Bali’s real estate market is booming, attracting thousands of global investors, digital nomads, and entrepreneurs. The combination of high ROI, lifestyle appeal, and growing tourism makes the island irresistible — but it also creates room for legal pitfalls and scams.
Understanding the risks and how to avoid them is essential before signing any property contract. Here’s the 2025 guide by DDA Real Estate — your roadmap to safe, transparent, and profitable ownership in Bali.
Indonesia’s land laws are complex: foreigners cannot directly own freehold land, and regulations differ across zones and regions. Add unlicensed brokers, fast-changing developments, and informal practices — and it’s easy for newcomers to make expensive mistakes.
Buying property in Bali is safe — but only when done with proper verification, legal documentation, and licensed professionals.
1. Nominee Ownership — the Biggest Legal Trap
Some agents still promise “freehold for foreigners” using a nominee structure — registering land under a local Indonesian’s name. The foreign buyer signs a “private agreement” claiming beneficial ownership, but under Indonesian law, this contract has no legal protection.
If the nominee decides to sell, disappear, or pass away, you lose everything — the property legally belongs to them.
The Legal Alternative:
If your goal is to invest professionally and rent out property — PT PMA ownership is the safest long-term structure.
2. Unverified Land Certificates
Every property in Indonesia must have a legal land certificate issued by BPN (Badan Pertanahan Nasional) — either SHM (Freehold), HGB (Right to Build), or Hak Sewa (Leasehold).
Common risks:
How to avoid: Always request the Land Book Copy and confirm the title’s authenticity directly at BPN.
3. Zoning Violations (Green Zone Confusion)
Land use in Bali is strictly defined by RTRW zoning laws: residential, commercial, tourism, and agricultural. Many plots marketed as “buildable” are in green zones, where development is illegal.
Consequences:
Solution: Request an official zoning confirmation letter (Surat Keterangan RTRW) from the Dinas Tata Ruang before signing or paying.
4. Missing Permits — PBG, SLF, Pondok Wisata
Even built villas may lack key documents:
Without these, your property cannot be legally rented or insured. Always verify permits in the SIMBG online system or through your notary before purchase.
5. Unregistered Leasehold Contracts
A notarized contract is not enough — every leasehold (Hak Sewa) must be registered at the BPN Land Office.
If not registered:
Ensure your name and lease duration appear in the land’s official record (“Catatan Hak”).
6. Unrealistic ROI Promises
Bali’s average ROI for well-managed villas is 8–11%, not 20–25% as some agents claim. “Guaranteed ROI” deals often rely on unsustainable occupancy rates or future price speculation.
Check:
A professional agent will show you transparent ROI projections — not promises.
7. Tax & Ownership Mismanagement
Many foreign investors underestimate Indonesia’s property tax structure. Incorrect reporting or missed payments can lead to fines, audits, or license suspensions.
| Tax Type | Rate | Applies To |
|---|---|---|
| Lease Income | 10% Final Withholding | Paid monthly via PT PMA |
| Property Transfer | 2.5–5% | On sales or transfers |
| VAT (PPN) | 11% | Rental and hospitality revenue |
| Land Tax (PBB) | Annual | Must be current for all properties |
Keep records of all payments — it’s common for missing PBB receipts to delay future property resales.
Before you pay any deposit or sign a contract, verify who you’re dealing with.
A legitimate agent or developer will never hesitate to share credentials and past work — transparency is their best marketing.
| Step | Verification | Responsible Party | Duration |
|---|---|---|---|
| Land title check | SHM / HGB verification at BPN | Notary (PPAT) | 3–5 days |
| Zoning confirmation | RTRW letter from Dinas Tata Ruang | Architect / Notary | 3–7 days |
| Building permits | PBG / SLF validation | Local Authorities | 1–2 weeks |
| Tax clearance | PBB / NPWP check | Accountant | 2–3 days |
A proper due diligence process usually takes 2–3 weeks — but it’s the difference between safe ownership and future litigation.
