Two of the main reasons why you might wish to buy property in Bali is to either go and live there, or you might be contemplating renting the property out within a Bali villas rental business.
We say both of these options are possible, but given the complexities of Indonesian law, which is the law that governs Bali, both of them are not without their pitfalls.
Sadly, many an investment in property or business has not realised the hoped-for returns, not because investing in Bali property or business is not viable, but because the person investing failed to follow proper guidelines, nor had they taken any legal advice.
Had they done both, not only would they be enjoying that property, but they would also be seeing a return on their investment, rather than getting embroiled in legal problems.
For investments in Bali to come to fruition, certain pitfalls must be avoided when seeking to buy property in Bali, otherwise legal difficulties are inevitable. Here are five of the most common pitfalls.
Not Seeking Professional Legal Advice
If there is one mistake that stands head and shoulders above all others concerning the purchase of property and starting a business in Bali, it is this one.
It has caused more fallout, lost investments, and even legal proceedings for foreigners than any other issue. Whatever your plans are regarding property and/or starting a business in Bali, do yourself a huge favour and secure the services of a reputable lawyer before you do anything else.
Not Conducting Proper Due Diligence
Whatever means you plan to use to obtain a property in Bali, be it leasing or via a limited company, you must carry out due diligence.
This will cover some of the further pitfalls we are going to cover, but also concerns factors such as land certificates, building quality, and that the asking price is a fair one.
Not Understanding Your Tax Obligations In Bali
Unfortunately, moving to another country does not let you escape taxes, it just means you are paying them to a different government. One issue that does arise is that regulations and the laws on taxes you must legally pay will differ.
Do not try to avoid paying property taxes. It might benefit both buyer and seller to artificially reduce the property price to reduce their respective tax liabilities, but, if caught, the repercussions for both can be severe.
Not Ensuring That You Have Access Rights
If you get caught out by this your Bali villas rental business could be over before you welcome your first guest.
Bali has access rights laws that apply to many roads.
If a neighbour or someone else has access rights adjacent to your villa, at best you may have to pay them a significant amount for them to allow you, and your guests, access, and in the worst-case scenario, they could prevent access altogether.
Not Checking Zonal Restrictions
Bali has zoning laws that stipulate what use land and property can be put to within specified zones.
Some of these zones do not allow for any building work, prevent businesses being run from and even prevent a company from buying land in some zones unless it is to be sued for agriculture proposes.
To avoid being caught out by this, ensure you know the zone designation for the property you are purchasing.