What is the difference between SHM, SHGB and Hak Pakai?
Four land rights, four different answers to who can hold them and for how long. Getting this wrong is how people end up with nothing.
Every Bali property conversation eventually turns on one question: what does the certificate actually say? Agents use "freehold" loosely. The certificate does not.
The four rights that matter
| Right | Certificate | Maximum term | Foreign individual | PT PMA |
|---|---|---|---|---|
| Hak Milik (freehold) | SHM | Permanent, inheritable | No | No |
| Hak Guna Bangunan (right to build) | SHGB | 30 + 20 + 30 years | No, except apartments | Yes |
| Hak Pakai (right to use) | SHP | 30 + 20 + 30 years | Yes, with conditions | Yes |
| Hak Sewa (lease) | Contract, not a certificate | As agreed | Yes | Yes |
Hak Milik is the strongest right in Indonesian law and it is closed to foreigners in every circumstance. Not through a company, not through a spouse, not through an arrangement. A PT PMA cannot hold it either.
If a listing says "freehold" and the buyer is foreign, one of two things is true: the structure is actually something else, or it is a nominee arrangement.
HGB — the commercial route
HGB lets the holder build on and use land they do not own outright. It is the normal route for a foreign-owned company holding property for commercial purposes, and it can be mortgaged and transferred.
It comes in two forms, and the difference decides your timeline:
| State-granted HGB | Private-granted HGB | |
|---|---|---|
| Source | State land | Private Hak Milik land |
| Who grants it | BPN / the relevant authority | The owner must first convert their Hak Milik |
| Timeline | Longer, more administrative steps | Depends entirely on the owner cooperating |
| Typical use | Large developments | Villa projects, plots bought from private sellers |
Nobody can promise you an HGB conversion timeline without first establishing which of these applies. On a private-granted conversion, the seller's cooperation is a dependency you do not control.
Hak Pakai — the residential route
Hak Pakai is the one route that puts a registered certificate in a foreign individual's own name. It requires residency — a KITAS or KITAP — and the property must be residential and meet a minimum value.
It does not authorise a rental business. A residence and an accommodation business are different legal activities.
The 80-year number
You will hear "80 years" constantly. The framework is 30 years, plus up to 20 years extension, plus up to 30 years renewal.
Each step must be applied for, approved and paid for. It is a sequence of permissions, not a guaranteed eighty-year term. Diarise the expiry dates the day you buy.
What actually goes wrong
- The certificate is a photocopy or a photograph, never the original
- The certificate is real but a second certificate exists over the same land
- The seller on the certificate is dead and the heirs have not all consented
- The land is joint marital property and the spouse has not consented
- A hak tanggungan — a registered mortgage — sits against the title
- The land is adat land that cannot be transferred to outsiders at all
Every one of these is found the same way: your own notary verifies the certificate at the local BPN office. Not the seller's notary. Yours.
Land rights and building compliance are also separate questions. A clean certificate tells you nothing about whether the building on it has a PBG.
Got a specific situation?
Every deal in Bali has a detail that breaks the general rule. Send me the details and I'll tell you what I'd check first.
Kai — Bali property adviser