How to Acquire Property in Indonesia as a Foreigner

(Best Bali Real Estate)

Important Note: While Indonesia is increasingly open to foreign investment, foreigners cannot directly own freehold land. However, there are options for acquiring property with various leasehold titles.

What Property Can Foreigners Acquire?

• Houses (non-subsidized government housing)
• Apartments (with strata titles)
• Vacant land (with permission to build)

Understanding Property Titles in Indonesia:

Indonesia has four main property titles outlined in the Basic Agrarian Law (1960). Here’s a breakdown of the most relevant ones for foreigners:

• Hak Milik (HM): Freehold Title (Indonesian Citizens Only)
  • Offers full ownership rights to use the land in any way (excluding natural resources).
  • Can be sold, exchanged, or used as mortgage.
• Hak Pakai (HP): Right-to-Use Title (Most Common for Foreigners)
  • Grants the right to construct residential property on the land.
  • Lease term is 25 years, renewable for up to 80 years.
  • Requires Indonesian residency (KITAP or KITAS) to obtain.
  • Can be sold or transferred to another eligible individual.
  • Important: Upon leaving Indonesia, you must relinquish the title or transfer it within one year.
• Hak Guna Bangunan (HGB): Right-to-Build Title
  • Available to Indonesian citizens or companies registered under Indonesian law (including PMA companies for foreign investment).
  • Valid for 30 years, extendable for another 20 years.
  • Can be used as mortgage (unlike Hak Pakai).
• Hak Sewa (HS): Right-to-Lease Title
  • Grants the right to lease land or buildings owned by someone with another title.
  • Not registered at the land registry, so no official certificate exists.
  • Lease term is 25 years, with a possibility for extension.

Foreign Ownership Options:

1. Acquiring Property with a Hak Milik Title Through a Nominee (Risky):
   • Involves using a trusted Indonesian citizen (e.g., spouse) to hold the title in their name.
   • Extremely Risky: You have no legal protection if the nominee decides to claim ownership.
2. Acquiring Property with a Hak Pakai Title Through a PMA Company (Complex):
   • Establishes a Penanaman Modal Asing (PMA) company for foreign direct investment.
   • Requires a business plan, operational activity in Indonesia, and a local bank deposit.
   • Alternative: Obtain Hak Pakai without a PMA company (requires Indonesian residency).
3. Leasing Land with a Hak Sewa Title:
   • Leases existing villas, condos, or apartments.

Choosing the Right Option:

Consult with a professional to determine the best approach based on your specific needs and risk tolerance.

Best Bali Real Estate:

We offer a wealth of experience and expertise in navigating the Indonesian property market for foreigners. Contact us today to discuss your options and find your dream property in Bali!