A leasehold in Bali ends on the date written in the deed, without notice from either side. From that day the right to use the land is back with its owner. Indonesian law gives the lessee no right to extend and no right to be paid for the villa. Whatever the lessee keeps beyond that date comes from the lease deed.
Most guides add that the building “reverts to the landowner by law”. The Civil Code says something narrower. On leaving, a lessee may take away what they built, at their own cost and without damaging the property. For a concrete villa with a pool that right is worth close to nothing, which is how the building ends up with the landowner in practice. The difference matters when a contract is being drafted, because the law will not fill the gap in the lessee’s favour.
In short
- A written lease for a fixed term ends automatically (Civil Code, Article 1570). Staying on does not renew it.
- Without an extension clause, the landowner is free to refuse. With one, the result depends on its wording.
- The lease survives the landowner’s death and a sale of the land (Articles 1575 and 1576).
- Selling or subletting the lease needs the landowner’s permission unless the deed already gives it (Article 1559).
- The 10% tax on rent is due again on an extension payment.
What happens on the expiry date
The Civil Code sets a default for most events in the life of a lease, and a deed can change nearly all of them. The table puts the two side by side.
| Event | Default under the Civil Code | What the deed can change |
|---|---|---|
| The term runs out | The lease ends by operation of law, no notice needed (Art. 1570) | An option to extend, with a notice window and a price mechanism |
| The land | Returned in the condition received, fair wear excepted (Arts. 1562 to 1564) | The handover condition and who pays for repairs |
| The villa the lessee built | The lessee may remove it at their own cost without damaging the property (Art. 1567). No payment is provided for | Transfer to the landowner free, purchase at a valuation, or removal |
| The lessee stays on | A new lease arises only if the landowner leaves them in possession, and it can be ended by notice (Arts. 1572 and 1573) | A holdover rent or a grace period for moving out |
| The landowner dies | The lease continues (Art. 1575) | A statement that heirs are bound by the extension option too |
| The land is sold | The lease continues unless the deed says a sale ends it (Art. 1576) | A right of first refusal; a statement that a buyer takes the land with the option |
| The lessee wants to sell or sublet | Not allowed without the landowner’s permission (Art. 1559) | Permission given in advance, in the deed |
Leasehold in Bali is a private contract and the land office issues no certificate for it, so this table is the whole of the lessee’s position. How leasehold compares with the registered rights is in leasehold vs freehold in Bali.
The villa at expiry: what the law says and what it leaves open
Indonesian land law separates land from what stands on it, so during the lease the building can belong to the lessee while the land belongs to someone else. A lessee needs the landowner’s consent to build in the first place. The Supreme Court held in 1974 (decision 1400 K/Sip/1974) that a lessee may not alter or build on leased property without it, which is why a lease for bare land should state the permission to build.
At the end, Article 1567 gives the lessee a right to remove what they made. It gives no right to be paid for it. We found no provision in the Civil Code’s chapter on leases, or in the two articles of the Basic Agrarian Law on Hak Sewa, that awards compensation for a building left behind.
Who owns a building that stays on the land when the deed says nothing is a question we could not find a settled answer to. The nearest published case went against the occupant: in decision 534 K/Pdt/2016, as summarised in a Tarumanagara University law journal, the Supreme Court ordered the heir of a tenant who had built on leased land to vacate without compensation. A buyer should assume that a silent deed means the building is lost, and write the outcome down.
The deed can choose any of three outcomes. The building passes to the landowner without payment, the landowner buys it at a valuation, or the lessee may remove it. A valuation clause needs the same care as an extension price: who values, by what method, and when the money is due.
Extension: a right only if the deed makes it one
Indonesian law does not regulate lease options. An option to extend exists because the parties agreed it, under the Civil Code’s rule that a valid contract binds those who made it, and where the deed has none the landowner may refuse without giving a reason.
A clause can also be weaker than it looks. In case 467/Pdt.G/2014 at the Denpasar District Court, described in a 2018 article in Udayana University’s notarial law journal, foreign lessees of a house in Sanur held a “first option” to extend a 20-year lease for ten more years at the same rent. A later amendment made the extension subject to the landowner’s approval. The landowner refused, and the court ordered the lessees to vacate. The journal’s authors criticised the ruling. It still shows what the words “subject to approval” do to an option, and how an amendment signed mid-term can undo the original deed.
Price is the second weak point. The Civil Code requires the object of a contract to be at least determinable (Article 1333), and rent is an element of a lease. An extension “at a price to be agreed” leaves that element open. We found no Indonesian court decision on whether such a clause can be enforced, and a buyer should not be the one to find out. From strongest to weakest, the usual wordings are:
- A fixed price, stated in rupiah in the deed.
- A formula, for example the original price adjusted by a published index.
- An independent appraisal, with the deed naming how the appraiser is chosen and stating that the result binds both sides.
- “Market rate” with no method for finding it.
- “By mutual agreement” or “subject to the lessor’s approval”, which is an invitation to negotiate.
A clause that holds together covers five points. The wording below is an illustration to take to a notary, written to show the parts, and it is no substitute for drafting for a specific deal.
The Lessee has the right to extend this lease for a further 25 years by written notice given no later than 24 months before the expiry date. The extension price is the value of the land’s use for that period as determined by an independent licensed appraiser appointed jointly by the parties, and the determination binds both. The parties will sign the extension deed within 90 days of the notice. This right binds the Lessor’s heirs and any person who acquires the land. If no extension is signed, the Lessor will pay the Lessee the depreciated replacement cost of the buildings as determined by the same appraiser.
