balipropertyguideLeasehold, Hak Pakai and PT PMA: the three routes compared
There is no freehold route for a foreigner in Indonesia. There are three others, they are genuinely different instruments, and the difference is not price.
Not sure yet what the words in your listing mean? Start with what a foreigner can actually own — fourteen listing expressions resolved against the right each one names. This page assumes you have done that.
Three structures, and the market compares them on price, which is the one axis on which they are not really comparable. A lease is cheaper than hak pakai in the same way that a ten-year car lease is cheaper than a car. The useful comparison is on horizon, on whose name the right sits in, and on what each one needs to stay true about your life for the next three decades.
The same diagram as a table
| Right | Open to a foreigner | Term | Article |
|---|---|---|---|
| Hak Milik (freehold) | No | Perpetual | UUPA art. 21(1) |
| Hak Sewa (leasehold) | Yes | Whatever the contract says | UUPA arts. 44–45 |
| Hak Pakai | Yes | 30 + 20 + 30 years | PP 18/2021 arts. 49(2)(e), 52(1) |
| HGB via PT PMA | Yes, through the company | 30 + 20 + 30 years | PP 18/2021 art. 37(1) |
| Nominee holding hak milik | No — void by law | — | UUPA art. 26(2) |
The comparison, cell by cell, with the article
Every entry below is a rule we read in the Indonesian original. Where a cell says a range or a qualification, that is because the regulation does.
| Leasehold (hak sewa) | Hak Pakai | PT PMA holding HGB | |
|---|---|---|---|
| What it is | A contract to use someone else’s land for a building, for a rent UUPA art. 44(1) | A registered right to use and take the produce of land UUPA art. 41(1) | A registered right to erect and own buildings on land you do not own PP 18/2021 ch. on HGB |
| Who may hold it | Indonesians, foreigners resident in Indonesia, Indonesian legal entities, foreign entities with a representative UUPA art. 45 | The same list, and fixed-term hak pakai is granted to a foreigner expressly PP 18/2021 art. 49(2)(e) | Indonesian legal entities. A PT PMA is one. PP 18/2021 art. 37(1) |
| Term | No statutory maximum and no statutory minimum UUPA arts. 44–45 set none | 30 + 20 + 30 PP 18/2021 art. 52(1) | 30 + 20 + 30 PP 18/2021 art. 37(1) |
| Is it on a certificate? | No. It is a deed between two parties | Yes, a registered right | Yes, a registered right |
| Immigration document needed | To own a home, yes | Yes, at application and at every extension and renewal PP 18/2021 art. 69(1); Permen 18/2021 art. 125(1)(a)(2) | No — the holder is a company |
| Size and count limits | Not limited as a lease | One parcel per person or family, up to 2,000 m², luxury category Permen 18/2021 art. 186(1)(a) | Article 186 does not reach it — it is not a foreigner’s home |
| Acquisition duty | Outside the BPHTB object Law 1/2022 art. 44(3) | Within it art. 44(3)(d) | Within it art. 44(3)(c) |
| Ongoing cost | Usually none after the rent is paid | Annual land and building tax, ceiling 0.5% Law 1/2022 art. 41(1) | Company accounts, annual reporting, tax filings, and an investment floor Perka BKPM 4/2021 art. 12(2) |
| Inheritance | Only if the contract says the lease is assignable | Inheritable; a foreign heir needs their own immigration document PP 18/2021 art. 69(2)–(3) | Shares are inherited; the land right does not move |
| How it usually ends badly | The term expires and the “option to extend” was never an enforceable obligation on anyone | Stay permit lapses, so the renewal application has no basis | The company is dormant or undercapitalised and the business purpose was never pursued |
How to actually choose
Work down these in order. The first one that gives you a clear answer is your answer, and you can stop.
1. Is this a home or a business?
If you will live in it, hak pakai is the structure the regulation was written for. Article 71(1)(a) of PP 18/2021 says that a landed house owned by a foreigner sits on hak pakai — over state land, or over hak milik by a deed made before a PPAT, or over hak pengelolaan. Article 187(3) of the implementing regulation then requires conversion to hak pakai where the house you are buying is currently held under hak milik or HGB. That is not a preference. It is the route.
If it is a rental business with staff, revenue and a KBLI code, you are looking at a PT PMA holding HGB, and you are looking at a company with obligations that exist whether or not the villa is occupied.
2. How long do you actually need it for?
This is where most buyers guess and then regret it. If the honest answer is “ten to fifteen years, then I will probably sell”, a lease is a reasonable instrument and its lack of a statutory term stops mattering. If the answer is “this is where I intend to be in my seventies”, a lease with 25 years on it is not the instrument, however good the price looks.
