How buying property in Bali actually runs, stage by stage

Indonesian law sets no timetable for the whole sale, but it does set three clocks and the order things must happen in — and two of the stages are often done back to front.

The sequence below is not a legal timetable — Indonesian law sets none for a private sale as a whole. It does set three clocks inside it: acquisition duty falls due on the date the PPJB is signed (Law 1/2022 (HKPD) art. 49(a)); the seller’s final tax is paid before the deed is signed (PP 34/2016 art. 3(1)); and the PPAT lodges the deed with the land office within 7 working days of signing (PP 24/1997 art. 40(1)). The two documents, and when each clock starts.

What follows is the order in which things have to happen for the right to end up in your hands, with a note on what each stage can and cannot achieve.

Read it once before you start looking. The single most valuable thing on this page is the observation that stages two and three are almost always performed in the wrong order.

Before anything: decide which right you are buying

This sounds like a detail to settle later and it is the decision everything else depends on. A lease, a hak pakai and an HGB held by a company are three different transactions with three different documents, three different tax treatments and three different exits. Working out which one you want after you have found a property means letting the property choose the structure, and the property has no opinion about your circumstances.

The comparison page works through the choice in four questions. It takes about ten minutes and it saves the entire rest of this page from being done twice.

Stage 1 — Listing and viewing

No legal effect whatever. Nothing said at this stage binds anyone and nothing written in a listing survives into a contract unless it is put there.

What this stage is for is collecting questions: which right is on the certificate, how many years remain if it is a lease, who is on the certificate, what the land is designated for. All four are reasonable to ask at first viewing and the answers cost nothing.

Stage 2 — The holding deposit

The first money to move, and the point at which the transaction stops being theoretical. It is commonly described as reserving the property while checks are done, and it is commonly non-refundable by its terms.

Two things to settle before it moves: that it is refundable if the checks fail, in writing; and who holds it. A deposit sitting with an agent is in a different position from one held against defined milestones.

Stage 3 — Due diligence

Investigation, with no legal effect of its own, and the stage that decides whether the rest of the transaction should happen. Certificate, seller identity, consents, encumbrances, zoning, building permits, access, boundaries, land and building tax history.

The checklist sets out each document and what it is capable of proving, which is the part usually left out: a certificate proves the registered right, and it proves nothing at all about permitted use.

Stage 4 — The binding document

For a purchase of a registered right this is typically a PPJB, an agreement to sell and buy: the agreed terms, the price, the conditions, what happens if a condition fails. For a lease it is the lease deed. Either way this is the document that commits you, and it is the one to read in Indonesian.

Bilingual contracts are normal and the English column is a courtesy. Where the two disagree, the contract itself says which governs, and an Indonesian court will work from the Indonesian. Have it read by someone responsible to you rather than to the transaction.

Stage 5 — The AJB before a PPAT

Who a PPAT is, how the office differs from a notaris, and the eight acts a PPAT deed covers: the deed the land office will actually register.

The deed of transfer, executed before a Pejabat Pembuat Akta Tanah — the official authorized to make land deeds. This is where the right actually changes hands as a matter of deed.

Where the seller holds hak milik or HGB and you are a foreign buyer, this is also where the conversion happens. Article 187(3) of Permen ATR/BPN 18/2021 provides that a landed house acquired by a foreigner and currently held under hak milik or HGB is converted into hak pakai, and article 158 confirms a foreigner may only apply to convert those rights into hak pakai. The certificate you were shown at viewings is not the certificate you will hold.

Stage 6 — Registration at the land office

Until the transfer is registered, the right has not moved in the register. This is the stage that makes the transfer effective against everyone else, and it is the one buyers stop paying attention to because the exciting part is over.

Do not stop paying attention. Ask for the registration receipt and the new certificate, and keep them.

What it costs, and who bears it

Four categories, and only two of them are set by statute.

• Acquisition duty (BPHTB), on the buyer. A statutory ceiling of 5% under Law 1/2022 article 47(1), with the operative rate set by regional by-law, a base of the transaction price under article 46(2)(a), and relief of at least IDR 80 million on a first acquisition in that region under article 46(5). Note: a lease is not an acquisition of a land right, so it is outside this altogether — article 44(3) lists the rights and hak sewa is not among them.
• Final income tax on the transfer, on the seller. 2.5% of the gross transfer value under PP 34/2016 art. 2(1)(a).
• Notary and PPAT fees, capped rather than fixed: the PPAT’s fee is at most 1% of the transaction price stated in the deed, witnesses included (PP 37/1998 art. 32(1)), and a notary’s fee on a lease deed is capped by band under Law 30/2004 art. 36(3). The caps, worked through.
• Due diligence and legal fees, negotiated, and the only line on this list that reliably pays for itself.

The costs page works through the statutory items properly, including why a rate quoted to you as “the Bali rate” is really a regency rate.

The one change that prevents most of the trouble

Move due diligence in front of the deposit. That is it. It is not a clever insight and it is not hard to do, and it inverts the ordering that produces most of what goes wrong in the risks page.

The objection is that sellers will not hold a property while you investigate. Sometimes true. But a refundable deposit conditional on defined checks achieves both, and a seller who refuses that has told you something for free.

Before any of this begins you are reading a listing, and the listing is written to be read quickly. What the words in a Bali listing actually mean takes “freehold”, “25 + 25” and a quoted ROI apart before you book the viewing.

Questions on this page