Bali property glossary

Freehold is an English term used by the market. In Bali, it is often used to refer to Hak Milik, the most complete land ownership right. The word alone does not give a foreign buyer a right of ownership.

To remember. A foreigner cannot hold Hak Milik in their own name. The title actually offered must be identified, rather than relying on the commercial label.

More on this subjectHak Milik, Hak Pakai, HGB and Hak Sewa

Hak Guna Bangunan, often abbreviated HGB, is the right to erect and own buildings on land belonging to someone else, for a fixed period. It may be held by an Indonesian legal entity.

To remember. Creating a PT PMA does not automatically confer an HGB. The title, its remaining term and the conditions of extension are checked on the certificate and in the applicable regulations.

More on this subjectUnderstanding HGB

Hak Milik is the most complete land ownership right under Indonesian law. It is reserved for Indonesian citizens, and for certain legal entities designated by the State. A foreigner cannot hold it directly in their own name.

To remember. An arrangement under which a nominee would hold this right for a foreigner is legally risky and may be deprived of effect.

More on this subjectProperty rights in Indonesia

Hak Pakai is a right to use land and, where applicable, the building on it, for a fixed period. Under certain conditions, some foreigners may hold it for a residence.

To remember. The conditions of stay, type of property, duration and minimum price depend on the regulations in force at the time of the transaction. This right is not Hak Milik.

More on this subjectCan a French national buy a villa in Bali?

Hak Sewa is a right, provided for under Indonesian law, to use another person’s land against payment. It is a contractual right of use, distinct from Hak Milik.

To remember. On the market, it is often likened to leasehold. The contract nevertheless sets out the duration, the price, the permitted use and what happens at the end of the term.

More on this subjectLeasehold and Hak Sewa

The land certificate is the document that records a right over land, for example Hak Milik, Hak Pakai or an HGB. It states the holder, the location, the area and the type of right.

To remember. A brochure or a screenshot does not replace verification of the certificate and of its correspondence with the land offered.

More on this subjectThe checks before buying

Zoning indicates the use a plot of land may receive: housing, tourism, agriculture, a protected area, and so on. An attractive plot is not necessarily buildable for a rental villa.

To remember. Permission for a use is checked against the local planning rules, and not only in the sales argument.

More on this subjectRisks linked to the land

In everyday property language in Bali and Lombok, leasehold means a right to use a property for a fixed period, under a contract. It is not full ownership.

To remember. The duration, any extension, transfer and the parties’ obligations are read in the documents and under the applicable law. The word does not, by itself, designate a single land title.

More on this subjectUnderstanding leasehold in Bali

An extension is the possibility, whether or not the contract provides for it, of lengthening the term of a right of use. It is neither automatic nor free of charge, unless a clear stipulation and the applicable law say so.

To remember. It is necessary to read who may request the extension, at what price, within what time, and whether it is already recorded or only an option to be negotiated.

More on this subjectExtending a leasehold

To transfer a property right is to assign it during one’s lifetime, or to arrange what becomes of it on the holder’s death. Everything depends on the title and the contract: a leasehold is not transferred in the same way as Hak Milik.

To remember. Assignability, the owner’s consent, the costs and the effects on succession must be in writing. An oral promise of “free transfer” is not enough.

More on this subjectTransferring or reselling a leasehold

The beneficial owner is the natural person who ultimately owns or controls a company or a transaction, even if other names appear on the documents.

To remember. Declaration rules change. Concealing real control in order to circumvent a prohibition on holding a right is a matter for advice, not a technique to improvise.

More on this subjectInvesting through a company or a holding

Due diligence is the set of checks carried out before committing: title, zoning, the seller’s company, permits, contract, payment schedule and consistency of the prices announced.

To remember. It is not limited to the brochure. Legal, technical and tax points belong to competent professionals; BEL-AIR can help gather the documents, without taking their place.

More on this subject10 checks before buying

The Indonesian notaris is an officer who authenticates certain private-law instruments, in particular company articles. The role is not exactly the same as that of a French notary, and the notaris is not automatically the person who draws up the land deed.

