As many know, non Indonesian citizens cannot legally own freehold property in Indonesia. So those who want pride of “ownership” usually, long term lease properties. This entails paying cash up front to the leasor, an agreed yearly cost multiplied by the length of the lease for either a house and/or land.
It is possible to “buy” a long term lease which has partially expired. This is called here “over contract”. For example, someone originally pays cash to the house and/or land owner for a 20 year lease on house and land then decides midway through to go elsewhere. They then offer a 10 year “over contract” lease at an agreed amount per year for the remainder of the lease.
Of course at the end of the lease period the right to use i.e. the lease has expired, the leaser has to vacate and the property reverts to the actual owner.
The benefit of leasing is to fix the cost of use of the property. Hence if one paid say $A250, 000 for a 25 year lease, the cost per year is $A10, 000 or $192 per week fixed for 25 years. Now that seems at first glance to be a pretty good deal, if one has $A250, 000 to lay their hands on in the first place. However as in all things that looks too good to be true there are some downsides.
Firstly one has to have the $250,000 in cash in the first place. If one had this amount and invested at say a net 5% per annum, one would earn $A12, 500 a year which over 25 years is $312,500 and one would still have the original $250,000 in the bank. Total amount a whopping $A562, 500. So if one divides this into the hypothetical 25 year lease above the real cost of the pride of “ownership is actually. $A22, 500 per year or $432 per week.
Ah, you might say,” but this is an unfair comparison as if we rented the rent would increase every year would it not?” and you would be right except on top of your cost of lease you also have maintenance costs on the building, land rates, water rates, fees to the local council, maid, gardener, pool maintenance and security and the cost of buying your furniture and appliances which wear out and have to written off. And these, in total, well exceed the 5% per annum that rents tend to increase here in Indonesia.
OK, you may say “but we have heard that leases appreciate in Bali so if I fix my cost now at $190 per week in a few years time we could sell “over contract” at a much higher amount for the remainder of the lease. You would be right except in our experience this NEVER occurs in reality. Its property spruicking, at its worst.
We can tell you story after story of people entering into long term leasing arrangements here then due to changing circumstances deciding to try to get out, only to advertise month after month with not even one looker. Why? It’s because the market for leasing is very narrow, it’s tiny, only a very few want to lease and they know there are so many properties on the leasing market available at distressed prices.
So take a look at the Bali Easy Living Long term rental costs. They include furniture and appliances, gardener, maid service, pool and building maintenance, council fees, and security can be paid yearly or six monthly or monthly, so you’re hard earned, can stay where it should be, which is in your pocket.
In Bali there is simply not enough electricity to around. Part of the problem is that Electricity consumed in Bali is generated in Java and transmitted via cables. The distance between the Power Stations and Bali is over 400 Kms the conventional wisdom suggests is this is too far to effectively transmit electricity without loss. At time of writing we do not know of any plans to build a power station on Bali.
Bali has some excellent private schools, some of which are world class, something many parents may not be aware. Having educated 3 children, one of whom is now a teacher herself we know that choosing and selecting expensive private schools in the Western World is not easy. We are now educating another 2 children here in Bali, it’s a pleasure to know that schools here are both excellent, some world class and less expensive. The closest, good schools to Bali Easy Living- Canggu are