Foreign nationals who wish to purchase property in Indonesia can experience some difficulties navigating the confusing Indonesian laws pertaining to property ownership. In this article, we will explain the law regarding property and outline what options foreigners have to own land rights in Indonesia.
Under the Land Code of Indonesia, Hak Pakai is a Rights of Usage or leasehold. An individual foreigner is entitled to own land with the status of Hak Pakai, and this can be either on government land or Hak Milik (freehold land).
Hak Milik is freehold title and this can only be owned by Indonesian citizens.
If a foreign national would like to own rights over land they can do so in the following ways:
1. Purchase Through an Indonesian Nominee
The freehold land (Hak Milik) will be legally transferred to the Indonesian nominee, so it is important to ensure that you have protected your investment legally through a series of contracts and documents.
2. Purchase Through a Company
One of the most secure ways to purchase property in Indonesia is through a Penaman Model Asing (PMA) Company, which can be 100% controlled by foreigners. The Company will have the right to build on its property and can operate for 30 years initially, with a right to extend this. There are several requirements to be fulfilled to be establish a PMA Company.
3. Acquire Leasehold Rights
Leasehold title to land in Indonesia can be acquired by a foreign national where they have a KITAS (Kartu Izin Tinggal Terbatas) working visa. Leasehold title can be eligible for 25 years, with the possibility of renewing it for another 25 years and further 20 years after that. The interest must be registered with the local land office after the land is purchased. As this is not a true ownership arrangement, the leasehold interest cannot be passed onto an heir.
4. Purchase an Apartment or Condominium
A foreigner can purchase rights to an apartment or condominium in Indonesia, either by acquiring leasehold rights (as outlined above) or through a Convertible Lease Agreement. The Convertible Lease Agreement is designed to convert your leasehold rights to strata title rights if and when the Indonesian laws change to allow foreigners to purchase property in Indonesia.
Once you have decided how to purchase your property rights in Indonesia and chosen your property, you will need to ensure that the land title has been registered and properly transferred. This can be challenging in Indonesia, and it is important to ensure that you follow the correct process.