Home / Buyer's Guide / Extending a leasehold in Bali
From the Bali Buyer's Guide
Extending a leasehold in Bali
An extension is only worth what the contract says about it.
A finished pool villa we list in Kaba Kaba, lease to 2048
An extension is only worth what the contract says about it.
A Bali leasehold can be extended only on the terms written in the lease, or on new terms the landowner agrees to when the time comes. There is no automatic right to extend. The extension clause in the deed is the whole of your right, so it is worth reading before you buy rather than in the last years of the lease.
Send the listing or the lease. We will tell you what kind of extension it really has, and what your notary should check before you rely on it.
No email required. No mailing list.
A lease in Bali, Hak Sewa, is a contract between you and the landowner under Articles 44 and 45 of the Basic Agrarian Law. When it ends, the land goes back to the landowner, and what happens to the building is whatever the deed says.
| The clause says | What it means | What it is worth |
|---|---|---|
| A fixed price for a stated number of years | You can extend at a price agreed today | The strongest. You know the cost now |
| A price set by a formula, such as a market rate on the day | You can extend, but the price is decided later | Something, but you cannot budget for it |
| An option to extend "by agreement" or "to be negotiated" | Nothing is agreed | Very little. It is a conversation, not a right |
A listing that says "30 years plus 20 year extension" could mean any of the three. Ask which.
The price, or how the price is set. In rupiah, in writing. A fixed figure is worth more than a formula, and a formula is worth more than "to be agreed".
The deadline to give notice. Many clauses require you to tell the landowner you want to extend some time before the lease ends. Miss it and the right can lapse.
When the extension is paid. Some leases ask for payment at the start of the extension, some well before it. Know the date.
Who it binds. The clause should bind the landowner's heirs and anyone the land is sold to, not just the person who signed. Ask your notary to confirm it does.
Whether it passes to whoever buys from you. If you sell the remaining years, the extension should go with them. If it does not, the next buyer is paying for a shorter lease than you were.
Who pays the tax. Income from renting land and buildings is taxed under Government Regulation 34 of 2017, and the deed should say who carries that tax on the extension payment.
If there is no extension, or it is not taken up, the land returns to the landowner. Whether the building goes with it, has to be removed, or is paid for, depends entirely on the deed. Most leases leave the building with the landowner, so read the clause before you buy.
The years that remain are what you are selling, and an extension that is written down, priced and transferable adds to them. A buyer comparing two villas will compare the years each one gives them, so a weak clause reduces what yours is worth. The lease calculator shows what each year left costs, with or without an extension.
If you already own a lease and the clause is weak, the time to negotiate is years before the end, not months. Agree the price and the terms in a new notarial deed, and have the notary confirm the landowner's title and the heirs' position before you pay.
Read the end date on the deed, not the years in the advert. Read the extension clause word for word. Ask whether it binds heirs and passes to a buyer. Then decide what the property is worth on the years you are certain of. How leasehold works in Bali and leasehold vs freehold cover the rest.
Ask your notary: is the extension price fixed, when must I give notice, does it bind the landowner's heirs, and does it pass to someone who buys from me?
This page describes publicly available law and practice and is not legal or tax advice. Bali Property Sourcing is a real estate agency and buyer's agent, not a law firm. Lease terms are private contracts and every deed is different. Instruct your own notary before you commit money.
Most extensions are described in one line on a listing and three pages in the deed. Send us either and we will tell you what it is worth. Your notary checks the title before the sale goes ahead.
We use Google Analytics to see which pages are useful. No ads, nothing sold. Privacy