If you start looking into buying property in Bali, you will quickly come across two terms: leasehold and freehold.

At first, it can sound complicated, especially if you’re used to buying property in Europe or other parts of the world. But in reality, the difference is quite simple once you understand how property ownership works in Indonesia.

Let’s break it down in plain terms.

Freehold: Owning the Land Forever

Freehold means you own the land completely and indefinitely. There is no time limit. You can keep it forever, sell it, pass it on to your children, or do whatever you want with it (as long as it follows zoning laws).

In Indonesia, this type of ownership is called Hak Milik, and it is the strongest form of land ownership.

However, there is one important rule: Only Indonesian citizens can own freehold land directly.

This means that foreigners cannot legally hold freehold land in their own name.

Because of this restriction, most foreign investors in Bali use a different structure.

Leasehold: Renting the Land Long-Term

Leasehold is the most common option for foreign investors in Bali.

Instead of owning the land forever, you lease the land from the landowner for a long period of time. Think of it as a long-term rental agreement for land.

Typical lease periods are 25, 30 years… But could be longer, sometimes also shorter.

Many contracts also include the option to extend the lease later.

During the lease period, the property is fully yours to use. You can:
• build a villa
• rent it out to tourists
• live in it yourself
• sell the remaining lease to someone else

So while you don’t own the land permanently, you still have full control over the property during the lease.

Why Most Foreign Investors Choose Leasehold

Leasehold is very popular in Bali because it is simple and relatively accessible.

Compared to freehold property, leasehold usually has:
• lower entry prices
• clear legal structure for foreigners
• the ability to generate rental income

For example, if someone buys a 30-year lease villa and rents it to tourists, they can still generate strong returns during that time.

Many investors see it as similar to buying a long-term income-producing asset.

Another Option: Owning Through a Company

There is also another route for foreign investors.

Foreigners can set up an Indonesian company called a PT PMA. This company can hold certain land rights, such as Right to Build (Hak Guna Bangunan).

This structure is often used for:
• larger villa developments
• hotels
• commercial projects

However, setting up and maintaining a company involves more costs and administration, so it is usually used for bigger investments.

So Which One Is Better?

It really depends on your goals.

If you want a simpler investment focused on rental income, leasehold is usually the easiest option.

If you are planning a large development or long-term project, a company structure might make more sense.

Both options are commonly used in Bali’s property market.

The Key Thing to Remember

Bali’s real estate market works a little differently from Europe or the US, but once you understand the basics, it becomes much clearer.

Most foreign investors simply use well-structured leasehold agreements and work with reliable notaries, lawyers, and developers.

With the right setup, Bali can offer not only an incredible lifestyle - but also a strong property investment opportunity.