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Building permits for a villa in Bali
Building a villa in Bali for residential or business purposes requires a lot of research and patience. Understanding building regulations and applying for the right building permit is part of the process to make sure your build runs smoothly.
Whether you are looking to build a villa to live in or to run a villa rentals business, there are specific permits and licenses for each purpose. The building laws in Bali do change from time to time so it is important to stay informed of any changes that may affect your villa project.
IMB permit replaced with PGB permit
The IMB building permit was replace in 2021 by the PGB building permit and SLF certificate. Foreign-owned PT PMA companies used the IMB to build, change or renovate property.
The previous IMB building permit provided land and building owners with clarity on;
- Landownership rights
- Permission to build
- Building ownership rights
- Permission for the
- building’s specific use or purpose
Since the IMB permit had changed, the new system has broken down the license application into three separate categories.
- PGB building permit – building permit
- SLF building certificate – detailing the specific use of the building
- SBKBG certificate – proof of building ownership
PGB building permit
The newly formed PGB building permit (Perizinan Gangguan Banunan) is essentially the same as the previous IMB. The main difference between the PGB and IMB is that a PGB permit does not require a company to apply for the license prior to building.
The PGB permit regulates the potential impact a building has on it’s surrounding environment. Building standards, noise pollution, zoning regulations, environment & community are all considerations of the PGB permit.
Once the PBG permit has been issued for a building, the length of the permit does not expire. Essentially the permit remains valid during the entire life of the building.
SLF building certificate
The SLF building certificate must be obtained along side the PGB permit. The SLF building certificate designates the permitted use of the building and what it will be used for. Both the PGB permit and SLF certificate combine to replace the previous IMB building permit.
For residential properties the SLF certificate must be renewed every 20 years. For commercial buildings the SLF certificate must be renewed every 5 years.
Building a villa on land for sale
Before applying for PGB and SLF building permits it is necessary to confirm that the building or land you have bought or leased is classified under the correct zone. Foreign-owned PT PMA companies should look for land designated under the Yellow Zone or Tourism Zone (red zone).
Making sure that your land or building is registered under the applicable zone is vital to obtaining the correct licenses that apply to your business.
Confirming the land zone can done though a reputable notaris. The notaris will send copies of the land documents to the local ITR government office. This check will confirm that the zoning boundaries conform with details on the land certificate.
The notaris will typically request the land documents noted below. These documents can be obtained from the selling landowner.
Copy of land certificate
Ordinance coordinates
Picture of land boundary
Land survey and technical drawings
On the basis you have secured the land to build a villa (Yellow or Tourism zone), the next step would be to survey the land and employ an architect for design and technical drawings.
With a land survey assessment and technical drawings, your notaries will arrange for a government officer to come and assess your land. This assessment is for the preparation of issuing the PGB permit and SLF certificate. Following this process before you start to build on the land is the quickest and cheapest option.
The alternative option is to build your villa and then apply for the PGB permit and SLF certificate. Whilst this is perfectly within the law, the process can be more complicated, time consuming and therefore more expensive.
Land zone case study
In the Karangasem regency of Bali, the government changed land zoning regulations during the Covid-19 pandemic. There is a situation where landowners have land certificates that state land is ‘Dry land’ or ‘Yellow zone land’. After conducting official checks, a lot of cases show that the land is actually officially designated as Green Zone land. To make matters more complicated, some plots of land are designated partially as Yellow zone and partially as Green zone. This essentially means that a business can only operate on the partial area of land designated as Yellow zone. The common question in this situation is, “Surely we can apply to the government to rezone the green area to yellow zone”? Before Covid pandemic, yes you could do this for a nominal charge with your Notaris. However with the new regulation change this option is no longer available. The only solution would be to wait until the government changes the region's land zoning policy. Obtaining land and relying on this regulation change would be highly risky and speculative, as this could potentially take years to happen.
Building a villa for business in Bali
Running a property management or villa rentals business in Bali is fun and rewarding.
Building villas in Bali to sell or to rent as a business venture requires a foreigner to incorporate a foreign-owned PT PMA business. Buying property with a PT PMA Company allows you to legally own or profit from villa sales and rental in Bali.
A PT PMA property business would also require the business owner to apply for a number of permits in order to continue as a going concern. The Indonesian government require all business to submit financial accounts on a frequent basis to ensure all tax payments are made in a timely manner.
Summary for building a villa in Bali
Building a villa in Bali as a holiday home or for business purposes is a challenging yet rewarding process. From securing the land, to approving building permits, to the eventual villa construction – a great deal of patience is required.
Understanding the land ownership and land zoning laws of Indonesia can be confusing. Applying for the necessary building permits can be frustrating. Taking the time to research what is required to build a villa in Bali with the right building permits will help you to make clear decisions in the long run.
Building permit laws vary depending on the purpose of your villa. If you are building a villa for a holiday home or for permanent residence, your SLF certificate application must reflect this. Likewise, if you are building a villa to rent out the SLF certificate must detail the use of this.
The property laws of Indonesia can be confusing, however they are clearly laid out. Using a reputable notaris for all your land and building license matters will make sure that your paperwork is in perfect order. A reputable notaris will also advise you on the best way to structure land purchase agreements to help secure your landownership right on the best possible terms.
