Bali 30-Year Leasehold: Value in Year 10, 20 and 28

A 30-year Bali leasehold is a depreciating asset that behaves like a bond, not like land. Its resale value tracks the income still left to collect — so it holds most of its worth through the first decade, softens through the second, and falls away sharply in the third.

This is general information about Indonesian land law and leasehold valuation. It is not legal, tax or investment advice. Every legal statement is sourced to a published regulation; every valuation figure is a model, not a forecast. Before committing capital, engage a licensed Indonesian notary (PPAT) of your own choosing — not the seller's — and an independent Indonesian tax adviser.

What Hak Sewa actually is

Indonesia's Basic Agrarian Law, UU No. 5 Tahun 1960, lists the rights that can exist over land at Pasal 16. Hak sewa is one of them.

Pasal 44(1) defines it: a person or legal entity holds hak sewa when entitled to use another's land for building purposes, paying the owner a sum of money as rent. Pasal 44(2) permits that rent to be paid in a single lump sum — which is exactly how Bali leaseholds are sold. Pasal 44(3) forbids terms containing elements of extortion.

Pasal 45 lists who may hold it: Indonesian citizens; foreigners domiciled in Indonesia; Indonesian legal entities; and foreign legal entities with a representative in Indonesia. That provision is what lets a foreign individual hold a Bali lease in their own name, with no PT PMA and no nominee.

Note the statutory wording, though: orang asing yang berkedudukan di Indonesia — domiciled in Indonesia. The market routinely sells leases to non-resident foreign buyers, and this is a point where the letter of the statute and market practice sit uneasily together.

We have not been able to establish how that domicile requirement at Pasal 45(b) is treated for a lessee who holds no Indonesian residence — whether berkedudukan is read as legal domicile, as physical residence, or as something looser still. We have found no implementing regulation and no reported decision that settles it, and we would rather say so than paper over it. If it matters to your structure, put the question to your own notary and ask what authority they are relying on. It is worth noting that the related term Orang Asing used in the 2021 land regulations is itself a defined one — under PP 18/2021 Pasal 1 angka 14, a non-citizen whose presence benefits, does business, works or invests in Indonesia — so "any foreigner" is not the test anywhere in this area of law.

On the other side of the ledger, Pasal 21 restricts Hak Milik to Indonesian citizens, and Pasal 26 makes any act intended to transfer freehold to a foreigner directly or indirectly void by operation of law, with the land falling to the State. That is the statutory basis for the standard warning against nominee structures. It is not a question of enforcement appetite; it is a nullity written into the law.

The four tenures, compared

Attribute	Hak Milik (freehold)	HGB (build rights)	Hak Pakai (right of use)	Hak Sewa (leasehold)
Source	UUPA Pasal 20–21	UUPA Pasal 35; PP 18/2021 Pasal 37	UUPA Pasal 41–42; PP 18/2021 Pasal 49, 52	UUPA Pasal 44–45
Foreign individual may hold?	No — citizens only (Pasal 21)	No — citizens and Indonesian legal entities, including PT PMA	Yes, but only an Orang Asing as defined at PP 18/2021 Pasal 1 angka 14 — a non-citizen whose presence benefits, does business, works or invests in Indonesia — expressly listed at Pasal 49(2)(e)	Yes — foreigners domiciled in Indonesia (Pasal 45(b))
Maximum term	Perpetual, hereditary	30 yrs + 20 extension + 30 renewal on state or HPL land; over Hak Milik, 30 yrs and renewable by a fresh deed	30 yrs + 20 extension + 30 renewal on state or HPL land; over Hak Milik, 30 yrs and renewable by a fresh deed	No statutory maximum — but not unlimited either: an indefinite or lifetime term to a foreigner risks being void (see below)
Registered?	Yes, certificated	Yes, certificated	Yes, certificated (Pasal 54)	Not a registrable land right — but the lease agreement itself may be recorded on the register and the certificate under PP 18/2021 Pasal 90
Mortgageable?	Yes	Yes	Yes	No

Two structural points that are routinely misstated

First, a lease is not invisible to the land registry — but it is not a land right either. PP No. 18 Tahun 2021, the omnibus regulation that modernised HGU, HGB, Hak Pakai and land registration, confines its own scope at Pasal 3 to Hak Pengelolaan, HGU, HGB, hak pakai and rusun. Hak sewa is not among them, so it is not regulated there as a right over land, and there is no Hak Sewa certificate to hold. That is a narrower claim than the one commonly made in Bali marketing, that the regulation ignores leases entirely. It does not. Pasal 90(1) permits an interested party to apply to the Land Office to record a perjanjian sewa over registered land, and Pasal 90(2) provides for it to be entered on the general register and/or on the certificate. Permen ATR/BPN No. 16 Tahun 2021 Pasal 127B goes further and prescribes the exact wording the certificate is to carry for a notarial Akta Perjanjian Sewa. So the right question is not "can it be registered?" but "has the recording under Pasal 90 actually been made against this title, and may I see it?"