The periods and the valuation basis are choices, and the numbers in the example are placeholders. One point is outside the drafter’s control. Whether an option that has not yet been exercised binds a buyer of the land is not settled by Article 1576, which protects the lease itself. Writing “binds any person who acquires the land” into the deed is the available precaution, and a right of first refusal on a sale is a second one.
What an extension costs on top of the price
An extension payment is rent, so the 10% final income tax on rent of land and buildings applies to it again. The tax is the landowner’s. Where the lessee is a private individual, the landowner pays and reports it personally, and the deed should say who bears the cost. VAT is added only if the landowner is a VAT-registered business, which becomes compulsory above IDR 4.8 billion of annual turnover.
The notary’s fee has a legal ceiling. Under the Notary Law the honorarium may not exceed 1% of the deed’s value where that value is above IDR 1 billion, with higher ceilings of 1.5% and 2.5% for smaller amounts. These are maximums, and the fee is agreed before signing.
We can’t tell you what an extension is likely to cost. We found no official land price series for Badung or Gianyar, and the extension estimates in circulation differ from each other by an order of magnitude. The one official series nearby is Bank Indonesia’s residential price survey, which put house prices in Denpasar 0.87% higher year on year in the first quarter of 2026. That measures new houses, and it says nothing reliable about a plot in Canggu in 2050. The uncertainty is the case for settling the price mechanism at signing. The taxes that apply through the rest of the ownership are in Bali property taxes for foreigners.
If the landowner dies or sells the land
Neither event ends the lease. On death, the heirs step into the landowner’s place: the Civil Code treats a person as contracting for their heirs as well as themselves, and heirs inherit obligations along with the land. The practical difficulty is that one counterparty may become several, and an extension deed needs all of them.
On a sale, the buyer takes the land with the lease on it, unless the deed itself says a sale ends the lease. Where the deed does say that, the Code still requires notice, and for land the notice is at least one year. A lessee reviewing a deed should look for that sentence, because it turns a 25-year lease into one that lasts until the land changes hands.
Staying past the date
Remaining in the villa after expiry does not extend the lease. Article 1573 creates a new lease only where the lessee stays and the landowner leaves them there, and that new lease follows the rules for unwritten ones, so it can be ended by notice. Once the landowner has asked the lessee to leave, Article 1572 rules out even that. Staying against the owner’s will is treated as an unlawful act, with a damages claim attached.
Selling the remaining years
A leaseholder can leave before the expiry date by selling the rest of the term to someone else. The Civil Code makes that harder than it sounds. Under Article 1559 a lessee may not assign or sublet without the landowner’s permission, and doing so without it is a ground for ending the lease with damages. The permission belongs in the original deed, in terms wide enough to cover a sale of the lease and short-term letting.
How much a lease is worth with a given number of years left is something we have no reliable data on. Thresholds of 15 and 20 years both circulate, without a published dataset behind either. Dividing the asking price by the years remaining gives a figure that can be compared across the leasehold villas for sale in Bali, and a seller whose deed carries a priced extension option is selling more than the remaining term.
Hak Pakai and HGB expire differently
The registered rights follow Government Regulation 18 of 2021, and their clock is administered by the land office. An extension has to be applied for before the term ends. A renewal can be applied for up to two years after it. Both are granted on conditions: the land is still used for its stated purpose, the holder still qualifies, and the use fits the spatial plan. On State land the sequence is up to 30 years, an extension of up to 20 and a renewal of up to 30.
Where a Hak Pakai or HGB sits on someone’s Hak Milik land, there is no extension stage. The right ends after up to 30 years and continues only by a new deed with the landowner, which brings the holder back to the same conversation a lessee has. The conditions for holding each right are in Can foreigners buy property in Bali?
If your lease is already running
A deed signed years ago can be amended by a new notarial deed whenever both sides agree. Five things are worth reading for first:
- Whether the extension is a right or a request. “The lessee may request” and “subject to approval” are requests.
- How the extension price is found, and whether the result is binding.
- Whether assignment and subletting are permitted in the deed.
- What happens to the building.
- Whether heirs and buyers of the land are named as bound, and whether a sale can end the lease.
The lessee’s position in that negotiation rests on the years left, since a long remaining term is something the landowner cannot take back and a buyer will pay for. It weakens as the date approaches, which argues for raising an addendum early.
Bali lease expiry: FAQ
Can a Bali lease run for 99 years, or for life?
The law sets no maximum term, so a long fixed term is a matter of agreement. A lease with no end date is another matter. The Civil Code defines a lease as running for “a certain time”, and Indonesian courts have struck down lifetime and indefinite land leases on that ground, including a 2016 Gianyar District Court case over a lifetime lease tied to a nominee arrangement.
Can the landowner end the lease early to use the land himself?
No, unless the deed allows it. Article 1579 bars a lessor from ending a lease by declaring a wish to use the property, and the Supreme Court confirmed the rule in decision 277 K/Pdt/1984.
Does a lease have to be a notarial deed?
Not to be valid. Indonesian law sets no form for a lease. A notarial deed is the standard in Bali because it is strong evidence of the terms and the date, which is what a lessee will rely on decades later against people who never signed it.
This article describes the rules as they stood on 6 October 2026 and is general information, not legal advice on a specific lease. The court decisions are cited from the published sources listed below and were not read in full.
