Building on Leasehold Land in Bali: What Foreigners Can Build, and How (2026)
Yes, a foreigner can legally build a villa on leasehold land in Bali. A notarised lease (Hak Sewa), usually 25 to 30 years with an option to extend, gives you the right to use the land and build on it. Three things must line up before construction starts: the lease must explicitly allow you to build, the land's zoning must allow your type of building, and a PBG building permit must be issued. What changed in 2026 is the rental side. If you plan to earn income from the villa, zoning and licensing now decide whether you can rent it out at all.
We design and build villas and hotels across Bali and Lombok, including the 5-star Seven Secrets by Hanging Garden. This guide covers what we check on every leasehold project before we break ground.
What leasehold gives you, and how it compares
Foreigners cannot hold freehold land (Hak Milik) in Indonesia; that title is reserved for Indonesian citizens. A leasehold is a contract with the Indonesian landowner that lets you use and build on the land for a fixed term, typically 25 to 30 years with an option to extend. In Bali, most leases are notarised contracts rather than titles registered at the land office, so the quality of the contract is your protection.
Structure | Who can hold it | Typical term | Best for | 2026 catch |
Leasehold (Hak Sewa) | Any foreigner, by notarised contract | 25–30 years, extendable | Your own villa or holiday home | Renting it out needs a licensed operator and the right zoning |
Right to use (Hak Pakai) | Foreigners with a KITAS or KITAP | Up to 80 years in stages | Living in Bali long term | A minimum property value applies, reported at IDR 5 billion in Bali |
Right to build (HGB) via a PT PMA | A foreign-owned company | Up to 80 years in stages | Rental villas, complexes, hotels | Bali's OSS now rejects new PT PMAs for low and medium-low risk activities |
One structure to avoid: a nominee, where an Indonesian holds freehold land on your behalf. You have no legal ownership, and authorities are actively targeting these arrangements.
What you can build on leased land in 2026
What you can build depends on two things: what the villa will be used for, and how the land is zoned.
A villa for your own use. If you live in it or use it as a holiday home, you need a lease that allows construction, residential or tourism zoning, and a PBG. No business licence is required.
A villa you will rent out. Renting is a commercial activity, so the rules are stricter:
Zoning. The land must sit in a zone that allows tourist accommodation. Check the zoning confirmation (KKPR) before you pay any deposit.
Green zones. After the September 2025 floods, Bali's provincial government stopped new commercial buildings, including villas, on productive agricultural land. A cheap lease on rice-field land is usually cheap for a reason.
Licensing. Since 31 March 2026, booking platforms have removed rental listings that lack a verified business registration (NIB). A building that cannot be licensed cannot earn short-term rental income.
Operator. A foreigner earning rental income needs a PT PMA or a licensed management company acting as operator. New PT PMA registrations for most villa-rental activities are currently blocked in Bali's OSS system, so confirm your route with a legal adviser before you sign a lease.
Seven lease clauses to settle before construction starts
Most lease templates protect the landowner and the rent. Very few protect the building. These are the clauses we ask clients to confirm with their notary before we price a project:
An explicit right to build, renovate and demolish. Name the building type, floor area and number of storeys, so nobody can later dispute that a pool or a second floor was allowed.
The landowner's signed consent for the PBG. The permit application needs the land certificate and the owner's consent. Make cooperation an obligation in the lease, with a deadline.
A lease start date tied to the permit, or a construction grace period. Permits and construction can take 12 months or more. Without this clause, those months come out of your usable years.
The extension price fixed now. Agree the formula today, such as a set amount per are per year or a capped increase, rather than "to be negotiated".
Who owns the building when the lease ends. By default it stays with the land. Agree whether you receive compensation or first right to extend.
The right to transfer or sublease. This is what lets you sell the remaining lease, with the villa, later on.
Signatures from every heir with a claim. In Bali, land often belongs to an extended family. A lease signed by one member can be challenged by another.
