General information, not legal advice. This guide sets out the general rules as I understand them. It has not yet been reviewed by an Indonesian notary, and the rules change. Before you sign or pay anything, confirm every point with your own independent notary (PPAT) or lawyer.
What you actually buy
With a leasehold, you pay up front for the right to use the land and the villa for a fixed number of years. The Indonesian landowner keeps the freehold title; you hold a lease agreement, signed before a notary, in your own name.
In Lombok, terms of 25 to 30 years are common, usually with some form of extension. During the term you can live in the villa, rent it to guests if the lease allows, and sell or pass on the remaining years.
The clauses that matter most
When the clock starts
On an off-plan villa, find out whether the term starts at signing or at handover. If construction takes 18 months and the clock started at signing, you've lost 18 months of use before you get the keys.
Extension
"Priority to extend" or "first right of extension" only means the owner must offer the extension to you first. It says nothing about the price. An extension at a price or formula fixed now is far stronger. Ask for it in writing.
Transfer and sale
Check that you can sell or assign the remaining lease to someone else without the landowner's approval, or with approval that can't be unreasonably refused, and whether any fee is due.
Inheritance
The lease should pass to your heirs automatically if you die during the term. Make sure it says so.
Rental rights
If you plan to rent the villa to holiday guests, the lease must allow subletting, and the property needs the right tourism licence. Check who can manage the rental: are you tied to the developer's management company?
End of term
What happens to the building when the lease ends? Usually it returns to the landowner with the land. Some leases include compensation or a guaranteed renewal; most don't.
The landowner's obligations
Who pays annual land and building tax (PBB)? What happens if the landowner sells the land, mortgages it or dies? A good lease binds the landowner's heirs and any buyer of the land.
How leasehold value changes over time
A lease is a wasting asset: with every year that passes, fewer years remain. The building and the area may rise in value, but a villa with 8 years left will sell for much less than the same villa with 28.
That's why most leasehold buyers plan around the use and rental income over the term, plus the extension, rather than a resale profit. Factor this in when comparing a Lombok villa with freehold property elsewhere.
Questions to ask before signing
- Does the term start at signing or handover?
- What is the extension price or formula, and is it in writing?
- Can I sell or assign the lease, and is a fee due?
- Does the lease pass to my heirs?
- Am I allowed to rent it out, and through whom?
- Who pays land tax, and what happens if the land is sold?
- Is there a certified English translation, and which version prevails?
Example: the Tampah Sky villas are offered on a 30-year leasehold held in the buyer's name with a priority extension option. Ask the developer for the extension terms and the start date of the term in writing.
This guide is general information, not legal advice. Have your own notary or lawyer review any lease before you sign.