The Risks Buyers Meet in Bali: Nominee Deals, “Freehold” Claims, Unlicensed Rentals and How to Check
The costliest mistakes foreign buyers make in Bali usually start with a sentence someone said to them. “You can own it freehold.” “The nominee is safe, we have a side agreement.” “It’s 80 years.” “You can put it on Airbnb from day one.” “The villa gets you a visa.” Every one of those is false or seriously incomplete under Indonesian law as it stood in October 2026, and every one can be checked before money moves.
The risks fall into a few groups: who legally owns the land, how long your right lasts, whether the building is lawful on that plot, whether it can be let, and what the purchase does and does not give you outside property law. Below we take each claim, set it against the law, and say what to ask for.
“Freehold for foreigners”
Freehold in Indonesia is Hak Milik, and only Indonesian citizens can hold it. A person who also holds another citizenship cannot hold it either (UUPA Art. 21). Any sale, gift, will or other act intended to transfer Hak Milik to a foreigner, directly or indirectly, is void by law, and the land falls to the State (Art. 26(2)).
So there is no lawful route for a foreign individual to hold freehold in Bali. When a listing aimed at foreigners says “freehold”, it is describing something else: a nominee structure, a company holding a right to build (HGB), or a Hak Pakai. The first question to ask is simple: whose name will be on the certificate, and what right will it show? Our ownership guide explains the structures that do work.
Nominee deals: why the side agreement does not protect you
A nominee deal puts Hak Milik in an Indonesian person’s name, with a side agreement saying the foreigner is the real owner. Indonesia does not recognise beneficial ownership, so those agreements are unenforceable and you should not rely on them. The registered Indonesian owner is the legal owner.
The courts have applied this. In case 872/Pdt.G/2020, the Denpasar District Court voided a name-borrowing agreement and upheld the Indonesian party’s sale of the land to a third party, leaving the foreigner with nothing.
Holding company shares through a nominee fails the same way. Investment Law 25/2007 Article 33 voids any agreement under which shares in a PT are held on behalf of someone else, and the investment authority can impose sanctions up to revoking the company’s licence.
Since February 2026 the risk is no longer only civil. Bali’s Perda 4/2026 expressly prohibits nominee land ownership transfers, and its sanctions also reach anyone acting as an intermediary or facilitator, or providing the means, for a foreigner to control land through a nominee. An agent who arranges one is now exposed too.
“It’s 80 years” and “30 + 30”: what the term really is
“80 years” comes from Hak Pakai on State land: up to 30 years, extendable by up to 20, then renewable for up to 30 more, with each step applied for and approved. Even then, there is no guarantee that extension and renewal will be granted. Most Bali land is privately held Hak Milik, and a Hak Pakai over it runs for up to 30 years, renewable only by a new deed that the owner agrees to. A Hak Pakai also ends if the holder stops meeting the requirements to hold it.
For leases, “30 + 30” or “up to 80 years” are contractual options added together, not a legal right. An extension exists only if the contract provides for it, ideally with a fixed price or price formula, and at expiry the land and buildings revert to the owner. The good news is that a lease survives the death of either party and a sale of the land, unless the lease says otherwise (Civil Code Arts. 1575 and 1576). Our leasehold guide covers the clauses that make an extension real.
Land, zoning and permits
“Any plot can take a villa”
Zoning decides. Land in an agricultural or green zone cannot lawfully take a villa. In September 2025 the governor announced a halt on new commercial building on productive land and in water-catchment areas, and Perda 4/2026 restricts converting farmland to commercial use. Buildings without permits can be demolished: from 21 July 2025, authorities began demolishing 48 structures at Bingin Beach built without permits on protected or state coastal land.
“The developer has permits, so it’s fine”
“Permits” covers several different documents, and each answers a different question. Check the building approval (PBG) before construction, the certificate of function (SLF) before use, the spatial-use conformity (KKPR), and the land certificate at the land office (BPN). For the land, also get a district-court clearance and avoid dealing through an intermediary when the person named on the certificate is not present.
Family land
Bali land is often family-held, so confirm that every required family consent has been obtained, check for inheritance disputes, and have a lawyer say which signatures are legally needed.
