8 Common Mistakes Buying Property in Bali & How to Avoid Them
A Guide by Bali Real Estate Consultants
Avoid costly mistakes buying property in Bali. You see the photos of open-air villas and rice fields. You imagine living in Bali. The market here moves fast. Many foreign buyers rush into decisions. They skip critical steps. This leads to legal disputes and financial loss. You must understand the reality of the market before you sign any contract.
Here is a guide to the most common mistakes buying property in Bali and how Bali Real Estate Consultants helps you avoid them.
1. Choosing the Wrong Ownership Structure
Indonesia has strict laws regarding foreign land ownership. You cannot own a freehold title directly as a foreigner. Some buyers try to bypass this. They use a nominee arrangement. This means a local citizen puts their name on the title for you. This is one of the most dangerous mistakes buying property in Bali. The nominee legally owns the land. You have very little protection if they decide to sell it, take a loan against it, or pass away. The law favors the named owner. You should use a secure method instead. Leasehold is the most common option. It gives you the right to use the land for a specific period, usually 25 or 30 years. You can also form a foreign-owned company, known as a PT PMA. This allows you to hold a Right to Build title. Consult a legal expert to pick the safest path for you.
2. Skipping Zoning Checks
You might find a plot of land with a view of a river or a mountain. It looks perfect for a villa. However, Bali enforces specific zoning regulations. We call this ITR or spatial planning. Much of the land with great views sits in the Green Zone. This land restricts building. It is strictly for agriculture. If you build there, the government can demolish your property. You need land in a Yellow Zone for residential use or a Tourism Zone for commercial rentals. One of the most visible mistakes buying property in Bali is assuming a plot is buildable just because there is a building next door. Neighbors often break rules. You must check the specific zoning for your exact plot before you pay a deposit.
3. Ignoring Legal Due Diligence
Sellers often promise that documents are clean. They might show you a copy of a certificate. Do not rely on this. Accepting unverified documents is one of the classic mistakes buying property in Bali. A reputable notary, known as a PPAT, must verify everything. You need to check the original land certificate at the National Land Agency. You must ensure the land is free of mortgages and disputes. You also need to verify access. Some land in Bali lacks direct road access. You might need to pay neighbors to cross their land. This can block your project if they refuse.
4. Failing to Negotiate Lease Extensions
Most foreign buyers choose leasehold properties. The standard term is 25 years. This time passes quickly. The value of your asset drops as the lease term shortens. One of the common mistakes buying property in Bali is failing to secure a guaranteed extension. Buyers often leave it open to negotiation later. The land owner can increase the price drastically when your lease expires. They know you cannot move your building. You must negotiate the extension price now. Include a clause in your contract that defines the price formula for the extension. This gives you certainty for the future.
5. Underestimating Maintenance and Climate
Bali has high humidity and heavy rainfall. Underestimating this harsh environment is one of the frequent mistakes buying property in Bali. You will face issues like mold, termites, and rising damp. Properties near the ocean suffer from salt corrosion. Metal rusts quickly here. Wood rots if you do not treat it. Open living spaces look great in photos, but they invite insects and require constant cleaning. You need to budget for these ongoing costs. You will likely need staff for the pool, garden, and general maintenance.
Know the Seasons You need to prepare for two distinct seasons that affect your property differently:
Wet Season (November – April): This is when maintenance is hardest. Expect daily tropical downpours and extremely high humidity (often 85%+). This moisture accelerates mold growth and timber rot. Leaks you didn’t see in the dry season will appear now.
Dry Season (May – October): The weather is drier and slightly cooler, with lower humidity (around 60-70%). This is the best time for exterior painting and major repairs.
Temperature Reality It is hot year-round. Average temperatures sit between 27°C and 32°C (81°F – 90°F) during the day. Even at night, it rarely drops below 22°C (72°F) in coastal areas. This constant heat combined with moisture creates the perfect breeding ground for pests.
6. Overlooking Road Access
Bali roads are unique. We call small lanes "gangs." Many are too narrow for cars. You might see a villa on a map, but a car cannot reach it. This limits your rental market. Families often hire drivers. They need car access. One of the frustrating mistakes buying property in Bali is failing to verify the road status. You must check if the road is public or private. Neighbors can block private roads. Make sure you have a legal right to use the road.
7. Miscalculating Tax Obligations
The list price is just the starting point. You need to budget for several layers of tax. If you do not calculate this effectively, your return on investment (ROI) drops immediately.
Acquisition Tax (BPHTB): Buyers typically pay this. It is 5% of the transaction value or the government assessed value (NJOP), whichever is higher.
Value Added Tax (PPN): If you buy from a developer or a company (PT PMA), you must pay 11% VAT. This applies to most new off-plan villas.
Withholding Tax (PPh): Sellers usually pay this income tax (final tax is often 10% for leasehold). However, some contracts try to push this cost onto the buyer. Read the fine print carefully.
Notary Fees: Budget around 1% of the property value for the notary (PPAT) to handle the transfer.
Annual Land and Building Tax (PBB): You must pay this every year. It is usually low, but it adds up.
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Warning on Under-Declaring Value Some agents might suggest you declare a lower price on the contract to pay less tax. Do not do this. Agreeing to this is one of the illegal mistakes buying property in Bali. The tax office (Kantor Pajak) investigates these transactions. If they catch you, you will pay the difference plus a heavy penalty. It puts your investment at risk.
8. Ignoring Noise and Surroundings
A photo does not show you the soundscape. Ignoring the acoustic environment is one of the subtle mistakes buying property in Bali. The source of the noise changes depending on the time of day and the season. You need to investigate the neighborhood thoroughly.
The “Empty Land” Risk: Look at the land next to your potential villa. Is it empty? If yes, assume someone will build there soon. You will face 12 months of construction noise, dust, and workers looking into your pool.
Village Life: Bali is culturally active. Local community centers (Banjars) and temples play music and announcements over loudspeakers. This can happen late at night or very early in the morning during ceremonies.
Animal Noise: Roosters are common in residential areas. They start crowing at 4:00 AM. Street dogs can bark all night.
Traffic Flow: A quiet lane can turn into a busy shortcut during rush hour. Apps like Google Maps often reroute traffic through small village roads to avoid jams.
How to Check Properly Do not visit just once.
Go at 8:00 AM: Listen for construction work starting.
Go at 7:00 PM: Check for barking dogs or loud music.
Check the Calendar: Visit on a religious holiday if possible to see the impact of local ceremonies on access and noise.
BREC Helps You Buy Safely
We see buyers lose money because they rush. They sign contracts they do not understand. We want you to succeed. At BREC, we encourage you to slow down. We act as your shield in this complex market.
We do more than just show you villas. We protect your capital.
We verify the zoning to ensure you can build legally.
We check the legal status to ensure the land is free of disputes.
We help you understand the real costs, from taxes to maintenance.
We calculate the true return on investment for you.
A safe purchase is the only good investment.
GET A FREE CONSULTATION!
Do not navigate this market alone. We offer a free consultation to review your plans. We will tell you if your goals match the reality of the market.
Fill out the form below. Let us know what you need. We will help you avoid the traps and find the right property.
