balivillacareLeasehold land in Bali explained: what you buy, what it costs, and how to protect it
Key takeaways
- A Bali leasehold is the Agrarian Law's hak sewa untuk bangunan: the right to use another's land for a building, for rent. The term is the contract's, not the law's.
- The rent is the landlord's income: 10% final tax on the gross, prepaid lump sum included, withheld by a company lessee.
- A lease is not one of the rights BPHTB taxes, so a leasehold buyer pays no acquisition tax on it.
- A lease over freehold can be registered, by PPAT deed at the land office. Most Bali leases are notarial and are not.
- The extension clause, the assignment clause and the death clause decide what the lease is worth. The law fills none of them in.
Most villas sold to foreigners in Bali are leaseholds, and most listings describe them as if the buyer were acquiring a property for a period. In law the buyer is acquiring a contract to use someone else's land. That difference decides what protects the buyer — and almost all of it is in the agreement.
Seven words in a Bali lease
The terms of the law and of the deed.
| Term | What it is | What it means for a lessee |
|---|---|---|
| Hak sewa untuk bangunan | The lease of land for a building. | What “leasehold” means in Indonesian law. |
| Pemilik | The freehold owner. | An Indonesian citizen; the landlord. |
| Penyewa | The lessee. | May be a resident foreigner or a company. |
| Akta notaris | Notarial deed. | How most Bali leases are made. |
| Akta PPAT | Land deed official's deed. | What a lease needs to be registered. |
| PPh final 10% | Final tax on land and building rent. | The landlord's tax on the rent. |
| Bea meterai | Stamp duty. | IDR 10,000 on the agreement. |
What the law says, what it leaves to the contract, and registration
The right
A person or company has a lease of land when they may use another's freehold land for a building by paying rent; the rent can be paid once or at intervals, before or after use; and the agreement may not contain exploitative terms (UUPA Pasal 44). Citizens, foreigners domiciled in Indonesia, Indonesian companies and foreign companies with a representative in Indonesia may hold one (Pasal 45).
What the law does not say
There is no maximum term, no statutory right to extend, no rule on what happens to the building at the end, and nothing on assignment or the lessee's death. The Agrarian Law leaves further rules on the lease to regulation (Pasal 50(2)), and the Civil Code's lease provisions were not available to us in an official copy. In practice, every one of those questions is answered by the agreement, or not at all.
The clauses that matter
- Term and extension. A firm option to extend, its price or formula, and how to exercise it.
- Assignment. Whether the lease can be sold or sub-let, and whether the landlord's consent is needed.
- Death and succession. Whether the term passes to heirs. Foreign heirs.
- The building at the end. Who owns it, and whether anything is paid for it.
- Use. Whether nightly letting is allowed — it decides the villa's income.
Buying or holding a Bali leasehold?
Tell us which part of Bali the villa is in. Five questions, and your details are the last step.
Registering the lease
PP No. 24 Tahun 1997 Pasal 44(1) allows the encumbering of freehold with a lease of land for a building to be registered at the land office, if proved by a PPAT deed; the PPAT's duties to refuse a deed apply as for a sale (ayat (2)). A lease made by notarial deed alone is a contract between the parties. A registered lease is recorded on the land itself, where a buyer of the freehold or a bank will find it. Whether to register is a question for the notary-PPAT before signing, not after.
Tax on a lease
The landlord's 10%
The rent is income from letting land and buildings: 10% final tax on the gross, including maintenance, service and facility charges paid in connection with the building (PP 34/2017, Pasal 2 and 4). A company or other withholding agent as lessee withholds it; otherwise the landlord pays it (Pasal 3). On a lease paid up front, that is 10% of the lump sum.
| Amount | Rule | |
|---|---|---|
| Rent paid up front for the term | IDR 3,000,000,000 | The lease |
| Landlord's final tax, 10% | IDR 300,000,000 | PP 34/2017, Pasal 4 |
| Withheld by the lessee if it is a company | IDR 300,000,000 | PP 34/2017, Pasal 3 |
| BPHTB on the lessee | None | A lease is not a BPHTB right, UU 1/2022 Pasal 44(3) |
| Stamp duty on the agreement | IDR 10,000 | UU 10/2020 |
No acquisition tax
BPHTB is charged on acquiring ownership, HGB, HGU, hak pakai, strata title and management rights; a lease is not on the list (UU 1/2022, Pasal 44(3)). BPHTB on a sale.
Letting the villa you lease
If the lessee lets the villa night by night, that income is lodging, outside the 10% final rate, and is taxed as the lessee's business income. The tax on nightly letting.
What this page does not cover
- The Civil Code's lease rules. Not available in an official copy.
- Any market price or term. We give none.
- Hak pakai as an alternative. Compared here.
Common questions
What is leasehold in Bali?
The Agrarian Law's hak sewa untuk bangunan: the right to use someone else's freehold land for a building, for rent paid once or periodically, before or after use, without exploitative terms (UUPA Pasal 44). Foreigners domiciled in Indonesia may hold one (Pasal 45). The law sets no term; the lease does.
How long is a Bali leasehold?
There is no statutory maximum. Twenty-five or thirty years, with or without an option to extend, is whatever the agreement says. What happens at the end is also the agreement's.
Can a Bali lease be registered?
Yes. A lease of land for a building over freehold can be registered at the land office if it is proved by a PPAT deed (PP 24/1997, Pasal 44). Most leases are notarial deeds and are not registered.
What taxes apply to a leasehold?
The landlord owes 10% final tax on the gross rent, including any prepaid lump sum; a company lessee withholds it (PP 34/2017). A lease is not on the list of rights that carry BPHTB. The agreement carries IDR 10,000 stamp duty.
Can I sell my leasehold villa?
What can be assigned, and with whose consent, is set by the lease. The texts read do not set it.
Sources cited on this page
- UU No. 5 Tahun 1960 (UUPA) — Pasal 44-45, 50
- PP No. 24 Tahun 1997 — Pasal 39, 44
- PP No. 34 Tahun 2017 — tax on land and building rent
- UU No. 1 Tahun 2022 — Pasal 44(3), BPHTB rights
- UU No. 10 Tahun 2020 — stamp duty
Every figure above links to the source it was read from. This page was last changed on 28 October 2026. How we check this.