5 Common Mistakes Foreigners Make When Buying Property in Bali (And How to Avoid Them)

To help you navigate it, here are 5 of the most common mistakes foreigners make when buying property in Bali — and how you can avoid them.

Many foreigners, unaware of the risks, use an Indonesian citizen (often a friend, agent, or employee) to hold property under a ownership title on their behalf. While private agreements might give you some control, under Indonesian law, the nominee is the legal owner.

• The nominee can legally sell, transfer, or mortgage the property without your consent.

• Private agreements may not be enforceable in court.

• Obtaining the property through a lease agreement under your personal name; or

• Setting up a PT PMA and acquiring the property through Building Use Rights (HGB)

Not verifying land titles, zoning regulations, building permits (IMB/SLF), or ownership history is one of the fastest ways to land in trouble. Some properties are marketed for villa development but sit on greenbelt land where construction is prohibited.

Engage a reputable notary (PPAT) and consultant to:

• Check the land certificate type and ownership status

• Confirm zoning (residential, tourism, greenbelt, etc.)

• Verify building permits and licenses

Many foreigners think buying a villa means they can instantly rent it out. In reality, commercial rental activities require specific licenses under a PT PMA and additional permits.

• Set up a PT PMA company with the appropriate business classification (KBLI code)

• Apply for the necessary permits

• Pay applicable taxes

Indonesia has multiple land title types, each having its own rights and restrictions. Manybuyers get confused and sign deals without fully grasping what their title allows (or limits)them to do.

Before any transaction, understand the differences:

• Hak Milik (Ownership Title): Freehold, only for Indonesian citizens

• Hak Pakai (Right to Use): Right to use, for foreigners with valid stay permits

• HGB (Building Use Rights): Right to build, for companies (PT PMA)

Bali’s property market is enticing, but many foreigners buy impulsively without a clear longtermstrategy — especially regarding company maintenance costs, tax obligations, or exitplans.

• Factor in annual taxes, land and building maintenance costs

• Know the legal process for extending titles or selling the property

• Work with professionals who can assist with company management and propertycompliance

Buying property in Bali as a foreigner is 100% possible — but only if done legally and carefully. Avoid shortcuts and stay informed. By steering clear of these common mistakes, you’ll protect your investment and enjoy everything this island paradise has to offer.