So You Want to Own a Holiday Home?

Everyone dreams of an exotic holiday home, but what does it really take to own a piece of island property paradise?
Monday 30 July 2018
Artist Sin Sin Man built Villa Sin Sin originally as a private Bali home, and has converted it into a commercial villa. Photo: The Luxe Nomad

Do you dream of an island holiday home? You’re not the only one.

A home in the sun isn’t just for winter-beaten Westerners looking for a warm retirement home for their old bones. City-slickers across Asia want a piece of the pie too.

Horror stories aside, there are restrictions on foreign ownership in both Bali and Phuket property markets, some for good reason, some for impenetrable ones. Ostensibly in Phuket it is to protect the rice fields from being taken over by foreigners; in Bali it’s to protect Indonesian land, full stop.

So if you’re committed to the holiday home dream, this is the nitty gritty you need to know before you plunge into that infinity pool.

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To start at the very beginning: you can’t buy freehold in Bali, and anyone who tells you otherwise is lying.

What you can do is hold property for up to 80 years through various measures (more on that in a minute). Don’t be tempted to enter into a nominee scheme – this is when you have an agreement with a local citizen (who can own freehold) that they will lend you their name so that you can buy the property – theirs in name, yoursin practice.

There may well be instances where this has worked out, but they have not made the news quite as often as the more grisly cases where it has gone spectacularly wrong.

Even if you have complete trust in your nominee, should anything happen to them, your rights to the property (shaky as they already are) can vanish completely.

To own a piece of Bali property with complete peace of mind (and legal rights), you need to set up a foreign-owned company (PT PMA). Through this you will then be able to acquire the Hak Guna Bangunan (right to build) and the Hak Pakai (right to use).These rights enable you to own property for up to 80 years; the initial duration is 50 years, which you will be able to then renew for another 30. There is also an option to renew these rights again after that, or sell them to a local.

Information on these processes is freely available, but can be time-consuming and tedious to wade through, especially if you’re not based on the island or in the country.

Employing the services of an agency, while daunting, is the most efficient way of going about things. If you plan to lease your property commercially, as Villa Vedas owner Timothy Robins did, you’ll need to obtain the Pondok Wisata (the license to operate commercially).

“The acquisition of the land was relatively straightforward,” he explains. “However, construction took much longer than we anticipated, and I have had difficulties, and incurred significant costs, in obtaining the Pondok Wisata.”

And what are the areas of Bali that will make this chain of bureaucracy worth it? “Where we have seen a strong growth in demand is for the Canggu area in Bali,” says Chai.

The south coast resort village is near the famous Echo Beach and iconic Tanah Lot temple, surrounded by paddy fields.

“It’s being touted as the next Seminyak and has really grown in terms of land valuation and development of villas, shops and restaurants. And I feel Tabanan will be the ‘next Canggu’, as it’s just next door and the land is cheaper.”

Robins would look to the east coast of the island for his next Bali property. “It’s easily accessible via the new toll road across Benoa harbour and the concrete road to Candidasa (the west coast lacks a proper coast road) and has a big future.”

And a word of advice from him if you’re planning to join the villa market: “It is not as easy as it looks, and there is lots of competition. So be careful about what you do, and try to do something thatstands out from the crowd!”

Related: 9 Reasons Everyone Should Visit Bhutan This Year