Freehold vs Leasehold Properties in Bali: Should I Choose This One or That One?


Freehold vs Leasehold Properties in Bali: Should I Choose This One or That One?

Bali's tropical allure and investment-inclined nature have made it a real estate hotspot, drawing many people to its lush surroundings and energetic culture. As an intending buyer of property in Bali, you are often faced with a pivotal decision of leasing or purchasing properties and each of them comes with its privileges and shortcomings. This in-depth analysis by Rumah3D will dissect the complexities of these property types in great detail so that you can be equipped with tremendous insight as you search for your best property investment in Bali.

A Brief Description of Property Ownership in Bali

Before exploring the details of the freehold and leasehold properties, it's mandatory to ensure an adequate understanding of the two terms. In Bali, just like the rest of Indonesia, property law is the one that is followed and which has different kinds of property rights. The two most popular ones for non-Indonesians are freehold and leasehold, which are characteristic of each.

Freehold Property: The Peak Of Ownership Rights.

'Hak Milik', which is also Indonesian for 'Freehold', endows the owner with complete and permanent ownership of the land as well as any improvements made thereon. This right of property belonging solely to Indonesian citizens and companies does not apply to non-citizens, pushing non-citizens to explore other methods that do not result in property ownership in Bali. Such limitation notwithstanding, freehold comes with associations of liberty, absence of restrictions, and continued ownership which greatly attract buyers.

Leasehold Property: A Worthy Investment Roadmap

The leasehold, also called 'Hak Sewa' in Indonesian, is the right to exclusive use and possession of land and property for a fixed period based on the lease contract. Leasehold is usually the gateway to property ownership for those domiciled outside of Bali, with a tighter framework compared to a freehold that recognizes investment in Indonesia as a structured option for the long term. Leasehold properties have a lease period typically ranging from 25 to 99 years, presenting unique financial and strategic advantages for investors.

The Advantages of Freehold Property in Bali

For those lucky enough to have a freehold property in Bali the benefits are numerous. The next section will reveal the advantages of freehold ownership being the position that many regard as the benchmark of property rights.

Complete Ownership Rights

The attractiveness of freehold properties arises from the unique ownership rights that they confer. As a freeholder you have the right to use, develop, and even sell the property at your will and convenience, without the limitations of leasing. This is not just a good thing, it is the foundation of the security and empowerment for the owners of a property.

Investment Potential and Resale Value

Freehold properties are generally perceived as more prestigious and, hence, command a higher price on the market. The long-term investment potential of freehold opportunities in Bali is large with the guarantee of asset value increase over time. Regardless of whether they are for personal use or as a strategic investment, freehold properties tend to give good returns.

The Advantages of Leasehold Property in Bali

Leasehold properties are distinctive in that they satisfy the psychological and financial inclinations of some types of investors. This section will delve into why leasehold property is a good investment in the Balinese property market.

Tailored Duration and Terms

In contrast to the inflexibility of freehold, leasehold provides a custom approach, where the period and terms of the lease can be adjusted. Longer lease periods give stability and a feeling of 'home' to expats and investors who may not seek permanent residency but want a long-term connection to the island. On the other hand, shorter lease options are favourable for those who wish to test the waters or have flexibility in their investment portfolio.

Cost Efficiency and Flexibility

From a financial viewpoint, leasehold properties provide a cost option, which is often more accessible than the price of acquiring a freehold property, thus, a rational choice to make for those with a budget restriction willing to venture into the Bali property market. Furthermore, the flexibility in lease duration and renewal options, which is coupled with the varying personal or investment objectives, ensures that the property can adjust to the changing goals.

A Detailed Comparison: Freehold or Leasehold in Bali

For an educated choice in property investment in Bali, it is important to be highly selective and scrutinize the different leases and freehold options. In this part, we will span out a full comparison to highlight the chosen advantages and the relevant drawbacks.

The legal system, constituting the backbone of the decision-making process, is essential in property acquisition. The freehold ownership guarantees a clear and legal stand, while the leasehold necessitates the observant implementation of the lease terms that are liable to change. Mastering how each of the two types work legally, is of essence in ensuring the purchaser enjoys the ownership without hustle.

Due Diligence services are offered by Rumah3D in collaboration with Seven Stones Indonesia.

Financial Implications

Financial analysis plays a key role in any property investment decision-making. Though management could be more expensive than freehold, there is the advantage of possessing a permanent asset upon purchase. Leasehold which has its expiry dates furnishes a more complex picture in terms of the investment's current and future worth as it involves lease renewal fees and possible escalations.

Long-Term Strategic Decisions

The choice between freehold and leasehold should depend on your short-term objectives and strategies. Aspiring to have a permanent residence or a base in Bali can give advantages of freehold investment, and it can reflect the features of freehold property. On the other hand, if your ambitions are based upon a more short-term concept, leasehold properties can help you achieve a cost-effective and flexible alternative.

The Main Recommendations for Property Buyers in Bali

Armed with a knowledge of your property options in Bali, as a prospective property buyer, whether you have full ownership or leasehold depends on your circumstances, likes, and investment goals.

  1. Consider the Nature of Your Investment: The nature of your investment whether for personal use, income generation or long-term capital appreciation will determine whether the suitability of freehold or leasehold property in Bali is the one for you.

  2. Engage with a Qualified Real Estate Expert: Real estate agents with local knowledge can provide exceptional service, starting from helping you check out a property to make sure that the transaction meets all the Indonesian regulations.

All real estate agents partnered with Rumah3D are certified and licensed agents in Indonesia and have a long history of successful and reliable businesses.

  1. Conduct a Thorough Risk Assessment: There are risks associated with every property investment; thus, it is important to perform site-specific due diligence based on the type of property you are considering and your risk tolerance.


In the constantly changing terrain of property investing, there is no such thing as a universal solution. The choice between freehold and leasehold in Bali is a very individual endeavour. It should reflect your immediate needs, long-term aspirations, and financial situation. Through the knowledge you gain from this guide, you will approach your Bali property investment with great clarity and confidence that your choice will reflect your vision of Bali.

The Bali property market is a mosaic of investment opportunities just sitting there for the taking. Whether you opt for the permanence of freehold or the flexibility of leasehold, the key to a successful investment lies in knowing all subtleties and more importantly, making a well-thought decision that defines the purpose of your Bali dream. With the support of industry professionals and a clear investment strategy, your Bali property venture can be as rewarding as it is enchanting.

Get in touch with Rumah3D and our partners to get the latest insights about Indonesian regulations!

Have a question about Rumah3D?

Feel free to reach out to us!

Contact us on WhatsApp

By proceeding, you consent to receive calls and texts at the number and email you provided from the responsible agent and others about your inquiry and other home-related matters.

Back to blog home