Hak Pakai vs Leasehold vs PT PMA: The Foreign Buyer’s Decision Matrix for Bali Property

Last updated: February 2026 · By Bali Property Rules Research Desk

Table of Contents

1. Why Do Most Online Guides Get Foreign Ownership Structures Wrong?
2. What Are the Three Legal Structures Available to Foreign Buyers?
3. How Does Hak Pakai Work for Foreign Buyers in Bali?
4. How Does Leasehold (Hak Sewa) Work in Bali?
5. How Does PT PMA with HGB Give Foreigners Property Rights?
6. What Does Each Ownership Structure Actually Cost?
7. How Long Does Each Structure Last and How Do You Renew?
8. What Are the Real Risks of Each Ownership Structure?
9. How Does PP 28/2025 Affect Each Ownership Structure?
10. Which Ownership Structure Should You Choose?
11. Frequently Asked Questions
12. Sources and References

Why Do Most Online Guides Get Foreign Ownership Structures Wrong?

Most English-language guides on foreign property ownership in Bali contain outdated information, incorrect duration claims, and zero regulation citations. We reviewed the top comparison articles and found every single one still cites the pre-2025 PT PMA capital requirement, and most give wrong Hak Pakai durations.

If you are making a six-figure property decision in Bali, you need regulation-backed facts — not blog posts recycling outdated figures from other blog posts. The errors are not minor. They affect how much capital you need, how long your rights last, and which structure fits your situation.

Here are the most common mistakes found online:

• Many guides still cite IDR 10 billion minimum capital for PT PMA. This changed in 2025. BKPM Regulation 5/2025 Article 26(10) reduced the minimum paid-up capital to IDR 2.5 billion — a 75% reduction.
• Some guides claim Hak Pakai lasts 45 years. The correct answer is 80 years: 30 years initial + 20 years extension + 30 years renewal, as established by PP 103/2015.
• Others imply leasehold has a legal maximum of 99 years. PP 44/1994 sets no statutory maximum. The “99 years” figure is market practice, not a legal limit.
• One widely-shared guide claims HGB can be converted to Hak Milik for a company. This is impossible under UUPA No. 5/1960 Pasal 21, which restricts Hak Milik to Indonesian citizens only.

This article takes a different approach. Every claim about costs, durations, and risks is backed by specific regulation Pasal numbers. Where regulations are ambiguous or outcomes depend on administrative discretion, we use hedged language and explain the uncertainty.

What Are the Three Legal Structures Available to Foreign Buyers?

Indonesian law provides three compliant paths for foreigners to hold property rights in Bali: Hak Pakai (Right to Use) for personal residential use, Hak Sewa (leasehold) as a contract-based arrangement with a landowner, and PT PMA with HGB (foreign investment company holding a building right) for commercial or investment purposes.

Hak Pakai is a registered land right that allows foreigners with valid Indonesian residency (KITAS or KITAP) to use land and buildings for residential purposes. It is the closest equivalent to personal property ownership available to foreigners — you hold a title certificate registered at BPN (the National Land Agency) and can transfer or sell the right to another eligible foreigner.

Hak Sewa (Leasehold) is a private contract between a foreign tenant and an Indonesian landowner. It is not a land title — it is a contractual right to use property for an agreed period. No BPN registration is required, though notarization is strongly recommended. Leasehold is the most accessible structure because it requires no visa and has the lowest transaction costs.

PT PMA with HGB is a foreign investment company (Penanaman Modal Asing) that holds HGB (Hak Guna Bangunan — Right to Build). This structure allows commercial property ownership, multiple property holdings, and full business operations. It requires the most capital and ongoing compliance but offers the strongest long-term rights for investors.

