kman

New Member
Sep 27, 2011
13
0
1
Seminyak
Hey guys,

So i have been living in Bali for 8 months now and finally feel ready to jump into the deep end and build some villas.
I recently looked at a block of land that i am very happy with and am currently in negotiations about length of lease etc. I just have a few questions i hope you could help me with..

Firstly, alot of people have been telling me the maximum lease period is 25years.. Is this correct? I was always under the impression it was 30 years with options to extend?

I am of the understanding that the notary will cost 1-1.5% of the total lease cost. I do not have a notary as yet, but will this include lease agreement, nominee agreement etc?

What about land taxes? Will the notary deal with all this or will i have to come to an agreement with the owner? How much would they be and how do i know if they have been paid previously?

How long does it take to acquire a bmi? I know this can vary but is there an average time-frame?

Lastly, i am currently here on a social visa, do i need kitas to just oversee the build etc? I know i will need one eventually but am not sure if i would have to get one beforehand..

Sorry about all the question, would be very grateful if anyone could help.

Thanks alot!

Kind regards,
kman
 

gilbert de jong

Active Member
Jan 20, 2009
3,198
3
36
Panji, Singaraja.
Hey guys,

So i have been living in Bali for 8 months now and finally feel ready to jump into the deep end and build some villas.
I recently looked at a block of land that i am very happy with and am currently in negotiations about length of lease etc. I just have a few questions i hope you could help me with..

Firstly, alot of people have been telling me the maximum lease period is 25years.. Is this correct? I was always under the impression it was 30 years with options to extend?

I am of the understanding that the notary will cost 1-1.5% of the total lease cost. I do not have a notary as yet, but will this include lease agreement, nominee agreement etc?

What about land taxes? Will the notary deal with all this or will i have to come to an agreement with the owner? How much would they be and how do i know if they have been paid previously?

How long does it take to acquire a bmi? I know this can vary but is there an average time-frame?

Lastly, i am currently here on a social visa, do i need kitas to just oversee the build etc? I know i will need one eventually but am not sure if i would have to get one beforehand..

Sorry about all the question, would be very grateful if anyone could help.

Thanks alot!

Kind regards,
kman

some villa's...am I wrong or do you want to rent some villa's out? I am asking because, that would influence your VISA choice...
if you plan to rent them out, set up a business and have the land in name of the business (instead of a nominee) and this company that you have started can
provide you your KITAS. See, how the one links with the other?
but as to your question,
whatever you want can be the actual lease period...pre-signed contracts enables this.
notariscosts 2,5%, this includes every contract, checking the certificate, checking if the taxes are paid in full (who owns it know, has to pay the tax in full in
order to sell it)
bmi..I guess you mean IMB..can be anywhere in between weeks and months, depends on how many application they have, and how much you're willing to pay
so your application comes at the top of the stack instead of the bottom of the stack.
as for the overseeing of the project, you would not need an KITAS..but if you start a company for the lease and contracts to be in your name, this is done
before buying the land and starting to build, so you would have a KITAS.
 

sakumabali

Well-Known Member
Apr 2, 2010
1,056
185
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"notariscosts 2,5%"

wow 2.5 % is really high! 1-1.5 % is more likely, depends on the region you can nego to pay less than 1 %
 

hinakos

Member
Sep 3, 2008
517
1
16
Bali + Vietnam
"notariscosts 2,5%"

wow 2.5 % is really high! 1-1.5 % is more likely, depends on the region you can nego to pay less than 1 %

I just contracted more land for 30 years and instead of using a notaris, i used a business advisory service (Sabita) in combintation with a notaris.

The business advisory fee was 15 mill (flat rate), and the notaris was .75%. The land was 2.1M, so all the fee's combined came to 30.75jt.