Off-plan delivery
For developer sales covered by the housing laws, a PPJB can be signed only after at least 20% of construction is complete, and the buyer has statutory refund rights if the developer misses its disclosed dates. For leasehold off-plan villas, which is most of the Bali market, your protection is only what the contract says. Our off-plan guide covers the payment milestones to insist on.
Unlicensed rentals and yield promises
“You can Airbnb it from day one” ignores that short-term letting is a licensed business. It needs a business identification number (NIB) and a classification code (KBLI) through the OSS system, and guests’ payments carry a regional accommodation tax of up to 10%. In 2026 the tourism ministry gave platforms a list of unlicensed listings, and 259 were delisted from nine online travel agents by 1 August 2026. An API link between government systems and those platforms is targeted for 1 June 2027, so that unlicensed accommodation cannot be marketed at all. Airbnb itself is not banned.
Two related claims also need correcting. The homestay category, Pondok Wisata, is by definition owner-occupied and owned by the local community, so it is not a route for a foreign owner. And rent is not taxed at 10% for everyone: the 10% final rate applies to resident landlords, while non-residents should plan on 20% withholding.
Then there are yields. Some marketing quotes fixed yields of 10 to 15%. No official body or index tracks Bali villa occupancy or yields, so a projected yield is the seller’s estimate. Treat it as one, and never as a promise you can enforce. Our rental rules guide covers what a lawful rental needs.
Visa, price floor and currency claims
“The villa gets you residency” is false. There is no visa for buying a leasehold villa. The Second Home Visa needs US$130,000 in a state-owned bank or the purchase of an apartment worth at least US$1,000,000, and the Golden Visa has no property route. See our visa guide.
“Foreigners can buy anything at any price” is also wrong for titled property. In Bali the foreign-buyer floors are IDR 5 billion for a landed house and IDR 2 billion for an apartment, with one plot per person or family and a maximum of 2,000 square metres of land. Confirm the current figure with the notary before you commit.
And “price in USD, pay in USD” runs into Bank Indonesia’s rule. PBI 17/3/PBI/2015 requires the rupiah for transactions in Indonesia and requires prices to be quoted in rupiah, with administrative fines for non-cash breaches. Dollar figures in marketing should be read as indications only.
The claims and the facts
| What you may be told | The facts |
|---|---|
| “Foreigners can buy freehold.” | False. Hak Milik is for Indonesian citizens only; transfers to foreigners are void. |
| “The nominee is safe with a side agreement.” | Nominee agreements are void and unenforceable, and banned in Bali since February 2026. |
| “Hak Pakai is 80 years.” | Only on State or HPL land, step by step and subject to approval. On private land, up to 30 years. |
| “The lease is 30 + 30.” | Only the first term is certain; extensions exist only as written in the contract. |
| “Any plot can take a villa.” | Zoning decides; farmland conversion is restricted; unpermitted buildings have been demolished. |
| “You can Airbnb it from day one.” | Letting is a licensed business; unlicensed listings are being delisted. |
| “Fixed yields of 10 to 15%.” | No index tracks Bali villa yields or occupancy; a projected yield is the seller’s estimate. |
| “Rent is taxed at 10% for everyone.” | 10% for residents; plan on 20% for non-residents. |
| “The villa gets you a visa.” | No. The only property route is an apartment of US$1,000,000 or more, via the Second Home Visa. |
| “Pay in dollars.” | Transactions in Indonesia must be in rupiah. |
How to check, in order
- Ask which right you are buying and whose name the certificate or deed will carry.
- Verify the certificate and the owner at BPN, get a district-court clearance, and have a lawyer identify every required signature.
- Refuse any structure that depends on a nominee or a side agreement about “real ownership”.
- Read the term as the law and the contract give it: certain years first, options second.
- Check the zone, the KKPR, the PBG and, for a finished building, the SLF.
- If you plan to let, find out who will hold the NIB and KBLI, and get tax advice on your rate.
- Ignore yield promises, and check any visa claim with Immigration.
- Contract and pay in rupiah, against milestones you can verify.
The costs that come with a purchase are in our tax and cost guide, and the zoning rules in zoning in Bali. You can browse our Bali listings, and our Indonesia page explains how we work.
