Indonesian Land Law is quite different indeed to the laws that apply in most Western or developed countries. Foreigners wishing to purchase land or property for whatever purpose need to be aware of these differences and not assume that legal conventions that apply in their home country necessarily apply in Indonesia.
Construct Bali has 7 years experience in real estate in Bali, so we can assist and guide you smoothly through the process of acquiring your dream home or idyllic investment property.
There are a number of different types of title recognised in Indonesia. Outlined below are those most relevant to foreigner buyers.
There are three types of Bali property ownership by foreigners in Indonesia. They are Freehold Title (Hak Milik), Freehold Title for Foreigners (Hak Pakai) and Leasehold (Hak Sewa).
Freehold Title (Hak Milik)
Freehold title may only be held by Indonesian citizens, or by Indonesian legal entities that are entirely owned and controlled by Indonesian citizens. It is therefore impossible for a foreign individual to have direct freehold ownership of land/property in Indonesia.
Foreign individuals can acquire property in Indonesia by using a nominee arrangement. Under this arrangement, the title is officially owned by the Indonesian nominee, with notarial contracts to protect the interest of the foreign party.
Freehold Title for Foreigners (Hak Pakai – Right to Use)
Hak Pakai title is the government approved method for foreigners to purchase the exclusive use over a Hak Milik land/property which is registered in a separate certificate of title in the name of the foreigner. The foreign party needs to be domiciled in Indonesia to be eligible to hold a Hak Pakai title.
Hak Pakai title is granted for an intitial term of 25 years, which can then be extended up to seventy years. After the first term of seventy years it can extended again for another seventy according to the law but will be done with certain steps with the government . Hak Pakai is transferable to Indonesian citizens or renewable if sold to another foreign purchaser.
Leasehold (Hak Sewa)
Leasehold is a notary contract with a land/property owner, and the ownership certificate doesn’t change. Leasehold rights are normally granted to tenants of both residential and commercial premises. Acquiring the leasehold of a property is straightforward with the lease being in the name of the foreigner or Lessee. Lease periods vary but between 20 to 50 years is common in Indonesia with extensions normally agreed in advance in the lease contract.
Resource: Steve Wilkinson, LinkedIn Profile