What is Freehold? What You Need to Know Before Investing in Property in Bali!

Property investment in Bali is becoming increasingly popular, not just among locals, but also international investors. Bali, with its extraordinary appeal, promises great potential for profits. However, before you decide to buy property in Bali, there is one important thing you need to fully understand: freehold. What is freehold? Why is it so crucial to your property investment decisions?

For many, especially those new to the property world, the term “freehold” may sound unfamiliar. But this is a property ownership system that must be clearly understood if you want to invest in Bali. If you want to learn more, this article will explain what freehold is, why many investors prefer it, and how the purchasing process works. With the right understanding, you can make smarter investment decisions and maximize your potential returns. So make sure you read this article till the end to fully optimize your property investment in Bali!

What is Freehold?

Freehold is a type of property ownership where the owner is granted full rights to own both the land and the building on it, without any time limitations. This means that if you buy a property with a freehold status, you become the legitimate owner of the land forever. You are free to sell, transfer the rights, or even develop the property as you wish, without any time restrictions or limitations.

The main difference between freehold and leasehold (rental) is the duration of ownership. With freehold, you have lifetime ownership, meaning the property is yours indefinitely. Meanwhile, with leasehold, you are given rights to the property for a specific number of years, usually between 25 to 99 years. After the lease period ends, the ownership rights revert to the original landowner.

With freehold, you don’t have to worry about the expiration of ownership rights because you own it for life. This provides security and stability, especially if you want a property that can be passed down to your children or even used as a long-term source of income.

For this reason, many people, especially property investors, prefer to buy properties with freehold status, particularly in places like Bali with a highly attractive property market. With freehold, you can ensure that your investment will continue to bring benefits in the long run, without any unexpected restrictions or limitations.

Why Freehold is the Top Choice for Property Investment in Bali

Bali has always been an attractive destination for many, both for vacation and for investment. The Island of the Gods offers many property investment opportunities, and one of the main reasons why freehold is the top choice is because of the long-term security it offers. So, what makes freehold so appealing for property investment in Bali?

• Safe Long-Term Investment
  With freehold, you have ownership rights that last forever. This means that the property you buy will belong to you for life, and you don’t have to worry about the expiration of a lease or contract renewal. This provides long-term stability, which is crucial in property investment. In addition, properties with freehold status tend to increase in value over time, especially in popular locations in Bali like Seminyak, Canggu, or Ubud, which continue to grow and attract tourists and expatriates. By owning property in these strategic locations, you can take advantage of the continuous rise in property prices. Freehold properties also support stable communities and benefit residents by providing a secure environment for living and investment.
• Full Control Over Your Property
  With freehold ownership, you have full control over the property. This means you can plan and manage the property according to your needs and investment goals. Want to renovate the building to increase its value? You can. Want to sell or rent the property for passive income? You can do that too. There are no restrictions limiting how you use or develop the property, giving you the freedom to make the best decisions for your investment. Freehold ownership can also facilitate commerce or business activities, allowing owners to engage in commercial ventures without restrictions.
• No Time Limitations
  Unlike leasehold, which gives you ownership rights for a limited period (usually 25 to 99 years), freehold allows you to own the property permanently. With no expiration or time limitations, you can enjoy the benefits of the property without worrying about the lease running out. This is highly valuable for investors who want to develop their property long-term or even pass it on to future generations.

Read more: Property Agents in Bali: The Right Solution to Find Your Dream Home and Villa in Bali

The Process of Purchasing Freehold Property in Bali: A Guide for Investors

Buying freehold property in Bali is not a process you can take lightly. Apart from the different regulations compared to other countries, there are several things you need to understand to ensure your property investment goes smoothly and is legally valid. It is crucial to be aware of the relevant acts and the legislature that govern property ownership in Bali, as these legal frameworks determine the rights and obligations of property owners. Before moving forward, here are a few important things you should know about the freehold property purchasing process in Bali:

1. Understand the Property Ownership Rules in Bali

Generally, foreign nationals (WNA) are not allowed to own freehold land in Bali. However, don’t worry, as there are solutions to overcome this limitation, although they come with risks and procedures that need careful consideration.