To remember. The deed that records a right over land is in principle drawn up by a PPAT, who may also be a notary, but the two functions remain distinct.

More on this subjectUnderstanding the options before buying

A local PT is the usual name for an Indonesian company that is not formed as a foreign-investment vehicle. Its shareholders and its object follow a regime distinct from that of a PT PMA.

To remember. The mere fact that a company is “local” says nothing about the land title, nor about whether a foreigner may be a shareholder or control the rights.

More on this subjectPT PMA or leasehold

A nominee is a person presented as the holder of a right while the economic interest belongs to someone else, often a foreigner. This arrangement is used to circumvent a nationality rule.

To remember. BEL-AIR does not present it as a solution. An arrangement of this kind may be deprived of effect and expose both parties. It should be set aside unless independent advice has said otherwise in writing, which is rare.

More on this subjectUnderstanding the risks of an investment

The PPAT, Pejabat Pembuat Akta Tanah, is the officer authorised to draw up deeds relating to rights over land, for example a transfer or the creation of certain rights. These deeds are then used by the land registry.

To remember. Choosing a PPAT does not remove the need to read the title, the zoning and the contract. Their involvement authenticates a deed; it does not by itself guarantee the commercial balance of the project.

More on this subjectThe key checks before buying

A PT PMA is an Indonesian company open to foreign investment. It has its own legal personality. Depending on its object and the regulations, it may hold certain rights or carry on an activity.

To remember. Creating a PT PMA does not automatically guarantee a type of ownership, a permit or a tax advantage. The corporate object, the licences and the land title still have to be examined one by one.

More on this subjectInvesting in one’s own name or through a PT PMA

Acceptance is the agreement, or the reasoned refusal, to treat the works as complete. It generally makes it possible to list snagging items: defects to be corrected.

To remember. Warranty periods often run from this date, if the contract provides for it. Without a written record, the discussion remains unclear.

More on this subjectSupport for a bespoke villa

An advance payment is a sum paid before the balance, in order to reserve or start a sale. Depending on the contract, it may be applied to the price, or lost in certain cases.

To remember. The document must say to whom the money is paid, whether it is held in escrow, and in which cases it is returned.

More on this subjectBuying off-plan in Bali

The estimated handover is the date on which the developer announces that the villa should be finished. Until it is written into the contract, with a consequence in the event of delay, it remains a commercial target.

More on this subjectReading a handover schedule

Handover of the keys is the moment when the buyer can take possession of the villa, in principle after the payments provided for and the checks agreed.

To remember. It does not, by itself, prove that the permits, the title or technical compliance have been settled.

Buying off-plan means committing to a villa that is not yet built, or not yet handed over, on the basis of plans, renderings and a schedule.

To remember. The visuals are indicative until the contract describes the specifications, the deadline and what happens in the event of delay.

Example. Reserving a villa whose construction has not started, with payments staged until the announced handover.

More on this subjectBuying off-plan in Bali

The payment schedule sets out the sums to be paid and the events that trigger them: reservation, signature, construction stages, handover.

To remember. A percentage without a date, or a date with no link to actual progress, should be read carefully. Paying almost everything before construction increases the risk.

More on this subjectWhat budget to plan for

A reservation takes a property off the market for a short period, usually against a payment. It is not yet the sale: its effects depend on the document signed.

To remember. It is necessary to know whether the sum is refundable, for how long, and what happens if the checks do not confirm the project.

More on this subjectPrecautions for an off-plan purchase

The sale contract, or the contract that takes its place under the law chosen, describes what is acquired, by whom, at what price, on what schedule, and with what guarantees.

To remember. In Bali, the transaction may combine a commercial contract and a land deed. One does not replace the other. The language, the translation and the applicable law matter.

More on this subjectUnderstanding the options before buying

Acquisition costs are everything that must be added to the advertised price in order to become the holder of the right: taxes, deeds, translations, any commissions, and sometimes works or furniture that are not included.

To remember. Comparing two villas on the advertised price alone is incomplete. The cost of entry is also the basis for a return calculation.

More on this subjectPlanning the budget for a purchase

BPHTB, Bea Perolehan Hak atas Tanah dan/atau Bangunan, is a tax due on the acquisition of rights over land and/or a building. It is distinct from the price paid to the seller.