The same diagram as a table
| Structure | Initial | Extension | Renewal | Maximum |
|---|---|---|---|---|
| Hak Pakai | 30 | 20 | 30 | 80 |
| HGB held by a PT PMA | 30 | 20 | 30 | 80 |
| Resale leasehold in this example | 23 | By negotiation only | By negotiation only | 23 |
3. What has to stay true for this to keep working?
Each structure has a condition that has to survive for decades, and they are different conditions. Hak pakai needs your immigration status to keep being valid, because the land office asks for the document again at every extension and every renewal. A PT PMA needs the company to keep being a real company. A lease needs the counterparty — or whoever inherits from them, or whoever buys the land off them — to keep honouring a contract signed decades earlier.
Ask which of those three you are most confident about in 2046, and you will usually find you have answered the question.
4. What happens when you stop wanting it?
Exits are not symmetrical. A registered right can be transferred and the transfer is registered. A lease can only be assigned if the lease says so, and a lease with nine years left has a much smaller market than one with thirty-nine. Exit and inheritance works through each route.
Nothing on this page steers you anywhere. We are paid a fixed fee per enquiry regardless of which structure you choose, whether you buy, or what you pay — which is why we can say plainly that the cheapest of the three is frequently the wrong one.
Read next
Years remaining on a lease
No statutory term means the remainder is the whole asset. Nobody prices it.
Leasehold, in detail
Hak sewa in full: two articles, one elucidation, and a lease that can go on the owner’s certificate.
Hak Pakai, in detail
The right the regulation actually wrote for a foreigner with a house here.
HGB and the PT PMA route
What the company has to be, and what it costs to keep being one.
PT PMA requirements
Two IDR 10 billion tests and two shareholders, before the company holds anything.
Nominee arrangements
Article 26(2), quoted in the original, and why the paperwork makes it worse.
Inheritance and getting out
What each structure does when you die, divorce, or simply want to leave.
Ask about the structure you have been offered
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Questions on this specifically
Which structure is cheapest?
Leasehold, almost always, and that is the least useful thing about it. A lease is cheaper because you are buying fewer years, and because it is not an acquisition of a land right it does not attract acquisition duty (BPHTB) at all — article 44(3) of Law 1/2022 lists the rights whose acquisition is taxed, and hak sewa is not one of them. If you compare the three on headline price you will pick leasehold every time, including in the cases where it is the wrong answer.
Which structure gives the longest horizon?
Hak pakai and HGB are identical on this point and both beat a typical Bali lease: 30 years initially, extendable by up to 20 and renewable by up to 30, at PP 18/2021 articles 52(1) and 37(1) respectively. That is 80 years of statutory ladder. The catch is that the extension and the renewal are applications rather than automatic entitlements, and for hak pakai the application needs a valid immigration document each time.
Can I convert from one to another later?
Partly. A foreigner acquiring a landed house held under hak milik or HGB has it converted into hak pakai — Permen ATR/BPN 18/2021 article 187(3) — and article 158 confirms a foreigner may only apply to convert those rights into hak pakai, not to hold them. Converting a lease into anything is a different matter: a lease is a contract, not a registered land right, so there is nothing to convert. You would be starting a new acquisition.
Does a PT PMA let me avoid the 2,000 square meter cap?
The cap at article 186(1)(a) applies to a house a foreigner owns to live in. Land held by an Indonesian company for a business purpose is not that, so the article does not reach it. But that is not a loophole so much as a different transaction: a PT PMA is a company with an investment floor of more than IDR 10 billion under Perka BKPM 4/2021 article 12(2), annual filings, and a business purpose it has to actually pursue.
Which one do foreigners actually use in Bali?
We have no transaction data and we are not going to guess at market share. What we can say is what each is designed for. Hak pakai is designed for a foreign individual living here with a home. A PT PMA holding HGB is designed for a business. A lease is a contract for a term of years and sits outside the land-rights system entirely, which is both why it is flexible and why it offers the least protection.
Is a 'freehold' listing in Bali ever real?
It is real, and it is not available to you. Hak milik exists and is the strongest right in Indonesian law; article 21(1) of the Basic Agrarian Law reserves it to Indonesian citizens. An English-language Bali listing that says freehold is describing either a sale to an Indonesian buyer, or a nominee arrangement, which article 26(2) voids.
Sources cited on this page
- Law 5/1960 (UUPA) arts. 21, 41, 44–45
- PP 18/2021 arts. 37, 49, 52, 69, 71
- Permen ATR/BPN 18/2021 arts. 158, 186, 187
- Law 1/2022 (HKPD) arts. 41, 44
- Perka BKPM 4/2021 art. 12
Every rule above was read in the Indonesian original on 20 September 2026, not from an English summary. How we check this.