What Is The Different between Leasehold VS Rental and Buying Properties In Bali
Before you go further to choose properties in Bali, good to know about the different between buying, renting, and leasing.
What is buying Property In Bali?
Buying mean is to buy the properties which is become yours forever and you will get the Free Hold Land Certificate. But to buy the properties in Bali as a foreigners is not easy and not recommended unless you really trust somebody or at least your Husband/Wife. Why ? Because until now the Indonesian government doesn’t allow any other nationalities own property in Bali with Free Hold Land Certificate unless you married to Indonesian or you are Indonesian citizen . so The Best Way To Own Properties in Bali is either Renting or Leasing
What Is Renting Property in Bali?
Renting Means Is to Rent any Properties In Bali in Short terms for example monthly 1-6 months or yearly 1-2 years. this type of way to own properties in Bali are recommended for foreigners because you can directly rent the Properties by your self and need trusted property agent to help you with pepper work to make legal document between you and the owner in Notary.
What Is Leasing Property In Bali ?
Leashing is similar to renting however leasing is intent to long term of contract for example 10 years until 25 years.
This Type of way also very recommended and safe to do so for owning any properties in Bali in long terms you just need to look for any best properties you love to own and ask your Bali property agency help you with the legality of owning pepper work with the local notary .
Here are some property titles which a foreigner can acquire, such as Freehold (Hak Milik), Leasehold (Hak Sewa), Right of Use (Hak Pakai), Right to Build (HGB) .
So here are the differences between a Long-term Rental and a Leasehold property.
1.A Long-Term Rental Property
A long-term rental is usually anywhere from 1- 5 years . The owner of the property rents out his premises, typically receiving up-front yearly rental payments. A ‘Rental Agreement’ is signed by both the Landlord and the Tenant, accompanied by the signature of a witness (generally the property agent).
A Long-Term Rental is often the best solution for families or groups who regularly travel to Bali if:
- You are planning an extended vacation
- You often travel on business trips
- You are a large family and intend to relocate to Bali
- You have a higher budget but no plans to purchase a villa at this time
Is a Long-Term Rental the right solution for your needs?
There are many advantages to a long-term villa rental, for example:
- No contract renewal or return required for the rental period
- In most cases, the owner will give a discount the longer you rent
- Many villas provide 24-Hour manager assistance
- Personal cook, maids and butler service, nanny daycare (if under management)
- Fully furnished, quality interiors and amenities
- Additional free services, such as wifi internet access & satellite tv
- Having the privacy of your own villa, without the maintenance costs
- If permitted by the owner, the tenant can sub-let
2.A Leasehold Property
This is a long-term lease contract. Although the land title is not under the foreigner’s name and remains under the ownership of the original owner, the land can be leased for an initial period of around 25 years and can then be extended up to a period of 70 years. After the lease begins, the owner’s title of Hak Milik (Right to Own) will be legally transferred to the foreigner under the Hak Sewa title (Right to Lease).
Under the lease contract the property is able to be sub-leased (rented out to other people). This is how many foreigners turn a leasehold property into a lucrative investment and source of passive income. For most investors, the beauty of a lease is that their focus is immediate cash flow and a passive income, allowing freedom from the burden of watching market conditions as the actual value of the property is of no huge concern. In a low market there will be an increased number of long-term renters, and in a high market when everyone is purchasing, there is still the benefit of short-term holiday rentals.
If you decide to buy leasehold, the drafting of any leasehold agreement should be carried out with the assistance of a third party legal advisor, since guaranteeing renewals and limiting rent increases is the key to a cost-effective leasehold structure.
If the leasehold is not renewed once it expires, all rights go back to the original owner and it becomes a freehold Hak Milik property again.