To remember. The base, the rate and the person who bears it depend on the transaction and the local rules. They should be quantified before commitment, not afterwards.

More on this subjectProperty tax in Bali

Notarial fees group together, in buyers’ language, the fees of the notaris or the PPAT, the disbursements and sometimes taxes that the office collects. It is not a single fixed heading.

To remember. Ask for a written quotation that separates fees, taxes and registration costs. A round lump sum often conceals what remains payable by the buyer.

More on this subjectWhat budget to plan for

PBB, Pajak Bumi dan Bangunan, is the annual tax on land and building. It is due during ownership, and not only at the time of purchase.

To remember. Its amount depends on the value adopted by the administration and on the property. It does not replace service charges, maintenance or management costs.

More on this subjectTaxes linked to the property

PPh, Pajak Penghasilan, is Indonesian income tax. It may concern a capital gain, rent or a company’s profit, depending on the case.

To remember. The treatment of a resident and that of a non-resident, or of a company, are not the same. The tax treaty between France and Indonesia may come into play, without by itself eliminating the tax.

More on this subjectTax on income and transfers

PPN, Pajak Pertambahan Nilai, is Indonesian value added tax. It may apply to certain sales of property or services, depending on the status of the seller and the nature of the transaction.

To remember. A “net seller” price does not always indicate whether PPN is included. The rate and when it is due are confirmed on the invoice and with a tax adviser.

More on this subjectProperty tax in Bali

Rent may be taxed in Indonesia, and sometimes also declared in the owner’s country of residence. The regime depends on who receives it: an individual, a company, a resident or a non-resident.

To remember. An announced “net” return only means something if it is clear which taxes have been deducted. No single rate applies to all French-speaking investors.

More on this subjectProperty tax in Bali

ADR, Average Daily Rate, is the average price actually obtained for a night let. It counts only nights sold, not empty nights.

To remember. A rate displayed in high season is not an annual ADR. Discounts, platform commissions and complimentary nights bring it down.

More on this subjectThe assumptions in a rental calculation

Cash-flow is the money that remains, over a period, once rent has been received and expenses have been paid. It can be positive or negative, even if a gross yield looks high.

To remember. A property can show a yield and still require cash if costs, financing or works fall due before the rent.

More on this subjectReading a cash projection

Gross yield compares rent received, or expected, with the purchase price, before operating costs, management, maintenance and tax.

To remember. It is always higher than what actually remains. It is an order of magnitude, not a promise.

More on this subjectRental yield in Bali

The management fee is the share paid to the company that markets or administers the rental. It is often a percentage of the rent, sometimes already included in a package of costs.

To remember. The rate of one development does not apply to the others. It is read in the management contract, together with exactly what it covers.

More on this subjectUnderstanding management fees

Net yield deducts from the rent the costs one has chosen to count: operation, management, maintenance, sometimes tax. The word “net” means nothing without the list of those deductions.

To remember. A serious projection distinguishes at least a cautious scenario and a central scenario. None of these figures is guaranteed.

More on this subjectCalculating a net yield

The occupancy rate measures the share of nights, or days, actually let over a period. A villa is not occupied every night of the year.

To remember. A rate announced without a season, without a source and without distinguishing a reserved night from an occupied night remains an assumption.

Example. 180 nights let out of 365 correspond to a rate of about 49%, even before discussing the price per night.

More on this subjectOccupancy and rental yield

Operating costs cover what must be paid in order to let and maintain the villa: energy, housekeeping, linen, minor upkeep, insurance, subscriptions, and sometimes staff.

To remember. In some developments, a fixed share of revenue is presented as covering these items. It is necessary to read what is included, and what remains on top.

More on this subjectCosts and rental management

A capital gain is the positive difference between the transfer price and the acquisition cost, before tax and resale costs. It exists only if a sale takes place, at a real price.

To remember. A hoped-for rise in the market is not a capital gain. The tax on a transfer depends on the title, the seller and the country of residence.

