Buying land in Indonesia can be a challenging task, especially for foreign investors. Although land rights in Indonesia are regulated by law, there are many nuances and requirements that need to be taken into account when purchasing land. In this article, we will provide you with the basic information that will help you avoid difficulties and make a successful land purchase in Indonesia.
Let's start with the theory:
Leasehold - is a contract under which the lessee obtains the right to use the property for a certain period of time, according to the terms of the contract with the lessor.
Freehold - is a type of ownership where a physical or legal person has full ownership rights over real estate and the land on which it is located, for an indefinite period of time, without any time or usage restrictions, in accordance with applicable laws or rules.
With the low cost of land on the island, foreign investors could easily buy up all the land plots, which could have negative consequences. The government allows the purchase of land only by Indonesian citizens and special legal entities, such as local banks, religious organizations, and social bodies.
All of this is clearly defined in Article 9 of the 1960 Agrarian Law, which states: "Only Indonesian citizens have full rights to land, water, and airspace, and by full ownership rights we mean ownership rights." Article 21 is more specific: "Only Indonesian citizens can have ownership rights."
Buying land in Bali is usually done through a lease agreement either a Hak Pakai certificate or a Hak Sewa, which give the investor the right to use the property for a period of up to 80 years. The initial term is 30 years, which can be extended for another 20 years. After the first extension, a second extension of 30 years can be obtained, after which the rights must be transferred or handed over. Leased property in Bali can belong to individuals or companies, and the owner has full rights to use the land and property, as well as to sell or transfer it by inheritance. Hak Pakai can only be obtained for one unit of real estate, and the size of the land cannot exceed 2000 square meters. For Hak Sewa there are no such limitations and obtaining the certificate is less complex.
Interested in building? Then you should consider the Hak Guna Bangunan certificate. This certificate gives foreign companies registered in Indonesia the right to build one or more houses (without restrictions on the number) and own them for 25 years with the possibility of extension for a total of 80 years.
In Indonesia, there is a land law and related rules and regulations that govern land ownership. The land is divided into 11 main categories and 48 subcategories, so it is important to understand what type of land is involved.
The most important categories of land in Indonesia to be aware of are:
If you're a foreigner aiming to secure a second home visa by constructing a high-end residence, opting for Hak Pakai, or the "Right to Use", is a favorable approach. This will offer you the closest approximation to actual ownership, as it provides a land title bearing your name.
Other than that, land or property does not provide any advantages when obtaining any other visa or citizenship. In addition, certain types of visas may be required for certain transactions.
If the Hak Pakai owner's residence permit or work permit has expired, they must transfer their property rights to another person within one year, otherwise, the government may confiscate the property without compensation. There have been no precedents yet, but it is better to be aware of it.
A foreigner buying property through Hak Pakai in Indonesia must ensure that the property is purchased at a price that complies with the minimum purchase price rules set by the government: