Building a Bali villa on management-right (HPL) or desa adat land

Some of the most valuable villa land in Bali is not freehold at all. Resort zones sit on management-right land held by state bodies, and a large share of village land belongs to the desa adat. Building there means holding a right granted by someone who keeps the land — and the agreement with that holder decides term, fee and what happens at the end. This page reads the 2021 land regulation, the land ministry's 2021 and 2024 regulations and Bali's 2019 Perda on desa adat.

Seven words on HPL and adat land

The terms in the regulations and the agreements.

What HPL is, and who holds it

PP 18/2021 defines Hak Pengelolaan as “hak menguasai dari negara yang kewenangan pelaksanaannya sebagian dilimpahkan kepada pemegang Hak Pengelolaan” — the state's right of control, part of which is delegated to the holder (Pasal 1 angka 3). It comes from state land or customary land (Pasal 4). From state land it goes to central government agencies, regional governments, state- and region-owned enterprises and legal entities, the land bank, or legal entities appointed by the government such as authorities; from customary land it is vested in the adat community (Pasal 5). The holder plans the land's use, uses it or cooperates on it with others, and sets the tariff or annual fee under the agreement (Pasal 7(1)). It “tidak dapat beralih dan dialihkan” and cannot secure a debt (Pasal 12).

HGB over HPL: the right a villa company holds

HPL land can carry HGB, HGU or hak pakai for a third party when it is cooperated out under a land-utilisation agreement (Pasal 8(1)). HGB can be held only by Indonesian citizens and Indonesian legal entities (Pasal 34) — a PT PMA, not a foreign individual. It is granted by ministerial decree on the holder's approval (Pasal 38(2)), for up to 30 years, extendable by 20 and renewable for 30 (Pasal 37(1)); extension and renewal also need the holder's approval (Pasal 40(2)), are applied for no later than two years after expiry for renewal (Pasal 41(2)), and are available only if the land has been used for the purpose of the grant (Pasal 41(4)). Extending HGB.

The agreement

The agreement must state at least the parties, the location, boundaries and area, the use and the buildings, the type of right with its term, extension, renewal, transfer, encumbrance, change and ending, “ketentuan pemilikan Tanah dan bangunan setelah berakhirnya Hak Atas Tanah” — who owns the land and buildings after the right ends — the tariff or annual fee and how it is paid, and development obligations, penalties and termination (Pasal 8(2)). The land ministry adds that it is a civil-law agreement made before a public official, that its term matches the land right's including extension and renewal, and that it must contain a guarantee that the right holder will get extension and renewal — refused if the holder breaches the agreement (Permen ATR/BPN 18/2021 Pasal 43-44). The fee may not disadvantage either party, and the Minister sets its formula (PP 18/2021 Pasal 9).

Selling, mortgaging and the end of the term

The HGB over HPL can be mortgaged, transferred or released, but each needs the holder's recommendation and must be written into the agreement (Pasal 13). On a transfer, a new agreement is made for the remaining term without a new tariff (Permen ATR/BPN 18/2021 Pasal 44(4)). When the HGB ends after grant, extension and renewal, the land returns to the HPL (PP 18/2021 Pasal 37(3)) and the holder hands it back (Pasal 42(f)); what happens to the villa is the agreement's. Mortgages.

Desa adat and customary land

Bali's 2019 Perda on desa adat counts desa adat land among its assets — land it manages directly, and land entrusted to its members, such as house yards and ayahan land (Pasal 55). Desa adat land is registered in the desa adat's name (Pasal 58(1)); any change of the status or function of desa adat land rests on agreement through the Paruman of the desa adat or banjar adat, reported to the adat council (Pasal 11); and every transfer or change of status of desa adat assets needs the Paruman's approval (Pasal 59(5)). The Paruman is the highest decision-making body and decides on cooperation, the management of assets and investment plans in the desa adat (Pasal 41). Cooperation with other parties is by joint agreement or written contract, discussed in the Paruman, and may not conflict with adat, religious and cultural values (Pasal 82, 85). The Perda does not use the word lease. The banjar.

Customary land as HPL

The land ministry's 2024 regulation lets an adat community apply for HPL over customary parcels recorded in the customary land register; parcels not applied for stay customary land, which the community may use with third parties by agreement (Permen ATR/BPN 14/2024 Pasal 15-16). Its model decree lets the holder give parts to third parties as HGB, HGU or hak pakai under a land-use agreement, allows those rights to be transferred or mortgaged only with the holder's approval, and returns misused land to the community (Lampiran IV). PP 18/2021 adds that when an HPL on customary land lapses, the land returns to the community's control (Pasal 15(3)). We found no Bali regulation on registering desa adat land as HPL.

Checks before signing

1. Whose land. The HPL holder or desa adat named on the certificate.
2. The agreement. Term, annual fee, extension guarantee, and who owns the buildings at the end.
3. Approvals. The holder's approval for the HGB, or the Paruman's decision for adat land.
4. Your right. An HGB in the company's name, registered, with the remaining term matching the agreement.

What this page does not cover

• The fee formula set by the Minister.
• Any particular resort zone or desa adat.
• Leasing freehold land. Leasehold explained.

Common questions