More on this subjectThe tax on a transfer

RevPAR, Revenue Per Available Room, combines price and occupancy: it is rental revenue brought back to each night the property could have been let, including empty nights.

To remember. It is more informative than a brochure rate. It does not yet deduct all operating costs.

More on this subjectUnderstanding rental revenue

ROI, return on investment, compares a gain with the sum invested. For a villa, it only means something if the period is stated, if what is included in the cost is stated, and if the gain is gross or net.

To remember. It is not a guaranteed rate. Two calculations that do not use the same assumptions cannot be compared.

More on this subjectCalculating the real return

In French, “permis de construire” is the authorisation to build. In Indonesia, the document that corresponds to a current application is in principle PBG. IMB designates the former regime.

To remember. Asking for “the permit” without specifying PBG, IMB or SLF leads to misunderstandings. Each abbreviation covers a different moment in the project.

More on this subjectThe framework of a bespoke villa

A contractual warranty is the commitment, in a contract, to repair certain defects for a period. It exists only within the written limits: duration, items covered, exclusions.

To remember. For a French-speaking buyer in Bali, there is no automatic “ten-year warranty” modelled on French law. Only the contract, and the law that governs it, count.

More on this subjectWhat the support covers after handover

IMB, Izin Mendirikan Bangunan, was the authorisation to build issued before the reform of construction law. Existing villas may still refer to it.

To remember. IMB is not PBG. For a new project, the document expected falls in principle under the current regime, PBG, and not under a form that is no longer issued. The history of a building already erected is checked document by document.

More on this subjectChecking a project’s authorisations

PBG, Persetujuan Bangunan Gedung, is the approval required to erect, alter or adapt a building under the regime that followed the construction reform. It succeeded IMB for new applications.

To remember. PBG is not a title of ownership of the land. It is also not the same as SLF, which comes into play when the building is considered fit for its use.

More on this subjectBuilding a villa: the framework of the support

SLF, Sertifikat Laik Fungsi, certifies that a building is considered fit for its intended use, after its compliance has been checked. It is neither the building permit nor the land title.

To remember. A project may have a PBG and not yet have an SLF. Rental operation may depend on this step, depending on the project and the local rules.

More on this subjectThe documents to request

The specifications describe the works expected: areas, materials, equipment, limits of supply. They serve as the reference if the result handed over departs from them.

To remember. A 3D rendering does not replace this list. What is not written may be treated as outside the scope of work.

More on this subjectSupport for a bespoke construction

A turnkey construction entrusts one party with a broad scope: studies, works and handover of a villa that can be used. The exact content depends on the contract, not on the expression.

To remember. BEL-AIR coordinates the search and the commercial follow-up of a bespoke project. The agency does not take the place of the builder, the architect or the inspection office.

More on this subjectBespoke villas in Bali and Lombok

Maintenance covers the upkeep that keeps the villa lettable: garden, pool, air conditioning, minor works, and replacement of what wears out.

To remember. It has a cost, even when occupancy is low. A return that forgets it is incomplete.

More on this subjectThe cost items of a villa

Property management is the operational management of a villa that is let: welcoming guests, housekeeping, ordinary maintenance, collection of payments and reporting.

To remember. Where this management exists in a development, it is in principle provided by a specialist company of the developer, and not by BEL-AIR. The contract states the scope and the remuneration.

More on this subjectRental management of the developments

Remote management consists of supervising a villa from another country, relying on a local manager, reports and booking tools.

To remember. Distance does not remove the need for clear contracts, separate accounts and an identified contact on site. BEL-AIR does not operate the villas.

More on this subjectThe role of BEL-AIR and that of the manager

Rental distribution means the channels through which nights are sold: the manager’s website, platforms, local agencies. Each channel has its commissions and its rules.

To remember. A platform commission is added, or not, to the management fee. The two should not be counted only once by mistake.

More on this subjectUnderstanding rental marketing

Short-term rental offers the property to travellers for a few nights or weeks, rather than to an occupant for the year. Income depends on the price, occupancy and costs.

To remember. It may be subject to authorisations, zoning or rules of a joint ownership. A residential property is not automatically available for tourist letting.

More on this subjectThe return on letting by the night