxury property | Charged by the seller | |
| Deed fee | Agreed with the notary before signing | Capped on a sliding scale, from 1% up to IDR 500 million down to 0.25% above IDR 2.5 billion | As agreed |
The second row decides the comparison. The 10% is the landowner’s income tax, and the law does not put it on the buyer. A contract can. A lease price quoted “net of tax” moves it across, and then the arithmetic turns over. On a property priced at IDR 5 billion, the duty on a title purchase is at most IDR 250 million, about USD 14,000. Ten percent of the same price is IDR 500 million, about USD 28,000. A lease where the buyer has agreed to carry the landowner’s tax costs more to close than the title purchase it was supposed to undercut.
Who bears the 10% is a negotiating point, and it belongs in the price discussion, before a deposit. What follows during ownership and at resale is set out in Bali property taxes for foreigners.
Holding costs separate the personal rights from the company one. A lease and a Hak Pakai have no structure to maintain. A PT PMA has paid-up capital of at least IDR 2.5 billion (about USD 140,000) that must stay in the company for twelve months, apart from what it spends on assets, construction and operations, and it files an investment report every quarter.
The price of a leasehold year
A lease buys time, so the number to compare between two leasehold villas is the price divided by the years left. The listing price alone hides it.
Take two villas with invented figures, chosen only to show the arithmetic. One is offered at IDR 4.5 billion with 25 years remaining, which is IDR 180 million a year. The other is offered at IDR 3.6 billion with 18 years remaining. It looks 20% cheaper and costs IDR 200 million a year, 11% more. The second buyer also reaches the extension conversation seven years sooner.
The same sum explains why a lease with a short remaining term is hard to resell. Its buyer is paying for fewer years and inheriting an extension that is not priced yet. Nothing in Indonesian law gives a lessee the right to extend or sets what an extension costs. An “extendable” lease is extendable on the terms written into the deed, and if the deed says “at a market rate to be agreed”, the price will be whatever the landowner asks when the time comes. A fixed figure, a formula or an independent appraisal named in the deed settles it now.
A lessee does have two protections by default. Under the Civil Code a lease survives the sale of the land (Article 1576, unless the lease says otherwise) and the death of either party (Article 1575). The rest of what happens at the far end is in what happens when a Bali lease expires.
We can’t give a reliable figure for how much more freehold land costs than leasehold in Bali, or for how fast a lease loses value as its term shortens. Ranges such as “30 to 50% cheaper” circulate without a source or a method, and we found no published dataset behind any of them. The per-year sum on a specific property is the dependable substitute. Ask for the remaining term and the extension clause on any of the leasehold villas for sale in Bali before comparing prices.
PT PMA and HGB in 2026: why the comparison changed
The company route used to be the answer to “how does a foreigner get closer to freehold”. A PT PMA is an Indonesian legal entity, so it can hold HGB, a registered right that can be mortgaged and sold. Two things have changed what that offers a newcomer.
The capital rules were rewritten by BKPM Regulation 5 of 2025, in force since 2 October 2025. Paid-up capital came down from IDR 10 billion to IDR 2.5 billion. The planned investment did not: a company must still commit more than IDR 10 billion per business line per location, and for accommodation and property operation the land and buildings count toward it. A company built around one villa worth IDR 5 billion does not meet that threshold. In November 2024 the investment ministry revoked the registrations of 267 foreign-owned companies in Bali, investment below the threshold among the stated reasons.
Then licensing itself closed. From May 2026 the national system, OSS, has refused new foreign-owned company applications in Bali for low-risk and medium-low-risk business codes. Emerhub, a corporate services firm, reported on 18 May that the real estate code, KBLI 68111, was among them. In July Governor Wayan Koster announced a list of 18 closed classifications that names real estate along with star and non-star hotels (ANTARA, 23 July 2026). Companies licensed earlier keep their licences.
For someone choosing a structure today, HGB through a new company has left the table for a villa purchase. It remains relevant to buyers who already own a compliant PT PMA, and to projects large enough to sit in a higher risk tier with more than IDR 10 billion behind them.
Leasehold or freehold: which fits which buyer
A non-resident buying one villa. Leasehold is the route open to you, and the work is in the deed: the remaining term, the extension clause, the right to assign and sublet, and who carries the 10%.
A resident buying a home above IDR 5 billion. Hak Pakai puts your name on a certificate at the land office, which a lease never does. Ask the notary which land the right will sit on. On State land the three stages apply. On Hak Milik land it runs up to 30 years and renews by the owner’s deed, and the practical gain over a well-drafted lease is the registration. Whether a stay permit is required is unsettled between the land ministry and immigration, so plan on holding one.
The owner of an existing PT PMA. The company keeps its licence and can hold HGB, within the activity it is licensed for.
A buyer married to an Indonesian citizen. The spouse can hold Hak Milik once a notarial agreement separates the couple’s property. Since a 2016 Constitutional Court decision that agreement can be signed during the marriage. The title is then the spouse’s alone, and a foreigner who later inherits it has one year to transfer it to a citizen.
None of these rights is a licence to let the property to tourists. That is a separate permit held by an operator, and it depends on zoning as much as on title.
Leasehold vs freehold in Bali: FAQ
Can a leasehold be converted to freehold?
Not by a foreigner. A lease is a contract with the owner of the land and has no path to Hak Milik. If the lessee later qualifies for Hak Pakai, that is a new transaction with the landowner under a separate deed, and the price floor applies to it.
What happens to the villa when the lease ends?
The land returns to its owner. The building follows whatever the deed says: it can pass to the landowner without payment, be bought at a valuation or be removed. Which of the three applies is settled at signing, and it is rarely the clause a buyer reads first.
Is leasehold or freehold better for a rental villa?
Rental income depends on the zoning of the plot and on whether a licensed operator can take the villa on, and the title changes neither. The Tourism Ministry set 1 August 2026 as the start of removing unlicensed properties from booking platforms, whatever right the villa is held under.