Before you sign, check the land certificate at the land office (BPN) and confirm there are no unpaid land taxes or competing leases.
Permits on leased land: PBG and SLF
The PBG (Persetujuan Bangunan Gedung) is the building approval that replaced the old IMB. Every new villa and every major renovation needs one before work starts. The SLF (Sertifikat Laik Fungsi) is the certificate of fitness to use, issued after construction. You need it before you can legally occupy or rent out the villa.
On leased land, the PBG application needs the landowner's certificate and written consent alongside your drawings, structural calculations and zoning confirmation. In practice, the PBG is often issued within about two months of a complete application.
Lease length vs build cost: run the numbers first
A leasehold villa loses value every year as the lease runs down, so the real cost is the lease price plus the build cost, spread over the years you can actually use it:
Yearly cost of use = (lease price + build cost) ÷ (lease years − construction years)
Scenario (illustrative) | Lease price | Build cost | Usable years | Yearly cost of use |
25-year lease, 12-month build | IDR 1.5 bn | IDR 3.0 bn | 24 | IDR 187.5 m |
25-year lease, 24-month build | IDR 1.5 bn | IDR 3.0 bn | 23 | IDR 195.7 m |
30-year lease, 12-month build | IDR 1.8 bn | IDR 3.0 bn | 29 | IDR 165.5 m |
For current build prices per m², see our guide How much does it cost to build a villa in Bali in 2026?
Three takeaways for owners:
A longer lease usually costs less per year, because the build cost is spread over more years.
Every month of delay costs you a month of use. A fixed-price contract and a realistic programme protect you as much as the lease does.
Keep 20+ years left if you may sell. Buyers pay for remaining years, so a villa on a short remaining lease is hard to resell.
Step by step: from leased land to handover
Decide how the villa will be used: a home, a holiday house or a rental. This choice sets your zoning, structure and licensing.
Check zoning before you pay a deposit. Confirm the KKPR allows your building and, for a rental, tourist accommodation.
Run due diligence on the land: the certificate at BPN, the owner and every family member with a claim, unpaid taxes and access to the road.
Get a feasibility check from your builder. A site visit, a concept and a budget range show whether the plot fits your brief before you commit.
Negotiate and notarise the lease with the seven clauses above.
Design and apply for the PBG. Architectural, structural and MEP drawings go in with the landowner's consent.
Build to a fixed-price BOQ, with staged payments and weekly progress reports.
Get the SLF and take handover.
License the villa if you plan to rent it out.
Frequently asked questions
Can foreigners own land in Bali?
No, not as freehold. Foreigners can lease land (Hak Sewa), hold a right to use (Hak Pakai) with a residence permit, or hold a right to build (HGB) through a PT PMA.
Can I build a villa on leasehold land in Bali?
Yes, if the lease explicitly allows construction, the zoning allows your building and a PBG is issued before work starts.
How long is a leasehold in Bali?
Usually 25 to 30 years, with an option to extend. The extension price should be fixed in the original lease.
What happens when a Bali leasehold ends?
The land and the building go back to the landowner unless you have extended. Agree the extension terms and building ownership up front.
Can I sell a leasehold villa?
You can transfer the remaining lease if the contract allows it. Its value depends on how many years are left.
Do I need a PT PMA to rent out my villa?
To earn rental income legally, you need a PT PMA or a licensed management company as the operator, plus the right zoning and licences. New PT PMA registrations for most villa-rental activities are restricted in Bali in 2026, so get legal advice first.
Is a nominee arrangement safe?
No. You have no legal title, and authorities are actively targeting these structures.
This guide is general information, not legal advice. Confirm your structure with a licensed Indonesian notary or lawyer.
Related guides
Planning to build a villa on leased land?
Tell us about your plot and what you want to build. We'll give you a construction budget range and a realistic build timeline, so you can plan your lease around the build.
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