Second — and this is the point that matters at signing — there is no PPAT deed by which to create a lease. PP No. 37 Tahun 1998 Pasal 2(2) sets out a closed list of eight deed types a PPAT may execute, and hak sewa is not on it. A lease therefore runs through a notaris as an ordinary notarial deed, and reaches the register, if at all, by the Pasal 90 and 127B recording route. If a seller or agent tells you your lease was "made by a PPAT", ask which of the eight deed types they mean. There is no satisfactory answer, and the question tends to reveal quickly how well the person selling to you understands what they are selling.

Neither point changes the substance. Pasal 90 and Pasal 127B give a lease a way onto the register; they do not give it terms. The content of a hak sewa still rests on two articles of a 1960 statute plus general contract law, which is why the deed carries so much weight — there is very little statutory default to fall back on when it is silent.

Why a Bali 30-year leasehold became the standard term

There is no legal cap on the term, and Bali specialists confirm longer leases exist. The convention is a market equilibrium, and the usual explanations are that it mirrors the 30-year statutory ceiling PP 18/2021 places on HGB and Hak Pakai over Hak Milik land; that it suits families who prefer to reassess land use once a generation; that it comfortably outruns the 6–9 year payback villa investors underwrite to; and that notaries are fluent in it.

"Whatever the contract says" has a limit

The absence of a statutory cap is often sold as unlimited freedom of contract. It is not, and this is the part of the standard-term story most Bali articles leave out.

Indonesian courts have voided leases to foreigners drafted as indefinite, perpetual or lifetime arrangements, treating them as penyelundupan hukum — legal smuggling — an attempt to reach by contract the freehold that Pasal 21(1) reserves to citizens and Pasal 26(2) of UUPA makes void, with the land falling to the State. Putusan 112/Pdt.G/2016/PN Gin is an example on an indefinite lease; the Supreme Court's 4233 K/Pdt/2022 addresses nominee structures to the same effect. The consequence is not damages. It is nullity.

There is a conceptual reason as well as a policy one. The Penjelasan to Pasal 44–45 of UUPA is explicit that hak sewa exists only over tanah milik: "Negara tidak dapat menyewakan tanah, karena Negara bukan pemilik tanah" — the State cannot lease land, because the State does not own land. A hak sewa is parasitic on somebody's freehold. A term long enough to hollow out that freehold is a term a court may refuse to recognise.

The practical reading: a defined term of 25 or 30 years with a properly drafted extension mechanism is orthodox and safe. A "99-year lease", a lease "for the lifetime of the purchaser", or an automatic perpetual rollover is a structure to have your own notary look at very carefully before you fund it.

The value curve

Here is the mechanism that makes leasehold valuation tractable. A buyer of your lease is not buying a villa. They are buying the net income it will produce between their purchase date and expiry, plus whatever the extension option is worth. Everything else follows.

If net income is roughly level and future income is discounted at rate r, the share of a fresh 30-year lease's value surviving with n years left is a standard annuity ratio:

Years remaining	Value share at r = 8%	at r = 10%	at r = 15%
30	100%	100%	100%
25	95%	96%	98%
20	87%	90%	95%
15	76%	81%	89%
12	67%	72%	83%
10	60%	65%	76%
7	46%	52%	63%
5	36%	40%	51%
1	8%	10%	13%

Read the shape, not the digits. Losing the first five years costs about 4% of value. Losing the five years between year 10 and year 5 costs about 25%. Decay is not linear, and the last third of a lease is where almost all the damage happens.

Note what the discount rate does, too. A buyer demanding a high return is, counter-intuitively, less punishing of a short lease in percentage terms — they were discounting the far-out years to near-nothing anyway. If Bali yields compress, short leases get hit hardest.

