British expats in Indonesia: property rules in Bali and your UK estate

If you "own a villa in Bali", you almost certainly don't own the land under it. Foreigners can't hold freehold in Indonesia, so what you actually have is a right to use, a lease, or shares in a company, and which one decides what your heirs can keep. Some of those rights pass to family cleanly; others force a sale within a year or can't be inherited at all. Add a slow process for recognising a foreign will and a property-transfer duty that still applies, and the sensible plan is an Indonesian will for your Indonesian assets coordinated with a UK will for your UK ones.

Here's what shapes it.

How succession works for foreigners

Indonesia has a plural legal system: the Civil Code for non-Muslims and most foreigners, Islamic law for Muslims, and customary (adat) law for indigenous communities. For a British expat, the Civil Code is the relevant framework, and it includes forced heirship (legitieme portie), which reserves a minimum share for close family, the surviving spouse, children and parents, that can't simply be written out.

In principle, Indonesian private international law can point a foreigner's succession to the law of their nationality. In practice, enforcing a foreign will in Indonesia is slow and costly: banks and land offices are unfamiliar with foreign law and often demand an "affidavit of foreign law" that has to be approved by an Indonesian court. And for land, local rules override everything: a foreign will can't direct an Indonesian asset in a way Indonesian law forbids. That's the heart of why a local will matters here.

What you can actually hold in Bali

Full freehold (Hak Milik) is reserved for Indonesian citizens. A foreigner who acquires freehold, by inheritance or marriage, must give it up within a year or it reverts to the state. So the realistic options are these:

A right of use (Hak Pakai) is the most secure individual title for a foreigner. It can run up to around 80 years across its terms, but it depends on holding a valid Indonesian residence permit (a KITAS or KITAP). A leasehold (Hak Sewa) is a contractual lease rather than a registered title, common for Bali villas, and only as strong as the contract behind it. And a foreign-owned company (a PT PMA) can hold a right to build, which suits genuine commercial use.

One route to avoid entirely: a nominee arrangement, where an Indonesian holds the freehold for you under a private agreement. It's unlawful and unenforceable. The nominee is the legal owner, and neither you nor your family has a protected claim. A will cannot fix it.

What passes to your heirs, and what doesn't

This is where the ownership type decides everything.

A right of use can be inherited, but only by an heir who also qualifies, meaning they hold a valid Indonesian residence permit. If your heir doesn't, they can't keep it: they face a one-year window to sell it to an eligible buyer or transfer it, and missing that deadline can trigger a forced government auction. Since a sale in Indonesia can take several months, that clock is tight.

A leasehold can be inherited only if the contract allows it. If the lease is silent or ends on death, the right reverts to the landowner and your family gets nothing, so the wording of that agreement is critical.

Shares in a PT PMA are the cleanest for succession. Heirs inherit company shares rather than the property itself, there's no nationality restriction on holding them and no one-year divestment rule, and the company keeps going regardless. For a genuine investment, that structure gives the most predictable inheritance, at the cost of higher setup and running obligations.

Making a will here

Indonesia recognises a handful of will forms, but for a foreigner a notarial will, drafted and signed before an Indonesian notary (a notaris) and registered with the central will registry, carries the most weight and is the hardest to challenge. A registered will is also far easier for your family to locate and act on.

Because local mandatory rules govern Indonesian land and a foreign will is awkward to enforce locally, the standard advice is a separate Indonesian will for your Indonesian assets, alongside your UK will. As always with more than one will, watch the revocation trap: a standard clause revoking all earlier wills can cancel your UK will by accident, so the Indonesian one must say plainly that it covers Indonesian assets only and doesn't revoke anything elsewhere.

Tax: no inheritance tax, but not free

Indonesia doesn't levy a classic inheritance tax, so receiving an inheritance isn't taxed as such. But a transfer of inherited property still attracts BPHTB, a regional duty on the acquisition of land and buildings, paid by the heir and based on the property's value, with some exemptions for lower-value homes. And if your heirs later sell, a final income tax (around 2.5 per cent of the sale value) applies. So "Indonesia has no death taxes" is only half true: inherited property isn't entirely free on transfer or sale.

The UK side runs separately. Anything physically in the UK stays within UK inheritance tax wherever you live. Since 6 April 2025, whether your worldwide assets are caught turns on long-term residence: broadly, if you were UK resident for at least 10 of the last 20 tax years, your worldwide estate is in scope, with a tail of years after you leave. The nil-rate band remains £325,000, with a residence nil-rate band of up to £175,000 where a home passes to direct descendants. There's no UK-Indonesia inheritance tax treaty, so relief for any double charge depends on a credit rather than a treaty.

What the family faces

Expect two processes. In Indonesia, your heirs need to prove their entitlement (a certificate of inheritance, or a legalised foreign probate decree), register any property transfer at the land agency, and meet the eligibility tests for the title in question, or start the one-year divestment if they can't. Banks there commonly freeze accounts until the estate is settled, which can leave the family short in the meantime. In the UK, your executors still need a grant of probate to deal with UK assets. Planning for both, with clear, country-specific wills, is what keeps it from becoming a mess.

A couple of real situations

A British expat in Bali holds his villa on a right of use and has savings in the UK. His daughter in the UK has no Indonesian residence permit, so she can't keep the villa: on his death she'd face the one-year deadline to sell it. His Indonesian will should anticipate exactly that, appointing someone to manage the sale and pass her the proceeds, while a separate UK will handles his savings.

Someone who bought a Bali property through a nominee can't fix it with a will, because the property legally belongs to the nominee. The first job isn't writing a will; it's restructuring into a lawful arrangement, a PT PMA or a right of use if eligible, and only then drafting an Indonesian will to leave the shares or the title to family.

Where this leaves you

In Indonesia, the order of work is the same as the rest of the region: establish exactly what you legally hold, because that decides what your heirs can keep, then build the will around it, locally and in the UK, and never rely on a nominee. A notarial Indonesian will for your Indonesian assets, coordinated with a UK will for your UK estate so neither cancels the other, is the structure that actually protects your family.

A clear, valid UK will is the anchor for the UK side. That's what Expat Legacy provides: a properly drafted UK will for British expats, in plain English, ready to coordinate with your Indonesian arrangements.

Sources

• Basic Agrarian Law (Law No. 5 of 1960), Article 21(3) (Ministry of Finance JDIH)
• Foreign land rights under PP 18/2021 (Hukumonline)
• Daftar Pusat Wasiat FAQ (Ditjen AHU, Ministry of Law)
• Law No. 1 of 2022, BPHTB provisions, Articles 44 to 47 (DJPK, Ministry of Finance)
• Final income tax on land and building transfers, PP 34/2016 (Directorate General of Taxes)
• Inheritance Tax if you're a long-term UK resident (GOV.UK)
• Inheritance Tax: Double Taxation Relief (GOV.UK)

This article is general information, not legal or tax advice. Indonesian property and succession rules are detailed and evolving, and your UK position depends on your own circumstances, so it's worth getting advice tailored to you, on both sides, before you act.