Leasehold land and building a custom villa - is it a good idea?

sunset_007

New Member
Sep 27, 2018
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Hi - I like BALI, and ready to retire. Two questions:

1. I can "Lease" land for 20 years, and build my own villa? So then after 20 years, I just give that villa to the land owner? Do they buy the villa from me?

2. How to break a 20 year lease? Let's say I want to leave after 10 years. I assume since I have to pay upfront cash, they won't refund it, and I have no recourse to a partial amount. Right?

I have access to local Indonesian attorneys, but I would like an expat's perspective.
 

tel522

Active Member
Oct 30, 2015
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Ya the landowner gets a free villa , which you paid for .

you can extend the lease on the land but at a cost .
 
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Juggler

Active Member
Jun 20, 2018
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You have to try and sell the remaining 10 years of the lease....shorter the lease harder to sell amd cheaper it will be
Also i have been told that up to 6 months from end of lease you can take down your building and remove/ sell ,so a jogolo style may suits
 

sunset_007

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Sep 27, 2018
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Ya the landowner gets a free villa , which you paid for .

you can extend the lease on the land but at a cost .
If I lease a Villa, and the plumbing needs repair after 15 years, who pays to fix it? Or is that a lease by lease contract situation.
 

tel522

Active Member
Oct 30, 2015
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Depends on your lease , but I would imagine in most cases repairs would be your responsibility ,maintenance can be a substantial cost , poor quality construction, tropical climate .
 

Juggler

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Jun 20, 2018
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From my understanding i look at it like a commercial lease where all outgoing are your expense. Cause in effect if i understand it correctly it is your building
 

dav733

Member
Dec 29, 2016
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I will be coming to Bali next year to retire I,m a builder by trade and initially planned to do what you are asking ,,after much research ,I decided to buy a lease ,as I don't feel as though I want to give a house away,,already done that ,(ex-wife)
And at first just rent something till I am sure ,I want to stay,,in Bali
 
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sunset_007

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Sep 27, 2018
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I will be coming to Bali next year to retire I,m a builder by trade and initially planned to do what you are asking ,,after much research ,I decided to buy a lease ,as I don't feel as though I want to give a house away,,already done that ,(ex-wife)
And at first just rent something till I am sure ,I want to stay,,in Bali

yeah I'm doing the math where if I lease for 25 years until I'm 80. If I can get the extra money I have leftover, from leasing instead of buying directly, will be the same amount as the equity on a purchased home. But just more liquid.
 

tel522

Active Member
Oct 30, 2015
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I think with the increased tectonic activity in eastern indonesia , there is something to be said for quick mobility of assets to another area , im not sure long term lease or purchase is the way to go.
 

sunset_007

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Sep 27, 2018
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I think with the increased tectonic activity in eastern indonesia , there is something to be said for quick mobility of assets to another area , im not sure long term lease or purchase is the way to go.
Are you saying that there were no earthquakes in the past few decades and all of a sudden BALI is under threat?
 

tel522

Active Member
Oct 30, 2015
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Im speaking about the general trend in activity , I prefer mobility currently .

Regarding Bali who knows ,Im sure the people in palu never thought there would be such a tragedy a month ago .

We live on top of a pressure cooker .
 

Markit

Well-Known Member
Sep 3, 2007
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To all that warn against the "nominee" format I can only say: if it works well then you have something for your children or wife to inherit. If it doesn't and goes south after 10 years you need to look at it in comparison to renting the same property or even leasing it for the same time period and count it as "amortized" - $150,000 over 10 years is $1250/month - can you get a 3 bed villa exactly tailored to your needs with pool and killer view in anywhere western for that money?

I suspect of the 4500 expats living permanently on Bali most have gone the nominee route. But everyone knows better now...!
 

sunset_007

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Sep 27, 2018
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[QUOTE="I suspect of the 4500 expats living permanently on Bali most have gone the nominee route. But everyone knows better now...![/QUOTE]

what is "nominee"?
 

Markit

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Sep 3, 2007
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Buying property with a Nominee Agreement is using a local to purchase freehold property in his name and enabling you to have all the joys of ownership in a country that doesn't allow foreigners to own it. Another option to own property here is to buy it using a PMA company setup to "front" for the ownership. You can search this and many other forums for further detailed information on this subject. Needless to say many will have negative opinions on the "legality" of the option but as I've said above many have used it and are just fine. Yous Pays Ur Money and Takes Ur Chance!
 
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sunset_007

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Sep 27, 2018
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Buying property with a Nominee Agreement is using a local to purchase freehold property in his name and enabling you to have all the joys of ownership in a country that doesn't allow foreigners to own it.
Got it. Can that nominee demand to sell the house, so they can part their ways or get a cut of profits?
 

Markit

Well-Known Member
Sep 3, 2007
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That nominee can demand lots of things but Indonesian law states that land sales can only take place when the land certificates are made available. You buy land, you hang on to the certificates and you nominee can whistle...

In reality if your relationship with your nominee (which is based on mutual trust and advantage) has fallen to the point you describe then you will have problems. As I've said over many years here the best nominee is as follows: someone with a family, a respected member of the local community with good name, religious and in a good job. Pick someone like that and you nurture him (sorry, only men need apply in this society) and you will have a productive and mutually supporting relationship for years to come. As foreigners here we all need local assistance to smooth the way on occasion.
 

Juggler

Active Member
Jun 20, 2018
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Ok team random question.
when you buy a lease with say 20 years to go, is there a condition that you have to leave the property in at the completion of the lease? For instance if the roof is at its end of life is the onus to renew it on the lessor prior to hand back.
Or is it totally reliant on what is is the lease contract.?
 

Mark

Well-Known Member
Apr 19, 2004
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Depends on what the lease says, and in the absence of any relevant clause, you leave the property as is.