Where the model and the market diverge

That table is a valuation floor, not a price. It assumes a rational buyer with capital, patience and a spreadsheet. Bali's secondary market has fewer of those than you would like, and published specialists are blunt that liquidity, not arithmetic, is what kills short leases: banks will not lend against them and most foreign buyers will not look at them. They do not agree on where that starts:

Source	Stated danger threshold
Villa Bali Sale	Value "begins to drop significantly" below 15 years; sweet spot is 20+
Exotiq Property	Value diminishes "more rapidly" below the psychological level of 20 years
Bali Property Rules	Below 20 years requires "steep discounts" and is significantly harder to sell
Anteya	Buyers will not pay premiums below 15 years; sell before 20 remain
Prestige Property Bali	Buyer pool "narrows sharply" only below 5 years

Four of five cluster at 15–20 years remaining; one is a clear outlier. The prudent reading is that a realistic exit window on a 30-year lease closes somewhere in years 10 to 15 of ownership — and that anyone quoting a precise threshold is estimating.

One caveat governs that whole table, and it is a serious one. There is no published Bali leasehold price index — no transaction register, no repeat-sales series, nothing that would let anyone calibrate the liquidity discount against observed prices. We looked for one and could not find it. Every threshold in the table above is therefore practitioner opinion offered by firms that also earn commission on transactions, not measured market data. That does not make the figures worthless; five independent practitioners clustering at 15–20 years is evidence of something. It does mean nobody, including us, can tell you what a 14-year lease actually sells for, and you should distrust anyone who quotes you a precise discount as though it were measured.

Worked example: the $130,000 one-bedroom

Berawa Private Suite sells a one-bedroom suite at $130,000 on a 30-year Hak Sewa, handover estimated July 2027 — so it is sold off-plan, which carries its own checklist on top of everything here. Working the exit maths exposes exactly which unknowns matter.

Assumptions — all assumptions, not facts:

1. The term is modelled as running from 2026 to 2056. Whether the 30 years runs from signature of the notarial deed or from handover is a question for the deed, not for a model, and a one-year difference shifts every row below by a year. Ask for the commencement date and the stated expiry date in writing; it is the first item on the checklist further down.
2. Net rental income of $15,600 a year, derived from the developer's published 12% target net yield. That is a vendor projection, not independently verified, and it is the model's largest sensitivity. It also predates the tax analysis set out below, which suggests a materially higher effective tax burden for a non-resident owner than that model assumes.
3. Discount rate 10%.
4. Two scenarios: prices for equivalent new 30-year leases flat, or growing 5% a year. Bali sources cite 6–8% historical land appreciation; 5% is deliberately conservative, and past appreciation is not a forecast.
5. No extension value included. A fixed-price extension option would make every figure below an understatement.

Exit year	Years left	Value share (r = 10%)	Resale, flat market	Resale, +5%/yr	Net rent collected	Total returned, +5% case
2032	24	95%	$124,000	$166,000	$78,000	$244,000
2037	19	89%	$115,000	$197,000	$156,000	$353,000
2042	14	78%	$102,000	$222,000	$234,000	$456,000
2047	9	61%	$79,000	$221,000	$312,000	$533,000

Three things fall out of this.

The flat-market column is the honest one. Strip out appreciation and the lease does what leases do: $130,000 becomes $79,000 over twenty years, and every dollar of profit comes from rent rather than resale.

Appreciation and decay cancel out around year 15. In the +5% case, indicative resale peaks around 2042–2047 and then flattens, because land appreciation stops outrunning lease decay.

But liquidity says exit earlier than the model does. By 2042 the lease has 14 years left — below the threshold at which four of five published sources say buyers walk away. Those 2042 and 2047 figures are arithmetic ceilings; a real buyer may pay materially less, or there may be no buyer. A defensible reading is that the window which is both valuable and liquid runs from roughly 2032 to 2040. Holding past that for yield is a legitimate strategy — but it should be a decision, not a surprise.

Extension: what belongs in the deed before you sign

Extension is entirely contractual. There is no statutory right of renewal for a Hak Sewa.

Clause	Weak version	What to insist on
Nature of the right	Prioritas perpanjangan — first refusal the landowner may decline	Jaminan perpanjangan — a guarantee binding the landowner to renew if you perform
Price	"To be agreed between the parties"	A fixed sum, or a written formula (indexed to NJOP or a published inflation measure)
Duration and notice	Unstated	A stated number of additional years, and a defined window to exercise, years before expiry
Who is bound	The current landowner personally	Heirs and successors in title, expressly
Assignment	Silent	Express right to assign or sublease; consent, if required, not to be unreasonably withheld; any transfer fee capped and stated
Improvements	Silent	Stated treatment of the building at expiry — compensation, removal rights, or explicit reversion

Extensions require a fresh notarial deed; a clause is a promise, not a completed act. Bali practitioners recommend opening discussions three to five years before expiry and — if selling — exercising the extension before listing, because a topped-up lease prices far better than a promise of one.