On my first land deal here i went with a notaris alone....it was a mistake. They have no business sense and wont advise on anything or help you too much. The advisory service gave advice on things like what type of IMB to get, how the taxes worked, where the loopholes where, when they would be trying to close those loopholes, how to do things legit and how much this would cost, and also even helped with my negotiations with the landholder. They also told me things i had to put into the contract to make it "safer"(i.e addendum to maps signed by all parties showing clear access etc).

The notaris on the other hand just witnessed the signing of the contracts and read them out in front of all parties before the signing.

The first piece of land we got here with the help of the notaris alone (without the advisory service), is under a contract that is very weak compared to the land we got and the contract we signed with the help of the advisory service.

Its kind of annoying to be sitting in a Notaris office, everyone speaking indo, important contracts being signed....and they just break off and start speaking Balinese instead of Indo.

My advisory who was there tried to make sure this was nipped in the bud when it started, and also translated into English/ Indo.

I only wish i had have gone with her the first time also...
 
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hinakos

Member
Sep 3, 2008
517
1
16
Bali + Vietnam
by the way your option to extend means nothing unless you have a predetermined price agreed upon and locked in.

our latest lease is 30 + 20.....but the 20 option we must pay for within the first 5 years.

the 20 year extension price is set at the current price of the land plus 30%. because of where our land is, this is a pretty good deal.

so we will wait 4 years and 9 months and then take it.(hopefully!)

theres a lot of contracts where the extension option states it needs to be paid at "current market value at the time". This are way too open to interpretation (even with the "average of 3 quotes from 3 independant valuers"), and if the landownder doesnt want you to extend, he will just tell you your land is now worth 10 million US, and if you dont like it then you cant extend.

also if your going to build, make sure your extension clause is for the cost of vacant land, not for the value of the land AND the buildings that you put on them. doesnt matter really anyway as houses here arent built to last 30 years anyway.

lock the price of your extension in, and put a time limit of when it needs to be paid if you decide to take it. (the earlier the better, as once the land is passed on to the landowners kids, they will be doing all they can to regain control of the land).

you may have to throw a few sweeteners in if they dont like the sound of this, which they probably wont.
 

balidavo

Member
Sep 16, 2011
209
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bukit bali
hinakos - a new law has been passed by govt ( advertisised last month on bali discovery) , and 60 year leases will be available.



Land, Bali & the law.Maybe now people will stop buying illegal so called “freehold” properties and go the legal route of Hak Pakai…
Hak Pakai – 60 years
The desire of the Minister of Public Housing, Djan Faridz, to give full property ownership rights to foreigners has run afoul of the National Constitution and the Basic Agrarian Land Act. As an alternative and in order to encourage foreign capital investment in the property sector, the right to rent or lease land will soon be extended to an initial 60 year period, an increase over the current limit of 25 years.

The government plans to issue the new regulation allowing 60 year lease holds is expected to published by late January.

Under the former Basic Agrarian Law instituted in 1960 foreigners were eligible to obtain a Hak Pakai — Right to Use Title for a maximum period of 25 years, extendable for additional sequential increments 20 years and 25 years.

The new law still limits foreigner to the rental of property, but now for an initial contract period of 60 years.

The Minster of Public Housing had originally promised to open property ownership to foreigners by opening Hak Guna Bangunan – Building Rights Title, short of the actual outright ownership of land. This idea, however, appears to be a concept that is anathema to the Basic Agrarian Law and the National Constitution.

Freehold Illegal – always was and still is…
Despite advertisements in Bali offering freehold property title, the Indonesian law remains absolutely clear on the point that the Indonesian equivalent of Hak Milik is the exclusive right of Indonesian citizens. Efforts to contravene this prohibition on foreign ownership of land through absolute powers of attorney and nominal ownership secured by nebulous loan agreements are “legal constructs” proven likely not to stand the test of time, legal challenge or close scrutiny by tax officials.

Related posts…

http://www.mypropertybali.com/category/laws-scams/
 
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hinakos

Member
Sep 3, 2008
517
1
16
Bali + Vietnam
hinakos - a new law has been passed by govt ( advertisised last month on bali discovery) , and 60 year leases will be available.


