expat ownership of property

[ronb]

So that's all fine - but here is the complexity. You go shopping and see a leasehold property for sale with 15 years of the initial lease still to run and with the option to extend another 20 years in the contract. Nearby you see a comparable property but it is freehold. Naturally the freehold property costs more but how do you juggle the comparisons.

With the freehold option, the owner will benefit from land price increases, and he/she owns the buildings and improvements - fairly straightforward.

With the leasehold option, you have a contract with the land owner for the agreed years, and the option to extend which you will pay for at the time, and you own the buildings with the obvious qualification that you usually cannot take them when the leasehold eventually expires.

So if you think a 90 year leasehold would be about the same price as freehold, you may figure the 15 years of lease of the land would be 1/6 of the freehold cost of a similar vacant lot. Then you add to that the value of the buildings with the proviso that towards the end of the lease you will lower the valuation of the buildings because they must be left behind. Then the option for extension is worth something to you because you can get more value from the buildings. So maybe you add that and keep in your mind what you think you will need to pay for the lease extension.

Well that's complex so what you probably really do is look at many leasehold offerings and try an get a feel for "market value".

 

[Beck]

Keep in mind that a lease is a temporary interest in the land only. A 25 year lease is short when it comes building your home.
If you lease land then maybe it takes two years to complete a building and then effectively your 25 years lease turned into 23 years. All added value ie buildings belongs to the land owner after the lease expires. Sure there is an option to extend if the owner agrees on the terms. It is not a right that you own or can enforce.
Even if the extension terms is pre-agreed or even prepaid, remember this is Indonesia. Good luck trying to enforce a contract if the opposite party don’t like to play ball.
Someone said that a 25 year lease should be valued as half compared to freehold (Hak Milik). The big bonus is that you are within the law and that it is your name that is on the certificate. You can resell the lease but your children cannot inherit it. A lease is just prepaid rent and the value naturally decrease every year.
Selling a lease with less than 20 years left is quite difficult. There is a lot these up for sale in Ubud. I see the same property year after year. As a buyer I would find someone who needs to sell for personal reasons and bargain hard.
Lease a house without a certificate (Hak Sewa) is possible of course. But again this is Indonesia what stops the owner lease someone else it or sell when you area away for a while? There is no certificate in your name. You put a lot faith in the integrity of the lessor and possibly the lessors heirs

 

[Marquin59]

Very complicated. !!!! will have to re - read ^ when I haven't had a couple of Friday nite reds !!! :-/

 

[davita]

Quote by Beck..'Someone said that a 25 year lease should be valued as half compared to freehold (Hak Milik). The big bonus is that you are within the law and that it is your name that is on the certificate. You can resell the lease but your children cannot inherit it. A lease is just prepaid rent and the value naturally decrease every year.' unqoute.

I believe that a lease is only resellable by the lessee if the contract specifically agrees to that....or any other agreements. There is no 'certificate' as such as it is a 'contract' between a lessor and lessee and simply notarised.

Hak Pakai property 'leases' are recorded in the Lands Office and a certificate issued.

link: Foreign Ownership Rights Relating to Land in Indonesia

 

[Marquin59]

Its, then, extraordinary, that SO many French/Germans/Australians/Btitts/American "own" property in Bali.

 

[davita]

Its, then, extraordinary, that SO many French/Germans/Australians/Btitts/American "own" property in Bali.

The definition if 'Own' and what is 'Property' is often assumed by 'property owners'....and may be incorrect.

 

[Markit]

Yes, lots of people "own" property here on Bali and many other islands here in Indonesia.

You need to find someone you can trust that will function as your nominee and secure the relationship with a contract binding him to you AND you must trust him not to want to cheat you. Big ask? Maybe or maybe not. Depends upon what sort of judge of character you are.

Many who buy land here have their own "Made" this is just some guy they met who "adopted" them, took them around his family and called them "brother" or "my good friend" and used his car and driving services. Lots of foreigners have learned to regret their naivete and now call their erstwhile "brother" their land owner.

If you decide to go the ownership route then I suggest you find an upstanding member of the community, religious, married with children, upper management and not dirt poor. Work out what the relationship will be, what it will cost and set up a contract at a Notary (PPAT are best) to cover the land sale/purchase.

Then build yourself a nice house.