The five questions to put to any developer — including us

There is a temptation, writing as a developer, to fill this section with our own terms and let the reader take them on trust. The more useful thing is to hand you the questions, because the same five apply to every leasehold offer in Bali and they are the ones that decide what your asset is actually worth. Put them to us in writing, and put them to whoever else you are considering. Compare the answers. An offer that will not answer in writing has told you something.

1. When does the term start, and when does it end? Not "30 years" — a commencement date and an expiry date, as stated in the deed. Signature and handover can be a year or more apart, and off-plan that gap is not academic: every year of construction is a year of your term you do not occupy.
2. Is the extension a guarantee or a priority? A jaminan perpanjangan binds the landowner; a prioritas perpanjangan is a first refusal they may decline. Ask which word appears in the deed, at what price or under what written formula, for how many additional years, and exercisable in which window.
3. Is the lease assignable, and on what conditions? Ask whether landowner consent is required, on what grounds it may be refused, whether it may be unreasonably withheld, and whether a transfer fee applies and at what capped figure. Assignability is a clause, not a default. Without it, your exit is nobody's obligation but your own hope.
4. Which instrument is used, and has the lease been recorded? Given that hak sewa is not among the eight PPAT deed types at PP 37/1998 Pasal 2(2), the honest answer is a notarial deed. Ask whether the Pasal 90 recording has actually been applied for against the underlying Hak Milik certificate, and ask to see the certificate afterwards with the Pasal 127B wording on it. "It will be registered" is not the same answer as "it is".
5. What happens to the building at expiry? Reversion to the landowner is the default. Ask whether this deed says anything different — compensation, removal rights, or an express reversion — and get the answer from the document rather than from a conversation.

We are publishing these questions rather than our own answers to them because the answers should reach you as documents you can give to your own notary, not as claims in an article we wrote about ourselves. Ask us for the deed. We would rather be compared on it.

What actually happens at expiry

On the expiry date, absent contrary wording in the deed: your right to occupy ends, with no holding-over right and no automatic renewal; everything permanently attached to the land stays with the landowner — building, pool, walls, landscaping, fitted joinery — with no compensation unless the contract created one; and you may remove movables that detach without damage.

Realistically, expiry is a scenario you plan around rather than reach. Long before the final year the options are to extend, to sell the remainder while a buyer pool still exists, or to hand it back. The one genuinely bad outcome is arriving at year 27 with no extension right, no buyer, and a building you funded.

Checklist before you commit

Ask the developer, in writing:

1. On what date does the 30-year term start, and what expiry date does the deed state?
2. Who is the registered owner of the underlying Hak Milik, and may I see the certificate?
3. Is the extension a guarantee or a priority? At what price, for how many years, exercisable when?
4. Is the lease assignable? Is consent required, on what grounds may it be refused, and what fee applies?
5. What happens to the building at expiry under this deed?
6. Which instrument is used — and, since hak sewa is not among the eight PPAT deed types at PP 37/1998 Pasal 2(2), has the notarial lease been recorded against the title under PP 18/2021 Pasal 90?

Ask your own notary (PPAT), not the seller's:

7. Confirm the grantor's authority, and that the certificate is clean of mortgages, caveats and prior leases.
8. Confirm the notary is appointed for the correct kecamatan, and that the plot's zoning permits the use you are buying for.
9. Explain in writing what happens if the landowner sells the land, dies, or defaults mid-term.

Ask an independent Indonesian tax adviser:

10. What tax is payable on acquiring this lease, and on assigning it later? BPHTB under Pasal 44 of UU No. 1 Tahun 2022 attaches to a closed list — hak milik, HGU, HGB, hak pakai, HMSRS and Hak Pengelolaan — at a rate capped at 5% by Pasal 47. Hak sewa is absent from that list, which means the "5% BPHTB on leasehold" figure that circulates in Bali marketing is wrong as stated. We have found no published authority squarely rebutting the contrary market practice, so treat the statute as the position and any 5% demand as a charge to challenge, in writing, before you accept it into a net exit price.
11. How is nightly rental income taxed for a non-resident owner? Here the position is clearer than the article previously suggested, and it is worse than the number commonly quoted. PP No. 34 Tahun 2017 Pasal 2(3) expressly excludes jasa pelayanan penginapan beserta akomodasinya — lodging services with accommodation — from its 10% final tax on land and building rental. A nightly-let suite is precisely that service. Income to a non-resident owner therefore falls under PPh Pasal 26 at 20% of gross, with no deduction for costs. On top of that, Badung levies PBJT at 10% on accommodation services under Perda Badung No. 7 Tahun 2023. Tax treaties do not rescue this: Article 6 of Indonesia's double tax agreements caps nothing on income from immovable property, and Article 6(4) removes the business-profits shelter that might otherwise apply.