Hi Balidavo.

That law hasnt been passed. This is just an articale about someone talking about trying to do something.

Politicians talk about changing laws here all the time but never do: i.e. New laws have been enacted to stop the rampant building of condotels and villas (always talked about, laws never really passed)


Even if they do allow longer contracts, the land owner has to agree to it....and the Balinese hold their land pretty close to their hearts.....

Also, Bali Discovery is an advertising e-letter put out by a real estate agent. I get flooded with thier junk mail all the time, always advertising slashed rates and discounts on properties theyve never sold becuase they are overpriced cheaply built villa's utilizing cheap local labout but trying to be sold for western prices. Mostly cheap concrete shells with no regard to balinese architecture whatsover. It particularly targets those with nest eggs coming here to retire.

Its in their best interests to try and say good things about the property laws in Bali...thats how they generate $$$$$$$$$$.

People still regard this Discovery news letter as gospel. Its an advertising brochure put together by a real estate brokerage, nothing more.

Real estate agents, car salesman, solicitors.......all are paid to peddle mistruths.
 

kman

New Member
Sep 27, 2011
13
0
1
Seminyak
Firstly, thanks for all your help. It has given me alot to think about. So if i get a 30 year lease and the owner agrees with this, could it still 'technically' be taken from me if the Right to Use Title for foreigners is only 25 years??
Gilbert you are right on the money, the plan is to build 3 villas, one for myself and the others for holiday rentals. I thought about putting the leasehold in a business name but i thought i would just transfer it once the villas were complete as i plan on selling one anyway. Maybe i should just do it beforehand to save hassles. Is the just pt/pma? Thanks hinakos for the advise on the business advisory service, will definately look into it.
Kind Regards,
kman
 
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hinakos

Member
Sep 3, 2008
517
1
16
Bali + Vietnam
Firstly, thanks for all your help. It has given me alot to think about. So if i get a 30 year lease and the owner agrees with this, could it still 'technically' be taken from me if the Right to Use Title for foreigners is only 25 years??
Gilbert you are right on the money, the plan is to build 3 villas, one for myself and the others for holiday rentals. I thought about putting the leasehold in a business name but i thought i would just transfer it once the villas were complete as i plan on selling one anyway. Maybe i should just do it beforehand to save hassles. Is the just pt/pma? Thanks hinakos for the advise on the business advisory service, will definately look into it.
Kind Regards,
kman

Hi Kman

The notaris we went to see said they have plenty of 30 year leases registered in their books. she was very thourough, so i dont think she would have left us in a dangerous spot...

Im doing the same thing - building 3. Will be nice and convenient for me as i live right next door to the project

we already got the land and signed the deed and paid 1.8M of the 2.1M owing. At the end of June they landowner has to move off his land, we then take possesion of the land and pay the final 300jt.

so between now and then he has time to do his temple relocation ceremonies and well closing ceremonies and whatever other ceremonies they have to do. should be anough hari baiks between now and then for this.

i then have to demolish his place (thats the easy bit) and start on the villa's.

trying to get them 80% finished before the rain comes in November....will get awfully messy otherwise. Need to at least have a roof on and the pools completed by then anyway.

When i get back to Bali in 2 weeks im going to get some more info about whether to build with normal imb / pondok wisata, who's name its best to register it in, tax liability, loopholes, type of company (i think this is tied in with the imb) etc. sabit'as work is done.....and the deed has been signed, but they will still assist with giving info about all this. If i then choose to use them to do applications for all this etc, it'll cost i think.

