The true cost of owning a Lombok villa: taxes, fees and the running costs nobody quotes
Brochures quote a price and a gross yield. Between the two sits a stack of one-off and recurring costs that turn a 20% headline into a 7-12% reality. Here is the full stack, line by line.
The short answer: The price is the smallest decision you make. Between the headline figure and the money you actually keep sits a stack of one-off transaction costs (5-12%) and recurring operating costs (management, commissions, tax, maintenance) that turn a brochure's "20% yield" into a real 7-12% net. This guide lays the whole stack out so nothing surprises you.
→ Part of the HubLombok cluster: Investing in South Lombok — The Complete Guide
One-off costs: what completion really runs
On top of the purchase price, budget for the transaction stack:
| Cost | Who pays | Rough size | |------|----------|-----------| | BPHTB (transfer duty) | Buyer | ~5% of assessed value above threshold | | PPh (income tax on transfer) | Seller | 2.5% of transaction value | | Notary / PPAT fees | Buyer | 0.5–1% of value | | Due diligence (BPN, surveyor, checks) | Buyer | €600–1,200 | | PT PMA setup (if used) | Buyer | €4–6K plus capital requirements |
For a straightforward leasehold transfer, total transaction costs typically land at 8-12% of the purchase price. Price these in from day one, not as an afterthought at signing.
Recurring costs: the part that eats the yield
This is where gross becomes net. On a managed rental villa, expect:
- Villa management: 18-22% of gross rental revenue.
- OTA / booking commissions: 15-20% (Airbnb, Booking.com and the like).
- Staff for a serviced villa: housekeeping, security, sometimes a manager.
- Pool and garden maintenance, a real line in a tropical climate.
- Utilities and insurance.
- PBB, the annual land-and-building tax, modest by Western standards.
- A refurbishment reserve. Sun, salt and humidity age a villa fast; budget for it or watch your rates slide.
Gross to net, worked
Run any villa through the same honest math (our ROI guide does this line by line, and the calculator does it for you):
- Developer-quoted gross: 12-22%.
- After management, commissions, costs and realistic occupancy: 7-12% net on a well-run villa, with the best assets reaching around 15% net.
A 7-12% net yield is excellent for the region. The point is not that Lombok is expensive to own; it is that you should compare net to net, never a competitor's gross to your net.
Structure changes the tax bill
How you hold the villa changes the running tax:
- An individual on leasehold or Hak Pakai is taxed on rental income personally.
- A PT PMA pays corporate tax but can offset legitimate expenses, which often suits a multi-unit or business-scale operation, and cleans up repatriation.
There is no universally cheaper option; there is only the one that fits your scale and plan.
→ Build the model: How to model the ROI of a Lombok villa
→ Move the money cleanly: Paying for a Lombok villa
Frequently asked questions
What taxes do you pay when buying property in Indonesia?
The buyer pays BPHTB, a transfer duty of about 5% of the assessed value above the tax-free threshold, plus notary and title-conversion fees. The seller pays PPh, an income tax of 2.5% of the transaction value on a leasehold or title transfer. Budget roughly 8-12% of the purchase price in total transaction costs for a leasehold transfer.
What are the annual costs of owning a villa in Lombok?
Annual land-and-building tax (PBB) is modest by Western standards. The larger recurring costs are villa management (18-22% of gross rental revenue), OTA and booking commissions (15-20%), staff, pool and garden maintenance, utilities, insurance and a refurbishment reserve. Management plus vacancy is the single biggest gap between gross and net yield.
Why is the real net yield so much lower than the brochure yield?
Brochure yields are gross and assume near-perfect occupancy. Strip out management (18-22%), OTA commissions (15-20%), maintenance, utilities, taxes and a realistic 55-70% occupancy in the first three years, and a 12-22% gross villa typically nets 7-12%. That is still strong for the region; it is just a different number from the one on the flyer.
Does a PT PMA change the tax picture?
Yes. A PT PMA pays corporate income tax and can offset legitimate expenses against rental income, which can be efficient for a villa run as a business. An individual holding leasehold or Hak Pakai is taxed on income personally. Which is better depends on scale, number of units and your repatriation plans; price both before deciding.