Freehold, friend or foe?

In September 2007 there were some stories in the media about mentioning Freehold (Hak Milik in Bahasa Indonesia) as a characteristic of a property, like BPI does on this website. People have claimed that mentioning this, without further explanation, is deceptive, and some even dare to call it criminal, because foreign people cannot hold freehold titles in Indonesia. So, here, because of the people with the “Holier than Thou” attitude, we state it again, foreigners cannot hold freehold titles in Indonesia. The type of title is simply mentioned on this site.

And now, in 2015 there are blurbs appearing here and there about “foreigners and freehold” in Bali. Usually the subject is something like “Bali is destroyed by developments, foreigners beware”. Ok, lets face it, Bali is not like it was 100 years ago. The island is under stress; environmental issues, cultural issues, growth of population etc. Bali is growing up fast and has plenty of growing pains. But growing up is unavoidable.

So does it mean that foreigners should not invest in a home in Indonesia? Of course not. Thousands of foreigners have done so in Bali, and property is sold or leased on a daily basis to (and by) foreigners.

One of the ownership constructions that is “under fire” is the so called nameholder structure, where an Indonesian citizen holds the property for a foreigner, who then can use it, and do virtually everything with the property as if this foreigner would own it outright. The Indonesian citizen is rewarded in one or another way for this service. There are several types and sorts of these constructions, such as Hak Pakai over Hak Milik, and not all of these constructions are considered safe. In any case, where there is involvement of an Indonesian citizen, it is important that this person is a trustworthy and reliable person.

One of the arguments that is used to declassify the nameholder construction is that this construction is used to circumvent the current Indonesian property laws, and therefore is invalid. If this is true, then other constructions that are commonly used by foreigners to hold property beyond a period of 25 years are more or less invalid.

BPI believes, that it is a good thing, at least as long as the property prices (and economics) are not on the same level “as in the west”, that the Indonesian government protects their citizens by not making it too easy for foreigners to buy land in Indonesia. BPI also sees however that the same government offers structures where a foreigner can safely invest in a home in Indonesia, with arrangements such as Hak Pakai, using their own name.

It is important, that you, as a possible buyer of property in Bali, find the best, and safest ownership construction there is for your particular situation. Consult third parties (lawyers) beside the agent or person who wants to sell you a property. And after that, enjoy Bali. In your own home.

See for general information here: Indonesia Property and Ownership, or press the back button of your browser.