If you weren’t already aware, everything in Bali is negotiable. Prices vary due to a number of factors. As a foreigner, it’s easy to feel that some see you as a walking ATM, so becoming very careful when it comes to money is a natural response. We always knew we would pay more for land than a local would (and that’s ok too – we are foreigners after all!), but we wanted to make sure we got a fair price. Of course, “fair” is a relative term!
After deciding we liked the area of Babakan (which is next to Canggu), we found some land that looked perfect, until we discovered it wasn’t zoned for residential buildings. Fortunately, just down the road we found another piece of land that was not only zoned residential, but also overlooked gorgeous green belt land. It was perfect! We soon met the landowner and started chatting. These chats soon turned into negotiations. That would drag out for months.
From the street, it’s so overgrown you can’t see what the land consists of.
This happened for a number of reasons. Firstly, the original landowner had died and we were negotiating with his 9 adult children. The youngest spoke English well and became the family representative, but had to have every detail confirmed by all 8 of his siblings! Sometimes they would quibble over seemingly meaningless details. Secondly, we needed to play hard to get. Although we really really really wanted this land, if we didn’t show that we were willing to walk away (to any of the nearby empty plots of land), we knew we wouldn’t get a fair price. On the flip side, the landowner’s family had just sold an adjoining piece of land so they knew that their land was desirable and what the willing price is. Both sides tried out their poker faces in order to get the best deal possible. The discussions were always good-natured, which was important for us because in most cases the landowner will keep some of their land to live on, so they will eventually become our neighbours.
The three main variables that we needed to work out were price, land size, and repayment terms. Our strategy was that in order to get the overall best terms, we needed to be willing to compromise on some of the details. Originally, we had only wanted land size of 4-6 are (1 are = 10m x 10m), but in order to get favourable terms for the repayment schedule, we chose to take more land. Finally, after these three key details were agreed upon, we had to meander our way through an Indonesian contract law and include every possible scenario in the lease (such as clauses prohibiting the owner from raising livestock or burning rubbish on adjacent land).
When I climbed over the trees and overgrown plants that blocked the view from the road, I could see that this land was exactly what we had been looking for!
Fortunately, the land zoning allows us to build.
We had experienced how villa owners had been very crafty when we had negotiated our annual rent (FYI in Bali, rent is usually paid in full when the contract is signed). We heard the same story from many friends too. It’s disheartening and annoying. In addition, we’d also seen firsthand that Bali is not immune to the global phenomenon of greed, and that people may will play ugly when money is at stake. This led us to be extra careful during the negotiations.
It often felt like it was taking forever, and as the negotiations progressed we increasingly half-expected them to fall apart. Typically, we’d meet with the representative of the family (who often brought a trusted advisor with him) and discuss various points. Sometimes our Notaris’ staff (a Notary Public ensures the contract meets all the legal requirements) would come along. Then we’d have lots of follow up discussion by WhatsApp as the points were debated by the rest of the family. The Notaris would then draft this part of the contract. Although a Notaris should be fair and impartial to both parties, we’d been advised to chose our own one rather than let the landowner choose.
Throughout this process we often spoke with friends and acquaintances about our plans and they would give us some fantastic tips about what to include in the contract. For example, one of our neighbours suggested including a clause that requires the landowner to keep any trees on the small piece of land he has in front our land below a certain height and prohibits him from building on that land, so it doesn’t impede our view (see land zoning pic above).
Sometimes we spent a few weeks to-ing and fro-ing over the wording of a single clause in the contract. A contract is only legal in Indonesia if it’s in Bahasa Indonesia, so we always worked off the Indonesian language version. Thank god for google translate! A long time ago, my husband had studied a few contract law subjects at uni, so he was able to dust off those skills. Even after we thought we had agreed on all the points, the “final” version went through 6 revisions! It was certainly a time-consuming process, but one we wanted to get right. Doing all this due diligence is not what I had imagined when I daydreamed about building a tropical home!
Amazingly, we got there in the end and signed the lease! We were thrilled and – to be honest – a little scared! Suddenly it was time to put our money where our mouth was! We ended up spending slightly more than we had planned because we chose a larger piece of land. However we are very happy with the outcome, especially as we will be neighbouring Canggu.
Inked thumbs after signing the contract. As they say in the classics – shit just got real!
Yay! Now we have the land! But what should we build? The standard L shape villa is so common in Bali, but I want to create something beautiful, functional and inspiring. Time to unleash my creativity and see what I can come up with!
L shape villas are everywhere in Bali.
12 Comments
You did really well to get all the caveats and clauses in your lease. I’m sure you’ll be feeling safer in the knowledge that you’ve covered all the bases. Enjoying reading about your once in a lifetime dream. Good luck x
Thank you! We heard so many horror stories that we were super diligent with our research. Is better to take your time than regret it!
Would you be willing to share all the special clauses and caveats that you put in besides the ones you shared in the blog? We are thinking of buying a piece of land in Lovina area. Thanks!
Hi Christine, many of them will be explained as this build diary continues! In the meantime, I think it’s essential that you use a recommended notaris (notary public) who ensures the contract/lease is legally binding. Make sure you use one who knows the area and has been recommended by other foreigners. Someone who has been in the business for a long time. There are a number of facebook groups where you can search for that info. Using a notaris is more expensive as they usually charge a feee of about 1% of the value of the contract, but it provides a lot of protection. I’d also suggest renting land long-term, rather than trying to buy through a foreign owned company (a search online will show the pross and cons of both). Also, make sure the contract accounts for scenarios where either party passes away. All the best as your search for your land! Lovina is lovely!
Loving reading about your progress with this, doing what you’re doing is a dream of mine also so this is very interesting and informative for me…thanks for sharing and good luck with your exciting challenge/adventure, looking forward to the next edition! x
Thanks Kirstie! It’s exciting and daunting!
Thanks and congratulations!!?
Thank you for reading!!
Thoroughly enjoying following the progress of your dream. Would love to lease an existing villa in Bali one day.
Thanks for sharing.
Thanks Lea!
So great reading your experience thanks for sharing.
Can I ask how you are able to purchase the land as foreigners as opposed to lease?
Will certainly keep reading your journey how exciting xx
Hi Kristy, we’ve chosen to lease as it’s a safe option. Foreigners often use a nominee system where a local buys the land (with the foreigner’s money) and rents it to them for a nominal fee. However, this method can (and often does) end in disaster if the local nominee changes his/her mind and decides to sell it (remember it’s in his/her name). Blood is thicker than water – the nominee can be put in a very difficult situation if their family faces financial pressure. If the nominee dies and the family members decide to sell, it’s the same problem. Another option is to set up a company. A local company can be set up in the name of 2 Indonesians, but the same issues apply as it is not owned by the foreigner. A foreigner-owned company can be set up but there are massive start up costs to do it this way. Good luck!