Do not put all your money in it!

 

[Marquin59]

Hear you......and can see how this could play out

:cupcake:Oh I hear you. And so get it. You totally nailed it. I can see how this could play out. Thanks :icon_wink:

Yes, lots of people "own" property here on Bali and many other islands here in Indonesia.

You need to find someone you can trust that will function as your nominee and secure the relationship with a contract binding him to you AND you must trust him not to want to cheat you. Big ask? Maybe or maybe not. Depends upon what sort of judge of character you are.

Many who buy land here have their own "Made" this is just some guy they met who "adopted" them, took them around his family and called them "brother" or "my good friend" and used his car and driving services. Lots of foreigners have learned to regret their naivete and now call their erstwhile "brother" their land owner.

If you decide to go the ownership route then I suggest you find an upstanding member of the community, religious, married with children, upper management and not dirt poor. Work out what the relationship will be, what it will cost and set up a contract at a Notary (PPAT are best) to cover the land sale/purchase.

Then build yourself a nice house.

Do not put all your money in it!

 

[Mark]

Do not put all your money in it!

Wise advice. I would be a little more conservative and advise to only invest what you can afford to lose. Bali has seen off many who have let it all ride on black and then find out the wheel stopped on red.

 

[Markit]

Wise advice. I would be a little more conservative and advise to only invest what you can afford to lose. Bali has seen off many who have let it all ride on black and then find out the wheel stopped on red.

Don't agree. If you go into any business expecting to lose then you most probably will. There is no way you're gonna be able to see what's coming at you or ask enough questions to sleep really well at night.

On the other side you are never gonna live somewhere where you can build whatever you can dream of for a pittance.

On the other other side where there is no risk there is also no gain.

It really depends on your ball size not so much brain size.

In my experience the ones that get cheated here bring their problems with them - either they are serial ****-ups, or they came at it expecting to be the GREAT WHITE MASTER and to know all the answers before they got off the plane, or their foreign partner fouls it all up by changing HER mind half way through or pissing the locals all off or both.

There's more but it's beddy-bye time.

 

[Beck]

An alternative to quasi ownership using a nominee or a lock your self in in a lease is just to rent yearly. In Ubud they are building like mad everywhere and all these places will hunt buyers or lessors soon. I dont think the demand side will keep up. Probably the situation is the same in a lot of other places in Bali. Why grow rice on an are when you can sell if for 3-400 juta? As a result there will be a lot of nice vilas available for rent. wners or investors will more than happy rent to you yearly at a nice discount from the monthly rate. You still have the same Bali. The same beauty. No messy paperwork and limited financial expousre to Indonesia's weak institutions. Should things turn sour you only loose what you paid up. You can always buy or lease later when you are certain. Meanwhile your savings will still work for you somewhere else in a safe jurisdiction.

But hey you dont own your home. And you miss out on the potential property boom or bubble.

 

[Nydave]

Correct me if im wrong once again,but this new regulation of being allowed to purchase a luxury apt for $375,000,seems like a very high figure to me,from what I have read on here it would seem that some of you have built your own Villas,now I have no idea what that would cost but I think you have probably done so possibly for $375,000 that is required to buy an apt,maybe even less,

Some of the replies I got from other members on here about their definition of a Villa compared to a house were really interesting and gives me the impression that not many of those guys would be happy in an apartment especially one at $375,000,not everyone are apartment types of people,there is nothing like having at least some piece of land attached to your home that you can stroll around or potter around growing veggies or flowers when you feel like it,

However im no expert on such matters

 

[Markit]

Personally I think this is all BS.

Buying an Expat Apartment: (loosely from a JacPost comment) will only be of possible interest to the 20,000 expats living in Jakarta - the rest of the country, even Bali, doesn't have em. Of whom only about 10% would even come into question for that price range. Of that 10% most will be leaving again soon so why would they buy an apartment?

So lets say only %10 of that %10 will actually buy.

You can't tell me that the Jak government can't do the same figures and we should therefore believe this whole can of worms has been opened to sell 200 apartments @ $375,000.00 a piece or $75,000,000.00?

NaaaaaHHH!

Just one more consideration: All the talk is about leasehold. Stop me if I'm wrong but haven't we been able to own leasehold forever?

