Leasehold agreements in Bali are contractual arrangements between foreign nationals and Indonesian landowners that allow for the long-term lease of a plot of land for construction or use of real estate. Key features of a leasehold contract include a lengthy lease term, typically ranging from 25 to 30 years, with the possibility of extension for an additional 30 years.
In simple terms, a non-resident can own property, meaning they can live in it, rent it out, or resell it at any time they deem fit. The agreement is registered with a notary and entered into the state registry. The Indonesian authorities provide legislative protection for the rights of tenants, including foreign nationals, through relevant laws and regulations.
Once established, it is impossible for the lessor to cancel or terminate the deal. To formalize the agreement, all you need is a passport.
This leasehold system is also widely used in other countries such as England, Thailand, the Philippines, and Malta.
Why Was the Leasehold Agreement Created?
Bali is an island, and therefore its territory is limited. Land is considered a gift from the gods, and originally, each family was given land where they cultivated rice or engaged in gardening, depending on the region. The entire family owns the plot, and each member has a certificate for their share. When the island became popular and attractive to foreign tourists, it became more profitable for peasants to sell their land to a foreigner for a limited period rather than work on it themselves. After all, why should a family give away its cash cow? And of course, the state would not allow foreigners to buy up the island forever. Although the leasehold agreement may be unfamiliar to many, it is understandable and widely used.
