Investing in East Bali - questions

**rexdu** · 06-07-2010 12:57 PM

Hi - just new to this forum, but have been reading very intently for some time and was hoping to tap in to any advice available out there.

We are looking at leasing and building on a plot in East Bali, however, this is something we don't have any experience doing, so are trying to avoid some of the pitfalls and traps that we know are out there.
We have been doing plenty of research, but find the best way to get a full understanding is to ask those that have done this sort of thing before - so if you're willing to share from your experiences, we'd be thrilled to hear from you!!

Where to start?

We know the plot that is available, and think the price is reasonable. The lease offered is a 5+5 year.
We are aware that it is important to get a good reliable notary. Are there any recommendations on where to find a good one, and is it necessary to have a lawyer in addition to a notary?

In regards to the lease - Is it possible to negotiate a longer term - or would be get a notary to do this? especially as we're thinking of buiding.. Is the Hak Pakai the right type of lease? To have the rights to build and use the plot?
Clauses - that the owner of the land cannot sell the land during the term of the lease? any other obvious inclusions that we should be aware of?
Is it necessary for any heirs to sign the lease as well?

I would also be interested in hearing what sort of formalities (?) are required is we decided to rent out the villa when it was not being used by us? (we're Australian residents but spend a reasobable amount of time in Bali). eg -any license required, income repurcussions, percentage payments to the land owner/village elder - keeping people onside? etc...

Thank you in advance for any information - yes, we are a little green - but trying to do gather as much information as possible before we dive in to any decisions!!

**PeteD** · 06-07-2010 02:38 PM

Just a quick point about the lease term you mention. 5 + 5 years is not ideal if you want to build. A more realistic time is 25 year lease with possible extension. Why is it such a short period?

Don't rush into this until you understand all the procedures and requirements. Saying you are green is even more reason to take your time. The best offered advice means nothing until you yourself understand it correctly and are willing to act sensibly and cautiously.

Having said that... Yes the lease term is possible to negotiate. If the owner is only offering a 5 + 5 year lease term to start with, this can suggest several things, 1. he is more interested in having terms that by far benefit him than the lessor, 2. he may not be the original owner, but may be sub-leasing the land and the time mentioned is all that remains on his lease.

If problem 1, you need to push for a better lease time. If he won't budge just walk away. If problem 2, it may not be a problem, you would just need to make a lease agreement for the extra time wanted directly with the owner at the same time, that takes affect once 5 + 5 years finished. That's of course if the original owner agrees.

A lease agreement holds it validity even if the land owner dies. If you go the Hak Pakai option, this is registered at the BPN (land office) and as such the property can not be sold while Hal Pakai is in effect.

Find a Notary in that area, ask as many questions as you can. Do not rely on someone to translate, if you can't speak Indonesian try find an english speaking Notary. Also all agreements should be translated by a certified translator.

Good luck.

**rexdu** · 07-07-2010 03:08 PM

Thanks for your advice PeteD. Yes, the lease term is the biggest sticking point with us at the moment, and if we can extend that, then I think it looks promising. Just want to check off all my other queries as well, so we're definitely taking the cautious approach.

I still have some queries on sub-letting issues that I'm trying to find out, so if you have any knowledge on that we'd love to get some advice.

Thanks again!

**sakumabali** · 07-07-2010 09:44 PM

Hi Rexdu,

Pete is absolutely right, in 6 years on bali (real estate business) i´ve never heard of a 5 + 5 leasehold deal for a permanent house (for knocked down wooden house it´s maybe a different thing), sounds weird to me. You´ve to build a house on a land you´ll never own and than you just get 5 (or maybe another 5 years)? Even you rent it out you gonna need at least 3 or 4 years to get your money back...

Don´t do it!

Good luck...

**henryyuliana** · 28-07-2010 09:37 PM

5 + 5 leasehold is extremely short. He might be looking for someone who has money to build something, then after 10 years, he is gonna sell the land plus building.

**Nina Kresna** · 07-10-2010 04:11 PM

Originally Posted by rexdu

Hi - just new to this forum, but have been reading very intently for some time and was hoping to tap in to any advice available out there.

We are looking at leasing and building on a plot in East Bali, however, this is something we don't have any experience doing, so are trying to avoid some of the pitfalls and traps that we know are out there.
We have been doing plenty of research, but find the best way to get a full understanding is to ask those that have done this sort of thing before - so if you're willing to share from your experiences, we'd be thrilled to hear from you!!

Where to start?

We know the plot that is available, and think the price is reasonable. The lease offered is a 5+5 year.
We are aware that it is important to get a good reliable notary. Are there any recommendations on where to find a good one, and is it necessary to have a lawyer in addition to a notary?

In regards to the lease - Is it possible to negotiate a longer term - or would be get a notary to do this? especially as we're thinking of buiding.. Is the Hak Pakai the right type of lease? To have the rights to build and use the plot?
Clauses - that the owner of the land cannot sell the land during the term of the lease? any other obvious inclusions that we should be aware of?
Is it necessary for any heirs to sign the lease as well?

I would also be interested in hearing what sort of formalities (?) are required is we decided to rent out the villa when it was not being used by us? (we're Australian residents but spend a reasobable amount of time in Bali). eg -any license required, income repurcussions, percentage payments to the land owner/village elder - keeping people onside? etc...

Thank you in advance for any information - yes, we are a little green - but trying to do gather as much information as possible before we dive in to any decisions!!

Hi,

If in the future you'll look for a builder,

You may visit this web: www.barenns.blogspot.com

as your builder reference.

They are a local builder with a nice price & quality!

Cheers,

**pollyanna** · 08-10-2010 07:18 AM

Originally Posted by Nina Kresna

Hi,

If in the future you'll look for a builder,

You may visit this web

as your builder reference.

They are a local builder with a nice price & quality!

Cheers,

Nina, what is your relationship to this builder? With the amount of advertising you are doing on this forum he must be desperate for work.

**spicyayam** · 08-10-2010 09:53 AM

Nina is listed as the "direct contact" for the company. Nina, if you want to promote your company here, get involved in the discussions first.

If someone has a question about building, try to answer that question rather than just linking to your business. If you answer the question well, people will be more interested in looking at your company further.

**scout** · 08-10-2010 11:24 AM

Good point spicy, I noticed all her messages yesterday, basically saying the same thing. Along with giving out her phone number for accommodation that she has on offer

**Markit** · 10-10-2010 04:58 PM

Ok in the 2 short years I've been planning and building in east Bali that is the first time I've heard of a lease like this one. That doesn't make it bad if that's what you want - your choice, your price, your land (for a very short time!) but it may also be a sign of the times.

Nobody wants to sell their land unless they have to. When I came it was the height of the financial crisis (so far

) and locals were willing to sell if that was the only way to get at the cash. In the mean time things economical and touristic are looking up so now nobody wants to sell their land - even my seller now only wants to lease (for double what I paid to own!) and I'm sure there are other "deals" out there - this 5 year thing may be one of them?

My advice would be to negotiate more or move on - there are still lots of great spots, particularly in the east.

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