Should a foreigner in Bali hold land on a lease (Hak Sewa) or a right of use (Hak Pakai), and how long does each last?

Two different kinds of right

Hak Pakai (right of use) is a land right in its own sense. UUPA defines it as the right to use land held by the State or owned by someone else, with the powers and duties set in the grant or in an agreement with the owner, which is not a lease (Article 41(1)). It is registered and the holder receives a land certificate (PP 18/2021 Article 54).

Hak Sewa untuk bangunan (lease for building) is the right to use another person’s freehold land for a building, paying the owner rent (UUPA Article 44(1)). The rent can be paid once or in instalments, before or after the land is used (Article 44(2)). It rests on the agreement with the owner.

Who may hold them is almost the same. Both are open to Indonesian citizens, foreigners resident in Indonesia (“berkedudukan di Indonesia”), Indonesian legal entities and foreign legal entities with a representative office (UUPA Articles 42 and 45; PP 18/2021 Article 49(2)). Neither is freehold (Hak Milik), which a foreigner cannot hold. See can a foreigner own land in Bali?.

Side by side

	Hak Pakai over freehold land	Lease for building
How it is created	Granted by the owner by a deed made by a PPAT (PP 18/2021 Article 53(3))	Agreement between the owner and the tenant (UUPA Article 44)
Registration	Must be registered at the land office; binds third parties from registration (PP 18/2021 Article 54(1) and (3))	A lease over registered land can be recorded on the register and certificate on application (PP 18/2021 Article 90)
Term	Up to 30 years, renewable by a new deed with the owner (PP 18/2021 Article 52(3))	Not fixed by UUPA; set by the agreement
Transfer to someone else	Only if the agreement allows it (UUPA Article 43(2))	Set by the agreement
Proof of the right	A land certificate (PP 18/2021 Article 54(4))	The lease agreement, and the land office record if made
Owning a house on it	A foreigner with immigration documents may own a landed house on Hak Pakai over Hak Milik land under a PPAT deed (PP 18/2021 Articles 69 and 71)	Not one of the bases PP 18/2021 Article 71 lists for a foreigner’s house
Tax	Acquiring a Hak Pakai is subject to the regional duty BPHTB (UU 1/2022 Article 44(3))	The owner pays a final 10% income tax on the gross rent (PP 34/2017 Articles 2(1) and 4(1)); a company tenant that is a withholding agent deducts it (Article 3)

Hak Pakai over State land or Hak Pengelolaan land works differently: up to 30 years, extendable by up to 20 and renewable by up to 30 (PP 18/2021 Article 52(1)). Ask your lawyer or PPAT which kind of land yours is.

Rules that apply to both

• No exploitative terms. UUPA says neither a grant of Hak Pakai nor a lease for building may carry conditions that amount to extortion (“pemerasan”) (Articles 41(3) and 44(3)).
• No disguised freehold. Any act meant to pass Hak Milik to a foreigner directly or indirectly is void, and the land falls to the State (UUPA Article 26(2)). Long leases or rights of use paired with side agreements that give a foreigner the owner’s powers should be checked by a lawyer.
• Staying eligible. A Hak Pakai holder who no longer meets the conditions for holding it must give up or transfer the right within one year, or it lapses by law (PP 18/2021 Article 50).

Questions to ask before you sign

• Is the land registered, and does the certificate match the land office records? A PPAT must refuse to make a deed for registered land if it does not (PP 24/1997 Article 39(1)).
• For Hak Pakai: what term is granted, and what does the deed say about renewal and transfer?
• For a lease: how long is it, how is it extended, can you sell or sub-let it, and what happens to the building at the end?
• Will the lease be recorded at the land office (PP 18/2021 Article 90)?
• What residence status do you need to keep the right, and which visa will you hold? See which visa lets a foreign investor live in Bali?.

Who does this work: property lawyers check title and terms; notaries and PPATs make the deeds (see what does a notary or PPAT do in a Bali land deal?); land sourcing agents find the plot.