Hak Pakai vs HGB vs Leasehold — Property Rights for Foreigners in Bali
Hak Pakai vs HGB vs Leasehold — Property Rights for Foreigners in Bali
Three ways foreigners can hold property in Bali, each with different levels of protection, cost, and risk. Understand which structure fits your investment before you sign anything.
Side-by-Side Comparison
| Hak Pakai (Right to Use) | HGB (Right to Build) via PT PMA | |
|---|---|---|
| Available To | Foreign individuals | PT PMA companies |
| Duration | 25 years (+ 20 + 20 extensions) | 30 years (+ 20 + 20) |
| Renewable | Yes, up to 70 years total | Yes, up to 80 years total |
| Can Build | Yes | Yes |
| Can Sell | Yes (to eligible buyers) | Yes (transfer company) |
| Can Mortgage | Limited | Yes (Indonesian banks) |
| Registration | BPN certified | BPN certified |
| Cost | Lower (direct ownership) | Higher (company required) |
Key Differences
Leasehold (The Third Option)
Leasehold (sewa) typically runs 25 years with options to extend. It's the cheapest entry point but carries the most risk — no BPN registration, no extension guarantee, and disputes are resolved under contract law only. Many foreigners lose their investment when landlords refuse to honor extensions.
Hak Pakai (Individual Ownership)
Hak Pakai is the only title a foreign individual can hold directly. It provides BPN-certified ownership for 25 years with extensions up to 70 years total. It's suitable for personal residences and moderate investments, but has limited mortgage options.
HGB via PT PMA (Corporate Ownership)
HGB through a PT PMA provides the strongest legal framework — 30 years plus extensions to 80 years, full BPN registration, ability to mortgage with Indonesian banks, and easy transfer by selling the company. The tradeoff is higher setup and maintenance costs for the PT PMA.
Transfer & Exit Options
Hak Pakai can be sold to other eligible foreigners or converted upon buyer's request. HGB via PT PMA allows share transfers, making it the most liquid option. Leasehold transfers depend entirely on the original contract terms and landlord cooperation.
Risk Profile
HGB via PT PMA carries the lowest risk with the strongest legal protections. Hak Pakai is moderate risk with good BPN backing. Informal leasehold without BPN registration is the highest risk — we've handled too many disputes where leaseholders lost everything.
Pros & Cons
Hak Pakai (Right to Use)
Pros
- Direct individual ownership
- No company required
- Lower setup and maintenance cost
- BPN certified
- Up to 70 years total
Cons
- Limited mortgage options
- Shorter initial term (25 years)
- Can only sell to eligible buyers
- Extension requires government approval
HGB (Right to Build) via PT PMA
Pros
- Longest tenure (up to 80 years)
- Can mortgage with Indonesian banks
- Easy transfer via company sale
- Strongest legal protection
- BPN certified
Cons
- Requires PT PMA setup ($2,000-3,000)
- Ongoing company maintenance costs
- Higher overall cost
- Annual corporate compliance required
Our Recommendation
For serious investment, HGB through a PT PMA gives the strongest legal protection and longest tenure. Hak Pakai works for personal residences. Avoid informal leasehold without BPN registration — we've handled too many disputes where leaseholders lost everything.