Thinking about buying property in Bali? You’ll likely encounter two main types of ownership: freehold and leasehold. Understanding the difference is crucial before you invest. Today, we’ll dive into the world of leasehold property in Bali.
What Does Leasehold Mean?
In a leasehold agreement, you purchase the right to use and develop a property for a set period, typically ranging from 25 to 30 years, though some contracts can extend as far as 99 years. You essentially become a tenant for a predetermined time.
The Leasehold Deal
Here’s how it works: you (the lessee) pay the landowner (the lessor) a sum of money for the leasehold rights. This grants you permission to build on the land, live in the property, and even sublease it to others during the lease term.
Benefits of Leasehold Property in Bali
- Affordability: Compared to freehold, leasehold properties are generally much cheaper. This makes them a good entry point for investors or those on a tighter budget.
- Lower Maintenance: Some leasehold agreements might involve the landowner handling some maintenance responsibilities, freeing you up from those costs.
- Flexibility: Lease terms can be negotiated to suit your needs. This allows for some customization of the agreement.
- Liquidity: Leasehold properties in Bali tend to be easier to sell or transfer compared to freehold options.
Things to Consider with Leasehold
- Limited Ownership: You don’t actually own the land, just the right to use it for a specific period.
- Renewal Challenges: Renewing the lease at the end of the term can be expensive and complex, with no guarantee of success.
- Potential Loss of Investment: If the lease isn’t renewed, you lose any structures built on the land and the initial investment.
- Restrictions: Landowners might impose limitations on what you can build or how you can use the property.
Leasehold vs. Freehold: Choosing What’s Right for You
The decision between leasehold and freehold depends on your goals. Freehold offers greater security and potential for appreciation, but comes at a higher cost. Leasehold provides a more budget-friendly option, but with limitations on ownership and future rights.
Seeking Expert Advice
Before making any decisions, consulting with a lawyer and a Bali real estate professional is highly recommended. They can guide you through the legalities of leasehold agreements and help you find a property that aligns with your plans.
