Land Lease in Indonesia

Indonesian law distinguishes the following ways of using land:

Land Lease (leasehold) is the most popular way for foreigners to own land in Indonesia. Lease does not require foreigners to have a work permit (KITAS) or to establish a PT PMA company. Lease is also a beneficial solution in terms of budget – lease prices are significantly lower than the prices of land ownership (freehold).

Lease prices are determined in millions of rupiah (IDR) per year per are (100m²) of land.

Depending on the location, the lease price ranges from 3,000,000 IDR/year/are (USD 192) in less popular areas to over 30,000,000 IDR/year/are (USD 1925).

Example: Assuming a price of 3,000,000 IDR/year/are, a 6-are plot leased for 30 years may cost 3,000,000 IDR/year/are x 30 years x 6 ares = 540,000,000 IDR (USD 34,655).

The lease period can range from 1 year to 90 years. Most often, foreigners lease land for a period of 25-30 years. The lease agreement can include provisions that allow for an extension of the period on agreed terms. This is recommended considering that property prices in Bali increase on average by 5%-10% per year depending on the area. The lease period can be extended at any time during the contract term, but it is most advantageous to do so as early as possible when the price increase is not as significant.

Yes, leasehold is a legally protected form of property lease for foreigners. During the lease term, the landowner has no right to undertake any actions related to the property – sell, encumber, lease. Leasehold is inheritable by the foreigner’s heirs. Leasehold is also an attractive financial option – it does not require the establishment of a PT PMA company with high share capital, and the value of the lease in Bali increases annually by 5-10%. However, in recent years, much higher lease price increases have been observed.

To sign a leasehold contract, you only need to present your passport. No additional certificates or documents are required. You can enter into a leasehold contract while on vacation in Indonesia with only a tourist visa.

The contract is concluded before a notary in Indonesia. The contract is made in two language versions – English and Indonesian.

In the case of Edenfield New Life Bali, a Master Lease Agreement has been concluded with landowners who are Indonesian citizens. Clients will enter into a Sublease Agreement directly with New Life Bali operating in Indonesia under the name PT Tirta Buana Bali.

The contract is very similar to those concluded in Poland. In addition to the owners’ declarations regarding the legal status of the property, the contract specifies, in particular:

1) the leasehold period

2) the price

3) he method of land use – possibility of construction, resale, rental

4) obligations regarding the cost of maintaining the land

5) stipulation that the owner will not sell the land, will not conclude another leasehold agreement, will not encumber the land with a mortgage, or take any other actions that could negatively affect the leasehold

After concluding the leasehold agreement, the notary is obliged to report such an agreement to the register. Additionally, as a safeguard, the notary keeps the original property certificate in a notarial deposit, which prevents the landowner from making any transactions concerning the land.

Yes, this possibility is specified in the contract. The extension occurs at the current market price of the property lease.

Yes, this possibility is specified in the contract. The lease can be transferred to a third party for the remaining lease period specified in the contract.

At the time of signing the contract, a 10% tax is paid by the landowner. As for ongoing taxes during the leasehold period, they are covered by the lessee – from 0.01% to 0.02% of the property value, and in the case of building a villa, there is an additional annual tax of the same amount calculated from the building value.

According to the law, the foreigner is the owner of the building for the duration of the land lease. After the lease period ends, the lessee can transfer movable parts of the building to another plot. However, after the lease period ends, the ownership of immovable parts (such as foundations or a pool) transfers to the landowner.