How to build a villa in Bali as a foreigner

How to build a villa in Bali as a foreigner? Whether you are planning on building a villa for your own use or as an investment, the process can be both exciting and challenging. To help ensure a successful project, we have compiled some tips and advice based on our own experience and that of other property investors in Bali.

1. Land Ownership Titles in Bali

How to build a villa in Bali as a foreigner and be as secure and confortable. That is the most important It is important questions for everyone that is dreaming of owning a villa in bali. As a foreigner, you are only allowed to hold a leasehold title in Bali (and throughout Indonesia). This means you have the right to use the land for a set period of time, usually between 40 and 80 years, during which you may also sell the land. Freehold licenses, which grant ownership of the land, are reserved for Indonesian nationals.

2. Conducting Due Diligence in Bali

When it comes to property deals in Bali, it is important to be cautious and always remember that if a deal seems too good to be true, it probably is. Even if a seller is motivated to sell due to a difficult personal situation, it is unlikely that they will sell their property for significantly below market value. To ensure a fair deal, it is worth spending a few thousand dollars on property due diligence to avoid potential losses of tens or hundreds of thousands of dollars.

3. Zoning Laws in Bali

Every piece of land in Bali is assigned to a specific “zone” that determines how it can be used. Some common types of zones include residential, tourism, agricultural, and forestry. It is crucial to understand the type of zone your land is in, as you may not be allowed to build certain types of structures or use the land in certain ways. For example, if your land is in a “flyover zone,” the government may have the right to take it over at a certain price.

4. Avoiding Bad Property Deals

To avoid making a bad property investment in Bali, it is important to do your due diligence and understand the zoning laws that apply to your land. By following these tips and working with a trusted property investment company, you can increase your chances of turning your Bali villa project into a success.

A Key Step in Buying Property in Bali

One of the biggest challenges in buying property in Bali is ensuring that the person selling you their land has the authority to do so. To verify this, it is important for the seller to provide you with a complete list of ownership certificates, which can be checked by your due diligence team with the National Land Institution (BPN). If the seller is hesitant to provide this information, it is a major red flag and you should consider looking elsewhere.

There are several potential issues that can arise with ownership certificates, such as complicated inheritance disputes or the need for both spouses to agree to the sale. It is also important to check for any outstanding tax obligations, such as unpaid property taxes.

Once you have completed your land due diligence, the most complicated part of building a villa in Bali is behind you. Now you can move on to the more enjoyable aspects of the project.

Choosing a Regency in Bali for Your Villa Project

The first step in building a villa in Bali is to secure the land on which it will be built. If you are unsure of which area to choose, it can be helpful to consider where other foreign investors are making property purchases. Based on the number of foreign investments, the following regencies in Bali are popular choices:

1. Canggu
2. Uluwatu
3. Ubud

The Process of Purchasing Land in Bali

1. Paying a Downpayment: Before conducting due diligence on a piece of land, it is common for sellers to require a downpayment as a sign of your commitment to the transaction and to show that you have the funds to proceed. This downpayment will be held in escrow and will be returned if the due diligence process is unsuccessful.
2. Choosing a Notary: It is recommended that you, rather than the seller, choose the notary who will handle the legal aspects of the land purchase. It is important to note that notaries cover specific areas, so you may need to use multiple notaries if you are buying property in different locations.
3. Appointing a Buyer Representative: If you do not live in Bali or do not have the time or language skills to attend meetings with the notary, it is common to appoint a buyer representative to handle these tasks on your behalf.

Our team can help you with the entire process of land acquisition and due-dillegence process. Contact us here: CONTACT

Choosing an Architect in Bali: Tips and Considerations

Once you have acquired land and completed the necessary legal steps, you are ready to start building your villa in Bali. While the process of choosing an architect is similar in many locations, there are a few factors to consider when selecting one in Bali.

1. Be wary of “international” firms that are actually delegating all of the work to local companies and charging higher prices for their services. It is a good idea to meet with potential architects in their office rather than at a coffee shop to get a better sense of their operations.
2. Look for firms with experience working with international clients, as the style preferences of local and western clients can differ significantly. For example, western clients may prefer larger windows while local clients may prioritise shade.
3. Avoid paying all of the fees upfront. In one of our projects, we paid a deposit to an “international firm” only to receive an AutoCAD drawing with details from a previous client. We ended up finding a different firm that was more dedicated to our project.

By following these tips and doing your research, you can find an architect in Bali who is able to design your dream villa and deliver high-quality service.

Our team can help you with all the architectural aspects of you construction in Bali. Contact us here: CONTACT

Services to Request from an Architectural Firm in Bali

When choosing an architectural firm in Bali, it is important to consider the range of services they offer and the cost of their services. In 2022, the typical cost of a good architect in Bali for a standard-sized villa is around 10,000 USD, which should include a full range of services, including:

1. MEP consultant: This person will be responsible for creating electrical plans and overseeing the installation process.
2. Structural consultant: This individual will develop structural drawings based on the architect’s concept.
3. Quantity surveyor: This person will ensure that the Bill of Quantities is accurate and that all materials are purchased at market price and in the appropriate quantities.

Many architects in Bali also have preferred contractors that they have worked with in the past. This can be a good option, as it ensures that the architect and contractor are in constant communication and that any revisions to the construction process are made for the right reasons, rather than to cut corners.

Our team can help you with all the architectural aspects of you construction in Bali. Contact us here: CONTACT

Submitting a License to Build (IMB or PGB) in Bali

Once you have finalized the plans for your villa, the next step is to obtain a permit to build it, known as the IMB (recently renamed as Persetujuan Bangunan Gedung or PGB). While the approval process for building permits can be lengthy in some countries, it is typically faster in Bali. After receiving zoning approval, you can begin construction and apply for the PGB at the same time. The PGB is usually issued within 3-5 months. For more information on building permits here: https://projasa.co.id/en/building-permit

Opening a Tender for Construction in Bali

Once you have your land, building plans, and zoning approval, you are ready to start the construction process. It is common to use a contractor recommended by your architect, as this can help ensure that the contractor is closely supervised and that the final result is as close as possible to the original designs. However, you can also choose your own contractor.

Regardless of which option you choose, it is a good idea to open a tender and receive bids from multiple firms. Consider factors such as references, communication, and price when deciding which contractor to hire. In 2022, construction costs in Bali range from 500 USD/m2 for standard quality to 1500 USD/m2 or more for luxury villas.

Paying Your Contractor in Bali

When working with contractors in Bali, there are two common methods of payment: paying for each milestone or paying a monthly fee. In general, it is more beneficial to pay per milestone, as it aligns your incentives with those of the contractor and encourages them to work as efficiently as possible. Monthly payments may be more suitable if you expect to make a lot of changes throughout the construction process and do not want to be limited to the agreed milestones.

Tax Aspects to Consider When Building a Villa in Bali

To minimize tax liabilities when building a villa in Bali, it is advisable to register a company and conduct all business under it. If you build a villa as a company, be sure to deduct withholding tax from each payment, as it is your responsibility (or that of your tax advisor) to do so. These tax payments will also be deductible for your annual corporate income tax.

Conclusion

Building a villa in Bali can be a rewarding and exciting process, as long as you are well-prepared and avoid common pitfalls. By following the steps outlined in this article and considering the unique aspects of the Bali real estate market, you can increase your chances of success and potentially enjoy a good return on your property investment. Alternatively, you may just have a beautiful place to call home. Hope we answer most of your questions on how to build a villa in Bali as a foreigner.