Buying Real Estate in Bali – The Leasehold Extension Dynamic Simplified

At some point you are going to face it – your lease is not getting any longer and you need to start talking with the owners of your property in Bali to discuss extending your lease. Maybe you would like to sell the villa and you feel that a longer lease will be more attractive to the market, or perhaps you just want the peace of mind that comes with having a longer future in your Bali home. Check the article(s) in your lease agreement that cover the method to establish the price of the extension and realize that the language of the contract will likely not prohibit you from extending the contract ahead of the predetermined time frame set out. You will need to talk about the market value of your property and negotiate. It is a delicate matter, we know, and it surely requires thoughtful actions and strategy. Let’s take a closer look at leasehold extensions and how to deal with them in such ways that you get what you need and keep everyone happy all at the same time.

Still wondering whether or not you should invest in the Bali Property Market? Check out these 5 things you need to know beforehand. Buying a “freehold property” in your price range may not actually be achievable if the property does not give you the benefits that you want. Leasing property in Bali just may be the best way to go for you, 100% legal, safe and secure.

The Lease Agreement of Your Bali Property
When you acquire a leasehold property in Bali, the lease agreement should already mention the option of leasehold extension. When you’ve leased your Bali villa for 25 years, usually it is extendible for another 25 years. Did you lease it for 30 years? You can extend it for another 30 years and so on. In some rare cases, the price of the leasehold extension is already mentioned in the agreement but more likely, it will say something like ‘the leasehold extension will be based on the market value of the land at the time of the extension’. As we have no central register of property transactions here in Bali, creating a Comparative Market Analysis like your agent would do ‘back home’ is simply not an option. Therefore, the methods used to establish are more subjective (personal) than they are objective (documented). Can your behavior actually influence the calculations used to set the price? Of course they can!

How to Determine the Market Value of Your Bali Property?
Very important to note, the market value of your villa is based on the value of the land, not the value of the land + the villa + the pool + renovations! In many cases, both the landowner and yourself will get 3 to 5 agents to have the land valued and give their professional statements on the market value of the land at the time of extension. You can then settle at the average value of these statements. However, there is room for negotiation and in the end, it all comes down to relationships…

A Good Relationship with the Landowner is Essential!
The relationship with the owner is of the utmost importance when you want to extend that leasehold at a reasonable price. How well did you maintain the relationship with the landlord of your property in Bali? Did you make that extra effort? Not only is it nice to get along well with the landowner, but it will also make things such as extending your lease so much easier. Establish a friendly relationship from the beginning, make the first meetings not about you wanting something from them but you giving something to them as a gesture of kindness and goodwill. Waiting until the leasehold is coming to end and asking them to meet to talk it over will most likely result in paying the highest price. They’ve got what you want, after all, and they’ve got all the time in the world which is something you don’t have.

Don’t Wait to Talk about the Extension of Your Leasehold
Usually, there is a stated term in the agreement to talk about the extension of your leasehold. However, you may want to try talking about it a bit sooner which is a lot easier when the relationship with the landlord is good. So, don’t forget to invest in the relationship and send something over for Galungan and Kuningan. For the landowner, it also means something to have good, kind and trustable people leasing their land! Maintain the relationship and talk about extending the lease in an early stage when there is no time pressure involved. It can do wonders.

If you are unsure of how best to approach the issue of extending your lease, find a professional that you can trust to offer the best advice. While this may be the one and only leasehold extension that you have ever encountered, a seasoned agent will have been through the process dozens of times under a wide range of circumstances and the advice that you receive can save you thousands of dollars and a lot of headaches.