 

[Marquin59]

"You can build whatever you dream for a pittance"

:icon_e_surprised: A "pittance".......what will AU$80,000 build you ? (as an example) ?

Don't agree. If you go into any business expecting to lose then you most probably will. There is no way you're gonna be able to see what's coming at you or ask enough questions to sleep really well at night.

On the other side you are never gonna live somewhere where you can build whatever you can dream of for a pittance.

On the other other side where there is no risk there is also no gain.

It really depends on your ball size not so much brain size.

In my experience the ones that get cheated here bring their problems with them - either they are serial ****-ups, or they came at it expecting to be the GREAT WHITE MASTER and to know all the answers before they got off the plane, or their foreign partner fouls it all up by changing HER mind half way through or pissing the locals all off or both.

There's more but it's beddy-bye time.

 

[Markit]

80k Oz isn't what it once was but few of us are. Land-wise, not much anymore. Since I built in 09 the property value has gone up almost 10fold (I know, if someone will pay that...blah, blah, market value, blah, blah).

Purely house-wise, it would depend upon what you consider a "house" to be. My next one will probably be purely bamboo with alang-alang room and pool. That should cost in the region of of 80k for 4 bedrooms, 10m pool and staff house. No land costs included.

They can be truly great to live in and if treated well no problem with termites. For instance:



This place cost around the 80k a couple years ago - no land costs, just buildings and pool.

The mistake many foreigners make is they come to Bali and build their dream house. Trouble is their dream is a European, Australian or American one and simple doesn't fit in here - lots of rooms with small windows. They end up empty and smelly.

 

[Beck]

Markit got a few good points. This is my own opinion of course but I have seen so many houses with realtivily small boring windows. Also the the windows and door frames are made of dark brown or back wood. It make the room and house itself feel very dark and depressive inside. All the interior light coming from "cold" low energy lamps refelect of "cold" tiles. Even more so when the sun is on outside. Add to that ceramic tiles (very practical though) on the floor and the room feels "hard and cold". The final mistake is make the ceilings to low and the whole place feels like a prison.

Instead use Alam Alam roofs with wood that is beautiful to look at. Big windows or even better sliding doors with frames in the same beautiful wood. Don't use tiles everywhere on the floor. In the garden put a bambbo guest house Markit style.

Use the big windows and doors to keep the air moving through the house during the day. Otherwise mould moves in. Once in it is hard to get it out. Never have closed door closets or warddrobes for the very same reason

 

[Steve Rossell]

Last year I had the good fortune to stay at Green Village in Abiensamal. The concept of open living and the results of using bamboo construction is outstanding. The bamboo is treated in a way the basically removes the sucrose and leaves it unappetising to bugs out for a feed or a good place to burrow and lay eggs. Boron I think. An element. The people that have developed this architecture are also behind the Green School, John Hardy and daughter son combo and they have been developing smaller abodes/pods than the Green Village homes. They ran an intensive 2 week building with bamboo workshop recently that I wish I could have attended but I guess they'll do it again sometime in the future. I also admire there concept of local inclusion, Balinese bamboo craftsmen/builders for example and the process of growing the bamboo for building and furniture material which entails shoots being offered to villagers to grow the stock that when matured to the height and width required is then bought by the Green Village lumber yard, well it's actually a bamboo yard but you get the picture. Like Beck says it's horses for courses and this kind of building would not suit good old Melbourne in Oz, just as the western style building techniques are unsuited to Bali.

 

[Marquin59]

The asse will fall out in Bali/Ubud soon no doubt ....Thai expats wanting to come home cant sell there atm

 

[Marquin59]

Love this !! Simple design

 

[Nydave]

Markit thanks for the pictures,they are really beautiful,however I do have another question,and I don't mean to pry into your personal life,but are these pics of where you live or are they of something you intent to construct in the future,dont get me wrong I love the design and all that but from what I see there is a lot of open space above the walls to the roof,are they actually open or do they have like a mosquito mesh installed,im just asking because I suffer really bad from bites or stings as im sure a lot of westerners do,i have rented a couple of houses in my time,not villas,and I always had to put mest on those square openings that are in most Indonesian houses to eliminate bugs and mosquitos from entering as much as possible,also regardless of mesh or no mesh surely with openings like that surely then air conditioning is no advantage at all,or am I wrong,