The main advantage of having an HGB title is that you practically own the land. For a small fee you can convert the HGB title into a Hak Milik title (this goes both ways), which means you actually hold a Freehold certificate in your company’s name. As compared to a Hak Sewa (leasehold) title, the land value of an HGB title do not decrease over time.

You may sell your HGB (or converted Hak Milik) title after, say, 20 years with the same value – or hopefully for an even higher value – as today. This means you could purchase a property via HGB title today, rent out the property over the next 5 years – generating rental revenue, and sell the property after 5 years for more than the initial purchase price (given that land prices are rising over time).

One other benefit of buying a property through PT PMA is that you and your purchase are protected by the law in cases of any dispute. This is huge because this is exactly the risk of purchasing a piece of land or a villa in Bali through a local nominee setup. Many foreigners try to purchase a Freehold property by using the nominee structure, whereby a local individual is registered as the official owner of the Hak Milik title.

This method is commonly used in Bali, however, it is not legal and will not protect the foreign buyer in case of any dispute. Rather than going for such risks, we strongly recommend to consider a HGB purchase over a nominee structure. After all, you don’t want to risk losing your property investment and get penalized for it.

Even though HGB titles can be obtained for single unit properties, their main purpose is to serve foreign and local property developers who intend to develop multiple properties with the intention to sell. Whereas the Hak Milik title is designed for individual property owners, the HGB title is created for commercial use. That is why a PT or PT PMA company name is used as the title holder instead of an individual’s name. Consequently, the property becomes a part of the company’s assets and is more tightly linked to the company’s tax evaluation.

As an alternative when buying a villa in Bali, foreigners can legally obtain a title called a Hak Sewa (Right to Lease). This right enables you, as a foreigner, to 100% own the property legally in your own name, while you are not required to set up a company for this. Same with a property bought through a PT PMA company, a land or villa, depending on its license, can be used and operated for a variety of business purposes such as a spa, restaurant or villa development with the intention to rent or sell for a profit.