Buying property in Bali: What Australians should know

The lush tropical vistas, glorious surf breaks, cheap food, sunshine and friendly locals make Bali a perennially popular holiday destination. For a growing number of Australians, Bali is becoming a home and not a holiday.

While there are risks and complexities when it comes to buying property in Bali, this isn’t always the case.

“We spent six months living in Ubud just to make sure that this dream of living here could be done,” says artist Christine Hingston who, with her photographer husband Tim, travelled for Bali for 20 years before in 2013 they pursued their dream to live there.

“We sold our house in Perth and secured a retirement visa through a professional visa agent. This enables us to stay permanently but not to make any income here. As we are not Indonesian citizens, we are not able to own land in Bali, only to lease.”

The Indonesian constitution prohibits foreigners from controlling the land but the government has introduced a form of ownership that can be used by foreigners called Hak Pakai, or usage rights, which is most easily thought of as a very long leasehold.

“For all intents and purposes, this form of ownership gives the same security as owning the freehold title, in that it can be mortgaged and the owner can do all things required when dealing with the property,” says Greg Smith, corporate and international manager with Elders Bali.

“Most of the foreign investment in Indonesia is on leasehold land, so they are very protective of maintaining the integrity of leasehold rights to avoid compromising foreign investment.”

There are no standard type of leases in Bali so it’s vital that a buyer gets good advice and information about the lease from agents and trusted property managers.

“This is particularly true when it comes to the option to renew or extend conditions in a lease. Some buyers still use the nominee ownership method, which uses an Indonesian as a nominee to own the property for you. This is used quite widely but is fraught with danger, because if the relationship between the nominee and the foreigner becomes sour, many problems can arise,” Smith says.

Still, the Hingstons have not had problems so far in not using an agent.

“We did not go through an agent to find land. We were lucky to have an elderly Balinese man who knew the area very well recommended to us and he showed us available land,” says Hingston.

“Once we found a piece of land, negotiations began with the family who owned the land and a local notarist [settlement agent]. We have a 25-year lease with an option for another 20 years. After 25 years, the price to take up the additional 20 years would be based on land value at that time.”

Smith says Kuta, Legian, Seminyak and Canggu in the north of Bali are highly popular.

“A one-bedroom apartment can be purchased for as little as $60,000 in Kuta,” Smith says.

“Some people love the huge selection of amazing restaurants and upmarket shopping at Seminyak, some love the peace and tranquillity of Ubud while other simply enjoy the laidback lifestyle for a fraction of the cost of doing the same in Australia or Europe.”

Now may be the time for buyers who have long dreamed of their own property in Bali, with environmental factors resulting in a significant drop in prices and demand, according to Smith.

“The Bali market has dropped 30 per cent to 40 per cent in the past four years. The volcanos and airport closures combined with a peaking of the market have seen prices spiral downward,” he says.

“The market had bottomed out and is just starting to recover.”

The Hingstons chose to design their own home. “A Balinese building company transferred our drawings into processional plans. We made only minor changes as we needed to. The build took a year, a few months more than the timeline we were given, but stayed on budget.”

The Hingstons have been mindful of the customs and traditions of the local Balinese community and actively educated themselves in how to honour and respect these as residents of Ubud.

“We had a land blessing ceremony before we started to build and had a large ceremony to bless the house. We couldn’t move into the house until we did this,” Hingston says. “We pay a local person to do our offerings every day. It would be very offensive to the local community who live around us if we didn’t do this.

“We have now been in our house for nearly three years. We love living in the rice fields and jungle. We love the fact that we can walk to town for a meal. We love the local community who live around us. We love living in Bali.”