Dimension	Hak Pakai	Hak Sewa (Leasehold)	PT PMA + HGB
Legal basis	PP 103/2015, PP 18/2021	PP 44/1994	UU 25/2007, UU 40/2007, BKPM 5/2025
Maximum duration	80 years (30+20+30)	No statutory maximum	80 years (30+20+30 HGB)
Entry cost	Moderate (BPHTB 5% + notary ~1%)	Low (no BPHTB, notarization optional)	High (~$160K+ year 1)
Registered at BPN	Yes (title certificate)	No (private contract)	Yes (HGB certificate)
Visa required	Yes (KITAS/KITAP)	No	No (company holds title)
Admin burden	Low	Minimal	High (LKPM, corporate compliance)
Value over time	Appreciates with land	Depreciates (shorter term)	Appreciates with land
Best for	Resident retiree/individual	Short-term investor, budget buyer	Commercial investor, developer
PP 28/2025 impact	Moderate	Low (high if business)	High

These are the only three legal structures for foreign property rights in Bali. Any other arrangement — including nominee ownership, where an Indonesian citizen holds title on behalf of a foreigner — carries significant legal risk and is not a recognized ownership structure under Indonesian law.

How Does Hak Pakai Work for Foreign Buyers in Bali?

Hak Pakai (Right to Use) allows foreigners with valid Indonesian residency permits to hold a registered land right for up to 80 years. Under PP 103/2015 and PP 18/2021 Article 37, the initial term is 30 years, extendable by 20 years, then renewable for another 30 years.

Hak Pakai is the most direct path to personal property ownership for foreigners in Bali. Your right is registered at BPN (the National Land Agency) and you receive a title certificate — providing legal certainty that private contracts cannot match.

Eligibility Requirements

To hold Hak Pakai, you must maintain a valid KITAS (temporary stay permit) or KITAP (permanent stay permit). This includes holders of the Second Home Visa. The property must be designated for residential use, and each foreigner or foreign family unit is limited to one Hak Pakai title.

In Bali, minimum property values range from IDR 2 billion to IDR 5 billion (~$130,000–$325,000), depending on the regency. This threshold is set by local government and can vary between areas like Badung, Gianyar, and Denpasar.

Duration and Extension

The maximum Hak Pakai duration follows a three-stage structure:

• Initial term: 30 years
• Extension (perpanjangan): 20 years — applied before the initial term expires
• Renewal (pembaharuan): 30 years — applied after the extension period ends

Total: 80 years maximum. The extension and renewal process is managed through BPN under procedures established by Permen ATR/BPN 29/2016.

Registration and Transfer

Hak Pakai is a registered right. BPN issues a certificate of title, and the right appears on the land register. You can transfer Hak Pakai to another eligible foreigner — the buyer must also meet the foreign ownership requirements (valid visa, residential use, minimum value threshold).

Tax and Compliance Obligations

BPHTB (acquisition tax) of 5% applies, as does PBB (annual land and building tax). If you sell, the buyer pays BPHTB and the seller pays PPh (income tax) at 2.5% of the sale price per PP 34/2016. See our property tax guide for full details.

Visa Dependency Risk

Hak Pakai is tied to your residency status. If your KITAS or KITAP expires or is revoked, your ability to renew the right may be affected. This does not mean you lose the right immediately, but it creates uncertainty at renewal time. For a detailed analysis of what happens when your visa status changes, see our guide on visa expiry and property rights.

Under PP 28/2025, KKPR (Kesesuaian Kegiatan Pemanfaatan Ruang — land use conformity confirmation) is required to confirm zoning allows residential use. For full details on how PP 28/2025 affects property rights, see our PP 28/2025 guide.

How Does Leasehold (Hak Sewa) Work in Bali?

Hak Sewa (leasehold) under PP 44/1994 is a contract between a foreign tenant and an Indonesian landowner. Unlike Hak Pakai and HGB, leasehold has no statutory maximum term — the duration is whatever the parties agree to in the contract.

Leasehold is the most accessible foreign property structure in Bali. It requires no visa, no BPN registration, and no minimum investment threshold. It is also the structure most prone to disputes, because your rights depend entirely on the quality of your contract and the reliability of your counterparty.