I am only on a 12 month business visa. suits me as i work month on month off and dont usually have to worry about the 60 day get out rule.

was no problem signing the land deeds with this kind of visa.

i think the company set up requires a KITAS though (pma), which as Gilbert states can be obtained through that pma company. ill be getting costs on all that when i get back too (and ongoing tax liabilities to operate like this)

as far as getting out project off the ground quickly though (there are 3 of us in this), we may just get a regular imb to start the job, get the builders in there and get the hammers swinging, and then work out the detials later (may need to change the kind of imb?).I know many will disagree with me here on this as it leaves a few loose ends....but thats how we are doing it - key for us is getting started beating the rain in November.

we are also only submitting general plans for our imb, we expect them to change quite a bit, but this isnt a problem (tht a few rp cant fix). You dont need to waste time getting your plans 100% perfect b4 you start...as they will no doubt change anyway....just make sure they are about 80% right.

If we have to pay an extra 30 mill to change imb later or whatever, sobeit, better than delaying things for 8 months to get to the other side of the rainy season. many people would say its not a problem building through the rainy season too...i for one think it sucks....and if i cant have at least my roof on and pools done before november i wont start the project until March next year.

helpful also is having a balinese builder , who has good contacts in all these offices. the guy who built our first villa is an anak agung, well connected. He didour first villa (3 bed 3 bath 220m2, 2 floors, pool), start to finish in 6 months with limited access in a very busy part of town! we may not use him this time as he's a little pricey...

we are also racing to beat the 30% price rise in EVERYTHING that will happen if the govt drops it fuel subsidy.

our advisor told us to get the builder to commit to his price, then we pre-purchade all the materials, rent a warehouse, store it all before we start. that way the fuel subsidy wont hurt us and the builder cant revise his quote halfway through the job because of price rises which may or may not be true.

i should be a whole lot more clued up in about 3 weeks
 

kman

New Member
Sep 27, 2011
13
0
1
Seminyak
hinakos,

Thank you so much for your detailed response. Yes i think im going to go with the 30 year lease + 20 year option (if possible).

The rain season didnt even cross my mind! Thank you for bringing this to my attention! I am lucky enough to have a few friends doing similar projects who have recommended builders to me, so that is not a worry. With business visa do i just need a sponsor?? And can this be through an unrelated company?

Im hoping to sign lease by end of this month and start building early April. I am still on a social visa though so do not know if this will affect me being able to sign lease agreement... Thats a great idea about pre-purchasng materials, just make sure they are locked away safe, i have heard some horror stories of builders stealing materials (i am sure you have too) etc.

Would be great to hear updates about your progress, i wish you good luck and all the best in your business going forward!

Kman
 

balidavo

Member
Sep 16, 2011
209
0
16
bukit bali
Hi Balidavo.

That law hasnt been passed. This is just an articale about someone talking about trying to do something.

Politicians talk about changing laws here all the time but never do: i.e. New laws have been enacted to stop the rampant building of condotels and villas (always talked about, laws never really passed)


Even if they do allow longer contracts, the land owner has to agree to it....and the Balinese hold their land pretty close to their hearts.....

Also, Bali Discovery is an advertising e-letter put out by a real estate agent. I get flooded with thier junk mail all the time, always ad

Thx hinakos , I re-read those articles and I agree with everything you said "I stand corrected " , I also agree with those points you made about bali discovery , a lot of it is just rehashed news from other sources ...., but it does give me something to read once a week while having the morning cuppa lol .
 
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balibule

Active Member
Feb 6, 2009
1,059
1
38
I heard that too around 20-30%

First of all there is the question whether we will actually see a fuel hike.This is an interesting article;

... At this stage, with fuel subsidies accounting for just 6.8 percent of total government spending and given Indonesia’s healthy fiscal position, there is little pressure for the government to reform the present system, particularly as the popularity of the Democrat ic Party is currently at an all time low ...

Analysis: Unexpected rate cut: Fuel price hike unlikely | The Jakarta Post


If the fuel hike does happen, then who says prices will go up 20% to 30%?

... The central bank expects inflation to near the upper end of its target 3.5-5.5 percent target range this year if the government goes ahead with a fuel price rise ...