Bali’s real estate market is dynamic and full of opportunity — but it also requires structure and discipline. Every successful transaction on the island follows a clear, legally sound process. Skipping just one verification step can cost you your investment, rental license, or peace of mind.
Here’s the step-by-step roadmap recommended by DDA Real Estate to ensure your purchase or lease is 100% secure and compliant.
Before you even discuss price or make a deposit, the first step is ownership verification. Every piece of land or villa in Indonesia must have an official land certificate issued by BPN (Badan Pertanahan Nasional) — either:
Why it matters:
Without this verification, you risk buying land that is already sold, mortgaged, or disputed. BPN will issue a Land Book Copy (Salinan Buku Tanah) that confirms:
This document is your legal foundation — it’s the “birth certificate” of the property.
Not every beautiful rice field can host a villa. Bali is divided into zones: residential, tourism, commercial, agricultural, and green (protected).
Zoning Verification (RTRW):
Get the RTRW Letter from the Dinas Tata Ruang (Spatial Planning Office) confirming what you can legally build or operate. This protects you from buying land in “green” or “agriculture” zones where building and rentals are prohibited.
PBG (Persetujuan Bangunan Gedung):
Replaced the old IMB permit — proves that the building’s design and location comply with regulations.
SLF (Sertifikat Laik Fungsi):
Confirms that the structure is safe and suitable for use. Without SLF, the villa cannot be connected to utilities or insured.
If any of these are missing — don’t buy yet. Permits define your property’s legal existence.
All real estate contracts in Indonesia must be prepared and signed before a licensed notary (PPAT). This ensures the agreement is valid under national law and enforceable in court.
The notary’s role:
Key contracts to review carefully:
Never rely on “private agreements” or unsigned promises — in Indonesia, only notarial documents hold legal power.
Before closing the deal, confirm that the property’s PBB (Pajak Bumi dan Bangunan) taxes are paid up to date.
Why it’s crucial:
Unpaid land taxes can result in government seizure or delays in ownership transfer. The PBB receipt proves that the current owner has met all annual obligations. For PT PMA transactions, ensure the company has a valid NPWP (Tax ID) and no outstanding reports.
No PBB = red flag. Tax compliance is the simplest sign of a clean and honest property.
After signing the contract, your notary must register the transaction at the Land Office (BPN). This applies to both purchases (Hak Milik / HGB) and leaseholds (Hak Sewa).
Registration ensures:
Without registration, your contract remains a private document — valid only between you and the seller, but unenforceable against third parties. Registration makes your ownership visible and protected — it’s your ultimate legal shield.
Choose professionals who are accountable and verifiable. Licensed agents belong to AREBI (Asosiasi Real Estate Broker Indonesia) or REI Indonesia, and follow national real estate ethics.
Why it matters:
If an agent refuses to share their license or company details — walk away.
Buying safely in Bali is not about avoiding bureaucracy — it’s about embracing it. Each document, stamp, and registration protects you from risk.
A safe investment checklist includes:
When in doubt, verify twice. When you work with DDA Real Estate, every step — from land checks to tax clearance — is managed transparently and professionally.
In 2024, a foreign investor bought a “beachfront leasehold” in Gianyar without checking zoning or ownership. The land was in a green zone and the lessor had unpaid taxes. Six months later, authorities revoked the lease — the investor lost $180,000.
Lesson: A quick deal is never worth losing your capital. Legal due diligence is your best insurance.
Read also: “Buying Property in Bali as a Foreigner”, “The Pros and Cons of Off-Plan Property Investments in Bali”, “How to Find the Best Deals on Real Estate in Bali”.
DDA Real Estate provides full due diligence, legal verification, and investment consulting for foreign buyers in Bali.
Our services include:
We make buying property in Bali simple, safe, and transparent — the way it should be.