No Statutory Maximum Duration

PP 44/1994 establishes the Hak Sewa framework without imposing a maximum lease term. The “99-year lease” figure that appears across marketing materials and guides is market practice, not a legal limit. Typical market structures include 25+25+25 or 30+20+30 year terms, with initial periods of 25 to 30 years and contractual extension options.

No Indonesian court has challenged lease terms longer than 30 years. However, some notaries may be reluctant to notarize leases that extend beyond 30 years in a single period. This is a practical consideration, not a legal restriction.

Registration and Legal Standing

Leasehold is not a land title. It is a private contract between parties. There is no BPN registration and no title certificate. However, notarization by an Indonesian notary is strongly recommended — a notarized lease has stronger evidentiary weight in court than a private agreement.

Cost Advantages

Leasehold has the lowest transaction costs of any structure. BPHTB does not apply because leasehold is not a title transfer. Notarization costs approximately IDR 5–15 million and is recommended but not legally required. Stamp duty is minimal at IDR 10,000. Leasehold properties are typically 30–50% cheaper than their freehold-equivalent counterparts.

Depreciation and Value

Unlike Hak Pakai and HGB, which appreciate with land values, leasehold properties depreciate as the remaining lease term shortens. A villa with 25 years remaining on its lease is worth more than the same villa with 10 years remaining. This affects both resale value and your overall return on investment.

Dispute Resolution and Risk

Leasehold disputes are resolved through civil court (Pengadilan Negeri) as contract disputes, not property title disputes. BPN has no role because there is no registered title. If the landowner dies or sells the underlying freehold title, enforcement of the lease can be difficult in practice — even with a properly notarized contract. For a comprehensive guide to leasehold structures, see our leasehold (Hak Sewa) guide.

How Does PT PMA with HGB Give Foreigners Property Rights?

A PT PMA (Penanaman Modal Asing — Foreign Investment Company) can hold HGB (Hak Guna Bangunan — Right to Build) on land in Bali. Since BKPM Regulation 5/2025, the minimum paid-up capital has been reduced from IDR 10 billion to IDR 2.5 billion (~$150,000), making this structure significantly more accessible than most guides currently indicate.

PT PMA is the most powerful ownership structure available to foreigners — it provides registered title, commercial flexibility, and the ability to hold multiple properties. It also requires the most capital, the most compliance, and the most professional support to maintain.

BKPM 5/2025 Capital Reduction

The headline change: Article 26(10) of BKPM Regulation 5/2025 reduced the minimum paid-up capital from IDR 10 billion to IDR 2.5 billion (~$150,000). This is a 75% reduction that fundamentally changes the PT PMA cost equation.

The total investment plan remains IDR 10 billion per KBLI (business classification code) per location. However, under Article 26(5), for property and accommodation sectors, the value of land and buildings can now be included in that IDR 10 billion calculation. This means the cash outlay can be significantly lower than the headline figure suggests.

12-Month Capital Lock-Up

Article 27 of BKPM 5/2025 introduced a 12-month capital lock-up period. Paid-up capital cannot be withdrawn from the company for 12 months after deposit, unless it is used for assets, construction, or operational expenses. This prevents the practice of depositing capital briefly and then withdrawing it.

HGB Duration

HGB follows the same three-stage structure as Hak Pakai: 30 years initial + 20 years extension + 30 years renewal = 80 years maximum, as established by PP 18/2021 Article 37.

Compliance Requirements

PT PMA ownership comes with significant ongoing compliance obligations:

• LKPM (Investment Activity Reports): Quarterly reports to BKPM are mandatory. Deadlines were extended by 5 days per quarter under BKPM 5/2025.
• Supporting KBLI: Under Article 35, income-generating business classification codes must be listed in the company’s Articles of Association.
• Corporate tax filings: Annual corporate tax returns and financial reporting.
• Director liability: Under UU 40/2007, directors face personal liability if acting negligently or in bad faith.

