10 Items to Check Before Buying Property in Bali

Despite Bali’s shocking spike in property prices, the market doesn’t go down soon. This is why many investors are still eyeing the lucrative real estate market in Bali. Continue reading this article to find the ten items before buying a property in Bali.

Check These 10 Items Before Buying Property in Bali

Investing in Bali’s real estate market presents incredible opportunities, but the process can be complicated, especially for foreigners. With unique rules about land ownership and increasing property prices, prospective buyers must navigate these challenges carefully.

Here are ten key things to verify when buying a villa in Bali, ensuring a secure and worthwhile investment.

1. Understanding Land Ownership Rules

Bali’s laws around land ownership for foreigners can be intricate. Foreign investors cannot directly own freehold property but gain rights through leasehold agreements or establishing a local company (PT PMA).

It’s essential to seek expert advice to avoid legal complications. Common options like nominee arrangements may seem convenient but must be legally sound to prevent future disputes.

Foreigners interested in buying property in Bali should fully understand the distinction between leasehold and freehold rights, making informed decisions that align with Indonesian law.

2. Verifying Zoning Regulations

Zoning regulations are important in determining how a property can be used. Bali has strict zoning laws, especially for foreigners who want to buy property for residential or rental purposes.

It’s crucial to ensure the land is in a designated residential or commercial zone, as certain areas, like the Green Belt, restrict development. Foreign buyers exploring buying a villa in Bali should consult legal experts to confirm the land’s zoning category and secure proper permits.

3. Inspecting the Property and Infrastructure

Before finalizing any purchase, a thorough inspection of the property is vital. This includes assessing the construction quality, drainage systems, and overall infrastructure. Bali’s tropical climate can lead to challenges like dampness, pest infestations, or foundation instability, which should be identified early.

Collaborate with professionals to evaluate the property’s readiness, ensuring it aligns with your expectations. Accessibility is another key aspect; many properties in Bali are tucked away on narrow roads that might not be suitable for vehicles, which could deter potential renters.

4. Analyzing Location and Accessibility

Location is among the most critical factors when buying property in Bali for foreigners. Whether buying an apartment in Bali for personal use or a villa for rental purposes, proximity to beaches, markets, and cultural attractions significantly impacts the property’s value.

Tourists and investors highly seek areas like Seminyak, Ubud, and Canggu. Ensure the property is easily accessible via good roads, as poor infrastructure could reduce its appeal and functionality.

5. Ensuring Proper Documentation and Land Certificates

Legal documentation is a cornerstone of any property purchase in Bali. Always review the land certificate to confirm the property matches its description, including boundaries and location.

This is especially important for foreigners asking, “Can foreigners buy property in Indonesia?” since proper documentation is crucial for compliance. Land certificates like Hak Pakai (Right to Use) or Hak Guna Bangunan (Right to Build) must be verified to ensure lawful ownership or usage rights.

6. Validating Building Permits and Licenses

In Bali, all properties require an IMB (Building Permit), and villas must have a Pondok Wisata license for rental purposes. Checking these permits is non-negotiable, as operating without them can lead to hefty fines or even property closure.

Additionally, the PPn (construction tax) must be settled before purchase. Collaborating with a notary and legal advisor is crucial to navigating these requirements and meeting all obligations.

7. Understanding Financial Implications

The financial aspect of buying property in Bali extends beyond the sale price. Buyers must account for legal fees, taxes, and maintenance costs. Staying informed about the price trends for buying land in Bali helps assess whether the deal is worthwhile.

Legal fees for notaries, taxes like VAT, and ongoing expenses like property upkeep can add to the total cost. Clear financial planning is essential to prevent unexpected burdens after the purchase.

8. Working with Reputable Agents and Notaries

Reputable real estate agents and notaries are indispensable for foreigners buying property in Bali. These professionals ensure transparency in the transaction process and compliance with local laws.

Notaries, in particular, play a critical role in authenticating contracts and overseeing land certificate transfers. Engaging trusted professionals reduces the risk of fraud and simplifies the complex legal processes involved in property acquisition.

9. Considering Rental Potential

Evaluating a villa’s market appeal is essential for those buying it with rental income in mind. Villas with private pools, modern designs, and easy access to tourist hotspots tend to attract more guests.

Understanding local competition and obtaining the proper rental licenses ensures smoother operations. Given Bali’s popularity as a tourist destination, buying property in areas like Canggu or Ubud could yield high occupancy rates, making it a lucrative investment.

10. Consulting Local Experts on Market Trends

The Bali real estate market is dynamic, with domestic and international demand influencing prices. While property prices have spiked recently, the market remains attractive for long-term investments.

Consulting local market experts allows you to understand future development plans and assess whether buying land in Bali is a smart financial decision. Staying updated on trends helps you make informed choices and maximize returns on your investment.

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Buy Property in Bali with InCorp’s Assistant

Buying property in Bali requires a seller and a buyer to be present at different transaction phases. A written agreement with verified signatures is also necessary.

At InCorp Indonesia, our notary will draft the transaction agreement on behalf of both parties. In Indonesia, it is common for the notary to be regarded legally as an intermediary for both the seller and the buyer.

Other than that, we can also assist you with:

• Comprehensive Legal Consultation: Receive expert guidance from professionals experienced in Bali’s property laws, ensuring a secure and compliant transaction.
• Drafting Legal Agreements: Our notary will prepare all necessary transaction agreements with verified signatures, acting as an impartial intermediary for buyers and sellers.
• Extensive Bali Property Listings: Gain access to verified property listings tailored to your preferences and investment goals.

For further information, don’t hesitate to get in touch with one of our legal experts by filling out the form below.