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Indonesian Property Law 101: Guide to Owning a Property as a Foreigner

Updated: Jun 1, 2020


Indonesia might not be the easiest country to buy or invest a piece of land or property in general. As mandated in Article 16 of Law Number 5 of the 1960 Basic Agrarian Law Act, the source of modern Indonesian land law, only Indonesian citizens are allowed to own a property under freehold title (Hak Milik). Hak Milik also gives the widest ranges of proprietary rights to its holder that includes selling, exchanging, mortgaging and passing it to successors and beneficiaries.


However, this does not mean that foreigners cannot own a property at all. Recent government regulation changes have made Indonesian property market more ‘foreign investor friendly.’ Below are the rules and regulations regarding property ownership for foreigners in Indonesia as governed by the Agrarian Law Act and the Government Regulation No.103 of 2015 on Ownership of Dwelling of Residency House by Foreigner Domicile in Indonesia (Regulation 103).




1. Right to Use (Hak Pakai)

An alternative to owning a property under Hak Milik is owning it under the Hak Pakai. This right is will create a leasehold estate for a duration of 25 years with the option to renew for a maximum of 80 years. Once, the lease expires, holder of Hak Milik title loses all proprietary interest in the property and the title reverts back to the original owner with the Hak Milik title.


2. Right to Build (Hak Guna Bangunan)

Although the Right to Build (Hak Guna Bangunan) is not available for a foreign individual, this title can be obtained through foreign-owned limited liability company registered in Indonesia (PT PMA). Under this title, the PT PMA owns the property for a maximum of 80 years, with an initial duration of 50 years that can later be renewed for another 30 years.

3. Owning a KITAS

Chapter 2 Article 2 of the Regulation 103 dictates that only foreigners who holds a valid license to reside in Indonesia can purchase a property. This license is familiarly known as Kartu Izin Tinggal Terbatas (KITAS) and is granted to foreigners who work, invest, or own a business in Indonesia. KITAS must be renewed every 2 years and having a valid KITAS is essential to maintain your ownership over any type of property titles in Indonesia. Additionally, pursuant to Regulation No. 29 of 2016 on Procedure for Granting, Releasing, or Transferring Land Rights over Residential Houses to Foreign Nationals (Regulation 29), when a foreigner ceases their residency in Indonesia, they must relinquish their property title and transfer it to another person within one year of their departure.

4. Detached Houses and Apartment Unit

According to Chapter 1 Article 2 and 3 of the Regulation 103, the type of residential property that foreigners may purchase are limited to detached houses or an apartment unit. Regulation 29 also prohibited foreigners and their families to own more than one property.

5. Marrying an Indonesian Citizen

Another way to own a property under Hak Milik is to marry an Indonesian citizen and create a prenuptial agreement to legally separate each other’s assets before the marriage. Without the prenuptial agreement, Indonesian law will regard all the freehold properties owned by the Indonesian spouses to be co-jointly owned by their foreign spouses, which is illegal under the Agrarian Law Act. Consequently, the said freehold properties must then be sold within one year or reduced to Hak Pakai.

Until next time!

Salam,

Phoebe


Sources:

1. Law No. 5 of 1960 Basic Agrarian Law Act

2. Government Regulation No.103 of 2015 on Ownership of Dwelling of Residency House by Foreigner Domicile in Indonesia

3. Regulation No. 29 of 2016 on Procedure for Granting, Releasing, or Transferring Land Rights over Residential Houses to Foreign Nationals

4. Can a Foreigner Buy Property in Indonesia?, https://indonesiaexpat.biz/business-property/foreigner-owning-property-indonesia/

5. Purchasing land and property in Indonesia as a foreigner, https://www.gapurabali.com/blog/siti-purba-harcourts-purba-jimbaran/purchasing-land-and-property-indonesia-foreigner/buying

6. Begini Syarat dan Ketentuan Orang Asing Beli Properti di Indonesia, https://blog.spacestock.com/orang-asing-beli-properti-di-indonesia/

7. Warga Asing Bisa Beli Properti di Indonesia, Ini Syaratnya!, https://ekonomi.bisnis.com/read/20190327/47/905065/warga-asing-bisa-beli-properti-di-indonesia-ini-syaratnya



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