Sanctions for Non-Compliance

BKPM 5/2025 Article 286 establishes a graduated sanctions framework: written warning, followed by license suspension, followed by license revocation. Non-compliance with LKPM reporting, capital lock-up rules, or KBLI restrictions can trigger this process.

Company Setup Costs

Company registration and legal fees typically range from $3,000 to $8,000. Combined with the IDR 2.5 billion minimum paid-up capital, the total year-one outlay is approximately $160,000 to $170,000 minimum. For the complete PT PMA setup process, including KBLI selection and OSS registration, see our PT PMA guide.

Exit Options

A PT PMA owner can exit by selling company shares (share transfer) or by transferring property held by the company. The share transfer route avoids BPHTB on the property itself, though it requires buyer due diligence on the company’s liabilities and compliance history.

What Does Each Ownership Structure Actually Cost?

The total cost of acquiring property through each structure varies dramatically. Hak Pakai adds approximately 6–7% in government taxes and fees on top of the property price. Leasehold has the lowest transaction costs with no BPHTB. PT PMA requires the highest upfront capital but offers the strongest long-term rights.

Cost Item	Hak Pakai	Hak Sewa	PT PMA + HGB
BPHTB (buyer tax)	5% of value	None (not a title transfer)	5% of value
PPh (seller tax)	2.5% of sale price	N/A	2.5% of sale price
Notary/PPAT	~1% of value	IDR 5–15M (optional)	~1% of value + company notary
VAT	11% (new properties only)	N/A	11% (new properties only)
Company setup	N/A	N/A	$3,000–$8,000
Paid-up capital	N/A	N/A	IDR 2.5B (~$150,000)
Annual compliance	PBB only	PBB (if lease requires)	LKPM + corporate tax + PBB

Hak Pakai cost example: With Bali’s minimum property value ranging from IDR 2–5 billion, BPHTB alone amounts to IDR 100–250 million (~$6,500–$16,000). Add notary fees (~1%) and PPh (2.5% on the seller’s side), and total transaction costs reach approximately 6–7% of the property value.

Leasehold cost example: A leasehold transaction may involve only notarization (IDR 5–15 million) and stamp duty (IDR 10,000). No BPHTB, no PPh, no registration fees. This makes leasehold the lowest-cost entry point — but remember that leasehold properties are contracts, not titles, and depreciate over time.

PT PMA cost example: Year-one outlay of approximately $160,000–$170,000 minimum (IDR 2.5 billion capital + $3,000–$8,000 setup fees), plus BPHTB at 5% on the property value and ongoing compliance costs for LKPM reporting and corporate tax filings.

For a comprehensive breakdown of all property-related costs, including ongoing taxes and maintenance fees, see our property costs guide. For annual tax obligations by structure, see the property tax guide.

How Long Does Each Structure Last and How Do You Renew?

Both Hak Pakai and HGB have a maximum duration of 80 years through a three-stage process of initial term, extension, and renewal. Leasehold has no statutory maximum — the term is whatever the lease contract specifies.

Structure	Initial Term	Extension	Renewal	Maximum
Hak Pakai	30 years	20 years	30 years	80 years
HGB (via PT PMA)	30 years	20 years	30 years	80 years
Leasehold	Contract-based	Contract-based	Contract-based	No statutory max

The Critical Distinction: Extension vs Renewal

Understanding the difference between extension (perpanjangan) and renewal (pembaharuan) is essential for any foreigner holding Hak Pakai or HGB — and virtually no English-language guide explains this distinction.

Extension (perpanjangan) is applied before the initial term expires. Your existing right continues seamlessly into the extension period. The application is submitted to BPN and, for qualified holders who have maintained compliance, is relatively routine.

Renewal (pembaharuan) is applied after the extension period ends. This is essentially a new application. You must re-qualify — demonstrating valid residency (for Hak Pakai), property conformity with the current spatial plan, and continued use for the designated purpose. Renewal is not guaranteed.