• Using a Local Nominee
  One way foreign investors often choose is by using a local nominee, meaning asking an Indonesian citizen to hold the property on their behalf. While this may seem like a shortcut, it carries legal risks since its legality can be questioned. It’s important to have a trustworthy relationship and fully understand the potential issues that may arise in the future.
• Establishing a PT PMA (Foreign Investment Company)
  A safer and legally sound alternative is to establish a PT PMA, a company that allows foreign investors to legally own property in Indonesia. This process is more complex and requires additional costs, but it provides clear and guaranteed ownership of property. If you are serious about long-term investment in Bali, this is a more stable and secure option.

2. Work with Trusted Real Estate Agents and Lawyers

The legal process in Indonesia can be quite complicated, especially if you’re unfamiliar with local regulations. Therefore, it’s highly recommended to work with experienced real estate agents and property lawyers who are familiar with the rules in Bali. They will guide you throughout the purchasing process, ensuring that all documents and transactions are carried out properly and legally.

A reliable real estate agent will also help you find properties that match your budget and investment goals, while a lawyer will ensure that your rights are protected and no legal issues arise after the transaction.

3. Documents Needed

When purchasing freehold property in Bali, there are several important documents you need to prepare to ensure a smooth and legal transaction:

• Land Certificate (SHM – Sertifikat Hak Milik)
  This is the primary document proving legitimate ownership of the land and property you’re buying. Make sure the land certificate is authentic and properly registered with the local land office.
• Power of Attorney
  If you’re using a lawyer or agent to help with the purchase, you will need a power of attorney to authorize them to represent you in administrative matters and transactions.
• Identification Documents
  Both the buyer and the seller need to provide valid identification documents, such as a KTP or passport, to ensure the transaction is carried out with the correct parties.

Risks to Consider Before Choosing Freehold Property in Bali

While freehold property in Bali offers many advantages, such as full ownership and potential for increased resale value, there are some risks you need to seriously consider before making an investment decision. Understanding these risks will help you make a more informed decision and reduce the likelihood of encountering issues in the future. Here are a few things to keep in mind:

• Legal Risks
  Although freehold gives you full ownership of the land, legal risks remain, especially for foreign investors. You must ensure that the land certificate held by the seller is legitimate and free from legal issues. There have been many land disputes in Bali, so make sure you buy from a trusted source.
• Zoning and Land Use Issues
  Bali has strict zoning regulations regarding land use. Some areas are designated for specific purposes, such as tourism or green zones. Make sure that the property you are buying complies with the applicable zoning regulations.
• Fraud and Deceptive Practices
  The property market in Bali is highly competitive, and there’s a risk of property fraud. Be sure to work with a reputable agent and always verify the authenticity of documents before proceeding with the transaction.

Is Freehold the Right Choice for Property Investment in Bali?

Property investment in Bali offers huge potential, and one of the main choices for investors is freehold property. However, before you decide to purchase freehold property in Bali, there are several factors you need to consider.

• Investment Goals
  If you plan to live or run a business in Bali long-term, freehold is a better choice. Freehold ownership gives you full control of the land and property without time restrictions. It offers long-term stability. You can sell, transfer, or develop the property as you wish without worrying about a lease running out.
• Budget
  Freehold properties are generally more expensive than leasehold because you are buying full ownership of the land. Property prices vary depending on location and facilities, but freehold properties tend to cost more. If your budget is limited, leasehold might be a better fit. Ensure your budget accounts for additional costs like notary fees, taxes, and other administrative expenses involved in the process of purchasing freehold property.
• Legal Risks
  Although freehold offers full ownership, legal risks remain, particularly for foreign investors. Before purchasing, make sure to verify the legal status of the property and the authenticity of the land certificate. This process can be complex, so it’s important to consult with an experienced property lawyer in Bali to ensure all documents are valid and there are no hidden land disputes.

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Plan Your Investment in Bali with Bali Premium Villa!

Understanding what freehold is and how property ownership systems work in Bali is the first critical step in property investment. With the right knowledge, you can make more informed decisions and avoid unwanted risks. If you’re serious about investing in Bali, make sure to choose a legally valid freehold property that aligns with your long-term goals.

If you’re interested in property investment in Bali, Bali Premium Villa can be the perfect partner to help make your investment dreams come true. We offer a range of premium properties with high return potential, along with legal guidance and professional assistance to ensure the buying process runs smoothly.

Ready to start your property investment journey in Bali? Contact Bali Premium Villa today and plan your smart investment with us. We’re here to help you succeed in the booming Bali property market!