Indonesia govt mulls hiking fuel prices by up to 44 pct | Reuters
 

hinakos

Member
Sep 3, 2008
517
1
16
Bali + Vietnam
Just wondering how you got the 30% figure?

plan for the worst hope for the best.

the indo govt will be trying to say (like they did last time they dropped some of the fuel excess) that the price of fuel isnt linked to anything else and therefore wont affect other industries.

the indo govt will be hoping for a smoother transition than when nigeria recently dropped their subsidy. maybe after seeing that they are reconsidering though......

fuel prices among countries who are net importers (indo included) are governed by market forces, not by the government.

international fuel price is now than double than what we pay here in Indo.As i understand the govt here wants to double it (in a round about way)

so my guestimate of 30% comes from that.fuel goes up everything goes up.

indo govt has been subsidising fuel at the cost of about 10Bn US per year for way too long.

(But then again some of the highest ranking ministers wont want the subsidy to go either as many have vested interests in large fuel tankers that buy subsidised indonesian fuel - lots of it - and sell it overseas)

the subsidy wins them votes, but its too much of a burden to carry now. even if they are making a fortune on the side from it.

they are going to stop subsidising...its just a matter of time.

i have no idea how they are going to police who is allowed the subsidised fuel and who isnt....at the end of the day theres a pertmina man at the pump with the nozzle in his hand. Anyhow, they fact they are saying only some people will pay and others wont is just a softener so people dont burn things and throw stones when they pass the bill in parliament...then its just a step away from dropping it all together.

thats just me thinking out loud though.....
 

balibule

Active Member
Feb 6, 2009
1,059
1
38
As i understand the govt here wants to double it (in a round about way)

so my guestimate of 30% comes from that.fuel goes up everything goes up.

indo govt has been subsidising fuel at the cost of about 10Bn US per year for way too long.

In October 2005 when the price of premium gasoline rose by 87.5 percent from Rp 2,400 per liter to Rp 4,500 per liter, the inflation was 10.5% in 2005 and 13.19% in 2006.

I am in no doubt that prices will go up if the rate for fuel goes up but I think 30% is very high.
 

hinakos

Member
Sep 3, 2008
517
1
16
Bali + Vietnam
The governemts targets of boosting domestic production to reach their targets are pure fantasy. they may boost it by around 30.000 bbls per day at best.

even that falls well short of the mark for domestic supply. they are not going to make their targets anyway.

i worked in the oil industry (inc pertamina) here for years and have seen first hand how they treat their oil fields and worse still, how they treat investors.Ive seen the cancer on this country that is pertamina. It could never exist in an open market place and doesnt.

the population is expanding, fuel consumption increasing, and production decreasing due to several factors - production, refining capacity, and a shortfall in ongoing exploration. none of these have a quick fix -especially when pertamina has already burnt the big players who are capable of helping them reach their targets (which even if reached still wont be enough to stop importing)

the longer they ignore the subsidy issue the harder the fix is going to be, and they know it.

just 6.8% of all spending is the fuel subsidy? i wonder what % is spent on education......6.8?

6.8% of this countries expenditure (when its a country that cant afford to cull chickens during a bird flu outbreak) is significant.

i also dont want to see prices go up......but at what cost?

if the subsidy isnt dropped in the very near future, then it will be dropped in the near future.

you cant keep wanking the dog off to feed the cat forever.
 

balibule

Active Member
Feb 6, 2009
1,059
1
38
It's a fact that fuel prices will go up. I just don't think that it will result in a "30% price rise in EVERYTHING"

Only time will tell.
 

Populaire

Member
Jun 22, 2011
71
6
8
Bali
www.populaire.com
All very good advice..

Many anticipate the re-valuing of the Rupiah (slashing three 0's from it) will have a large inflationary effect. When the announcement was made, so too were the speculations of inflation and as a result many wealthy Indonesians started pouring their money into land, which is still perceived as being a positive asset to hold during high inflationary periods. Whether or not this was a large contributing factor is what economists argue about over coffee, but land has significantly appreciated in value across Indonesia over the past 18 months..


All the best..

Populaire