Extension preserves your rights with minimal friction. Renewal introduces uncertainty — and is not guaranteed.

This distinction matters enormously. Extension preserves your rights with minimal friction. Renewal introduces uncertainty — if spatial plans have changed, if your visa status has lapsed, or if the land is designated for public interest, renewal may be denied.

HGB Extension Costs

Under PP 46/2002, HGB extension costs are calculated using the following formula:

HGB Extension Cost = (NJOP Land × Land Area × Percentage Rate) / 100%

The percentage rate varies by extension period:

• 20-year extension: 5%
• 30-year extension: 6%
• 40-year extension: 8%

Note: This formula covers the extension fee only and does not include BPHTB or administrative transfer fees. HGB certificate conversion costs approximately IDR 15–30 million per certificate, which is separate from the BPHTB obligation.

Leasehold Duration

Leasehold has no statutory maximum duration under PP 44/1994. Market standard terms are 25–30 years initial with contractual extension options. Common structures include 25+25+25 years or 30+20+30 years. “Renewal” of a lease is purely a contractual matter between the parties — there is no government application or approval process.

What Are the Real Risks of Each Ownership Structure?

Every ownership structure carries specific risks. Hak Pakai depends on maintaining valid residency. Leasehold depends entirely on the quality of your contract. PT PMA requires ongoing corporate compliance or faces license revocation.

Risk	Hak Pakai	Hak Sewa	PT PMA + HGB
Title security	Strong (BPN registered)	Weak (private contract)	Strong (BPN registered)
Renewal certainty	Moderate (government discretion)	Low (landowner negotiation)	Moderate (government discretion)
Admin burden	Low	Minimal	High
Dispute resolution	BPN + courts	Civil courts only	BPN + corporate law + courts
Visa dependency	Yes — KITAS/KITAP required	No	No (company holds title)
Counterparty risk	Government (BPN)	Landowner (private)	BKPM + shareholders
Forced loss scenario	Visa revocation + renewal denial	Landowner dispute + poor contract	License revocation + dissolution

Hak Pakai Risks

The primary risk is visa dependency. Under PP 103/2015, renewal may be denied if the holder no longer maintains valid residency status, if the property does not conform to the current spatial plan (as confirmed by KKPR), or if the land is needed for public interest. If renewal is denied, the holder must transfer their rights to an eligible party within one year.

This risk is manageable for holders who maintain continuous residency and ensure their property’s zoning compliance — but it represents a structural vulnerability that leasehold and PT PMA do not share.

Leasehold Risks

Leasehold’s primary risk is counterparty dependence. Your rights exist only within the contract, and if the landowner dies, becomes incapacitated, or sells the underlying freehold title, enforcement can be difficult in practice. Even a properly notarized lease may face challenges if the landowner’s heirs contest the arrangement or if a new freehold owner claims no knowledge of the lease.

Additionally, leasehold disputes are resolved through civil court (Pengadilan Negeri) as contract disputes. This process can be slow and outcomes are less predictable than BPN-administered title disputes.

PT PMA Risks

PT PMA carries compliance risk. Under BKPM 5/2025 Article 286, non-compliance with LKPM reporting, capital lock-up rules, or KBLI restrictions triggers a graduated sanctions process: warning, license suspension, then license revocation. License revocation can lead to forced dissolution.

Additional PT PMA risk factors include director personal liability under UU 40/2007 for negligent or bad-faith actions, the requirement to maintain at least 2 shareholders at all times (failure to do so for 6+ months can trigger dissolution), and court-petitioned dissolution by shareholders, creditors, or prosecutors.

Before committing to any structure, a thorough pre-purchase assessment is essential. See our due diligence checklist for the complete process.

How Does PP 28/2025 Affect Each Ownership Structure?

PP 28/2025 (Penyelenggaraan Perizinan Berusaha Berbasis Risiko) is Indonesia’s master regulation for risk-based business licensing. It affects each ownership structure differently — and no other English-language guide covers this cross-reference.