That last point deserves stating plainly rather than burying in a checklist: 20% of gross is materially higher than the 10% figure commonly quoted in Bali, including in our own published yield model. We are reviewing that model. Until it is reissued, treat the 12% target net yield used in the worked example above as unverified on the tax side, and have an Indonesian tax adviser price the actual burden for your own residence status before you underwrite anything.

The disclosure standard worth asking for is illustrated on the Berawa Private Suite project page — though as the questions above show, even a comparatively transparent listing leaves the most consequential facts unstated until a buyer asks for them.

Frequently asked questions

1. What is Hak Sewa, in one sentence? A contractual right to use somebody else's land to build on, in exchange for rent, defined at Pasal 44 of UU No. 5 Tahun 1960. It is a right over land, not ownership of it, and it ends when the contract says.

2. Why are Bali leases usually 25 or 30 years? Nothing in the Basic Agrarian Law caps the term. The convention mirrors the 30-year statutory ceiling on HGB and Hak Pakai, suits landowning families reassessing use each generation, and outruns the 6–9 year payback investors underwrite to.

3. When should I sell a 30-year Bali leasehold? Published specialists converge on exiting while well above 20 years remain — within roughly the first decade. They disagree on where value collapses: most say below 15 years, some below 20, one says below 5. None of them is working from measured transaction data, because no Bali leasehold price index exists.

4. Does the value of a leasehold fall in a straight line? No. At a 10% discount rate a lease with 20 years left retains about 90% of a fresh 30-year lease's income value, 10 years left about 65%, and 5 years left about 40%. Markets discount short leases further because so few buyers can finance them.

5. What happens when a Bali lease expires? Your right to occupy ends and everything permanently attached to the land stays with the landowner, uncompensated unless the deed says otherwise. Movables can be removed. There is no automatic statutory renewal.

6. Is a lease extension guaranteed? Only if the deed guarantees it. A jaminan perpanjangan binds the landowner; a prioritas perpanjangan is merely first refusal. Price should be fixed or formula-driven, never left to future agreement.

7. Can I sell my remaining lease years to somebody else? Only if the deed permits assignment or sublease — it is a clause, not a default. Check whether consent is required, whether it can be unreasonably withheld, and what fee applies.

8. Is a Hak Sewa registered at the land office? Not as a land right — PP No. 18 Tahun 2021 limits its scope at Pasal 3 to Hak Pengelolaan, HGU, HGB, hak pakai and rusun, so there is no Hak Sewa certificate. But the lease agreement is not invisible to the registry: Pasal 90(1) lets an interested party apply to record a perjanjian sewa over registered land, Pasal 90(2) has it entered on the general register and/or certificate, and Permen ATR/BPN No. 16 Tahun 2021 Pasal 127B prescribes the certificate wording for a notarial Akta Perjanjian Sewa. Note also that hak sewa is not one of the eight PPAT deed types at PP 37/1998 Pasal 2(2) — so a lease is made by a notaris, not a PPAT. Ask whether the Pasal 90 recording has actually been effected, and to see the certificate afterwards.

9. What taxes apply when I buy or sell a Bali leasehold? On acquisition, the statute is clearer than the market: BPHTB attaches to a closed list at Pasal 44 of UU No. 1 Tahun 2022 from which hak sewa is absent, so the 5% commonly quoted on leasehold transfers is wrong as stated — though no published authority squarely rebuts the market practice, so expect to have to challenge it. On income, a non-resident letting nightly falls under PPh Pasal 26 at 20% of gross rather than the 10% final tax under PP No. 34 Tahun 2017, because Pasal 2(3) of that regulation excludes lodging services with accommodation; Badung adds PBJT at 10% under Perda Badung No. 7 Tahun 2023. Treaty relief does not apply to immovable property income. Take this to an Indonesian tax adviser.

10. Is leasehold worse than freehold? It is different, and it is what is lawfully available. Pasal 21 restricts Hak Milik to Indonesian citizens and Pasal 26 voids any arrangement designed to pass freehold to a foreigner. A lease in your own name is a real right with a known end date; a nominee freehold is a right you do not hold at all.

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Nothing here is legal, tax or investment advice, and no reader should act on it without independent professional guidance. Regulations, practice and prices change; figures are as at 1 August 2026. Published by Kaluna Development, developer of Berawa Private Suite. Where this article sets out questions to put to a developer, they are questions we intend to be asked ourselves, and the answers should be requested from us in writing and taken to your own notary and tax adviser rather than accepted from an article we wrote about our own project.