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:
- 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.
- 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).
- 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!