PP 28/2025 establishes the concept of “acuan tunggal” — a single reference. No ministry, agency, or local government can create additional licensing requirements outside this framework. For foreign property buyers, this creates more predictable compliance requirements and protection from arbitrary local regulations.

KKPR (Kesesuaian Kegiatan Pemanfaatan Ruang — land use conformity confirmation) is a basic requirement under PP 28/2025 for all business activities. It confirms that the intended use of land conforms to the spatial plan.

Hak Pakai — Moderate Impact

PP 28/2025 affects Hak Pakai in three ways:

• KKPR required for residential use — you must confirm that zoning allows residential use on your property.
• “Single reference” protection — no local government can impose additional requirements beyond those in PP 28/2025. This protects against arbitrary local rules that previously varied by regency.
• Renewal conformity — at renewal time, your property must conform to the current spatial plan as confirmed by KKPR. If spatial plans have changed since your initial purchase, this could affect renewal.

Net assessment: positive for foreign buyers who do proper due diligence. The “single reference” principle reduces regulatory uncertainty, while KKPR confirms your property’s compliance upfront.

Leasehold — Low Impact (but High if Operating a Business)

The lease contract itself is a private arrangement between parties and is not directly affected by PP 28/2025. However, if you operate any business on leased property — including short-term rentals or Airbnb — you are fully within the PP 28/2025 framework and require NIB (Nomor Induk Berusaha), KKPR, and risk classification compliance.

Personal-use lease: no PP 28/2025 impact. Commercial-use lease: full impact. For commercial licensing requirements on leased property, see our villa licensing guide.

PT PMA — High Impact

PT PMA is fully within the OSS (Online Single Submission) framework established by PP 28/2025:

• NIB (Nomor Induk Berusaha) is the foundational business license under PP 28/2025.
• Risk classification determines the level of licensing required for your specific business activities.
• BKPM 5/2025 — which implements PP 28/2025 for foreign investment specifically — reduced capital requirements as discussed above.
• “Single reference” prevents rogue local regulations from adding surprise requirements to your PT PMA operations.

For a comprehensive analysis of PP 28/2025 and its implications for all foreign property structures, see our PP 28/2025 guide.

Which Ownership Structure Should You Choose?

The right structure depends on three factors: your residency status in Indonesia, your investment horizon and purpose, and your tolerance for administrative complexity. There is no single “best” structure — each fits a different buyer profile.

Use the following decision framework to identify which structure aligns with your situation:

Are you a resident (KITAS/KITAP holder) planning to live in Bali long-term?

Consider Hak Pakai. It offers the lowest administrative burden, a registered title at BPN, and an 80-year maximum duration. Hak Pakai is best suited for retirees and long-term residents who want a personal home — not a commercial investment. Your main consideration is maintaining continuous residency status to protect renewal eligibility.

Are you a short-term investor or budget buyer?

Consider Leasehold. It has the lowest entry cost, no BPHTB, and no visa requirement. Leasehold is best for 5–25 year investment horizons, villa renovation and resale projects, or rental income during the lease term. Your main consideration is contract quality and landowner reliability — get proper legal counsel and insist on notarization.

Are you a serious commercial investor or developer?

Consider PT PMA + HGB. It provides the strongest legal rights, full commercial flexibility, a registered title, and the ability to hold multiple properties. PT PMA is best for long-term property development, hospitality businesses, or portfolio investment. The capital requirement is now IDR 2.5 billion (not the outdated IDR 10 billion figure). Your main consideration is ongoing compliance — budget for professional accounting and legal support from day one.

Are you unsure about your long-term plans?

Start with leasehold. It carries the lowest commitment — no visa requirement, no capital deposit, no corporate compliance. As your plans solidify, you can evaluate whether PT PMA makes sense for scaling, or whether Hak Pakai is appropriate if you decide to settle long-term. Leasehold gives you time to learn the market without locking in significant capital.

Frequently Asked Questions

Related Guides