Bali Real Estate: Comparing Long-Term Rental and Leasehold Options
When it comes to owning property in Bali, two options stand out: renting and leasehold. Both options come with their own advantages and disadvantages, so it’s important to weigh them carefully before making a decision.
Many will argue that a Long-Term Rental property is the same as a Leasehold property and in some way they are until you sign the contracts. In Bali, there are many property titles that a foreigner can acquire, such as Freehold (Hak Milik), Leasehold (Hak Sewa), Right of Use (Hak Pakai), Right to Build (HGB) and Rental properties, be it daily/weekly/monthly or yearly. So when it comes to signing the contract for a Long-term Rental property, generally you will sign a ‘Rental Agreement’, which is not to be confused with a ‘Lease Agreement’, which is usually drawn up by a Notaris.
Bali Long Term Rental
Renting property in Bali is a popular choice for short-term stays or for those who are not ready to commit to a long-term investment. Renting allows for flexibility in terms of location, as well as the length of stay. It’s also a good option for those who are not ready to make a large financial commitment, as rental prices are typically lower than leasehold prices. However, renting comes with some limitations, such as the inability to make changes to the property or to sublet it.
A long-term rental is usually anywhere from 1- 5 years . The owner of the property rents out his premises, typically receiving up-front yearly rental payments. A ‘Rental Agreement’ is signed by both the Landlord and the Tenant, accompanied by the signature of a witness (generally the property agent).
A Long-Term Rental is often the best solution for families or groups who regularly travel to Bali if:
- You are planning an extended vacation
- You often travel on business trips
- You are a large family and intend to relocate to Bali
- You have a higher budget but no plans to purchase a villa at this time
Is a Long-Term Rental the right solution for your needs?
There are many advantages to a long-term villa rental, for example:
- No contract renewal or return required for the rental period
- In most cases, the owner will give a discount the longer you rent
- Many villas provide 24-Hour manager assistance
- Personal cook, maids and butler service, nanny daycare (if under management)
- Fully furnished, quality interiors and amenities
- Additional free services, such as wifi internet access & satellite tv
- Having the privacy of your own villa, without the maintenance costs
- If permitted by the owner, the tenant can sub-let
Under Indonesian Law non-Indonesian nationals are prohibited from acquiring freehold property (Hak Pakai). However, a foreigner can purchase a Bali villa or land with a long term lease contract, known as Leasehold (Hak Sewa).
When purchasing a Bali villa with a long term lease agreement, you have full control over the property for the agreed time period. A contract is drawn up by a Notary (Hak Asumsi) and signed between yourself and the Bali property owner.
This option gives you more security than using a nominee and offers protection in case the original land owner dies or decides to sell the property. However, once the lease period ends, you must renew it or the property reverts back to the original land owner (Hak Milik).
Many villas in Bali are available with a leasehold agreement for 25 years or more. This type of ownership is more affordable than a freehold property. It also allows you to pass on your property to your children once the agreement is over – although they will not be able to own the land itself beyond the agreed years.
Choosing The Right Option
When deciding between rental and leasehold options in Bali, it’s important to consider your long-term goals, budget, and desired level of control over the property. If you’re only planning on staying in Bali for a short period of time, renting may be the best option for you. However, if you’re looking to make a long-term investment and have more control over the property, leaseholding may be a better choice.
In conclusion, both rental and leasehold options have their own advantages and disadvantages when it comes to owning property in Bali. It’s important to weigh these carefully and consider your long-term goals before making a decision.