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Buying Belongings in Indonesia

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For many years Indonesia has decreed that land in Indonesia can only exist owned by Indonesian citizens. Thus, if yous want to purchase a house (as a greenhorn), this would take been legally incommunicable.

In the belatedly 90s, new laws were enacted so that foreigners are permitted to purchase apartments and part infinite in Republic of indonesia, IF the building has a strata championship condition. This enables the greenhorn to own the apartment or office space but non the land on which it stands.

Further laws were passed in 2010 & 2015 which may make it easier for expats to hold 70-year leases on land, merely the particulars/estimation/implementation of the law aren't always clear.

In 2020, foreigners can own apartments through xxx-year lease agreements with 20 year extensions; they can obtain, simply not own, landed houses through leases. The long term leases held by foreigners do non come with the same guarantees/protections as Indonesian citizens, making them harder to finance through bank mortgages.

Indonesian Agrestal Police, Police No. 5 of 1960, governs the ownership of land in Indonesia. In it is a category of land ownership called "Hak Pakai" which mean the correct to build on/use the land. As stated in this law, foreigners are merely permitted to purchase country or homes under the "Right to Utilize" (Hak Pakai) title.

Paperwork for Real Manor Transactions in Indonesia

Existent manor transactions in Indonesia are pretty straightforward, but even so tricky, every bit well as interesting business practices with several aspects blended in i unmarried deal. Real estate transactions involve various legal fields such as holding police, taxation constabulary, inheritance law, as well as family unit law in general. In existent estate transactions, the nigh well-known paperwork is the sale and purchase transaction. These are all very common legal transactions.

The Basic Agrestal Police in Indonesia stipulates that a sales and purchase transaction is the evidence that proves the transfer of title from the seller to the buyer. The constabulary imposed that real estate transactions must be carried out and encounter two criteria, i.e., transparent and paid in total. The legal transaction must be carried out in front of and under the supervision of an authorized officer. The law also imposed that it must be paid in full. In other words, the transaction cannot exist executed, if you have whatsoever shortfall in the payment.

These are the things that you need to practice earlier you lot proceed with the auction and purchase of property in real estate transactions in Republic of indonesia:

Property Title Background Cheque

This is a must. No transaction can exist carried-out without any formal background check of the legality of the previous title/ownership documents. In club to do this, yous need to supply us with the original certificate of buying. The legal status of the property will not be verifiable without the original certificate.

Information technology is very important to acquit a groundwork bank check before you make any farther transaction with the seller of the real estate property. This volition requite yous sufficient information about the electric current status of the belongings, besides as its title. Based on this information you can make up one's mind whether or non you want to proceed with the sale and purchase transaction.

The groundwork check will show you if in that location's whatever outstanding mortgage on the property. If yeah, you need to make sure the possessor removes the mortgage from the title first, earlier starting any further transaction with you lot as the buyer. Yous will too find out if the property is under whatsoever potential dispute or non. The background cheque is extremely important and I would not suggest proceeding with the transaction before the background bank check has been finalized.

Seller's Information

You need to obtain data from the seller with copies of the following documents:

1. Copy of Kartu Tanda Penduduk (So chosen "KTP"). If the property owner is married, you need to obtain a copy of the spouse'south KTP too. Chances are, the spouse will also be required to sign the sale and buy agreement with you. If they have no prenuptial agreement, it means the property you are buying is their marital asset, and therefore spousal consent is statutorily required. Otherwise, the transaction you're attempting is potentially illegal;
2. Family card (and so chosen Kartu Keluarga/KK). This document shows family members of the seller;
3. Matrimony certificate, if applicable. In the outcome, the spouse passed-away, you lot demand to obtain his/her decease document. In the event the seller is divorced, you lot demand to obtain his/her divorce verdict with the partitioning of property - certifying the holding being sold is hers or his;
4. Original of certificate of state ownership;
5. PBB tax payment, called SPPT PBB. This represents payment of the current of building and land tax. This document is important in order to identify the revenue enhancement applicable for the transaction. You will find out how much the seller should pay, and how much tax you should pay every bit the buyer.
6. Seller's taxpayer number, so called "NPWP."
   

Buyer's Information

If you're buying the property, you need to make sure you have the following documents bachelor for the transaction:

1. Copy of KTP. If you're married, y'all need to supply your spouse's KTP too. Unless, y'all signed a marital agreement, like a valid prenuptial or postnuptial agreement. Please contact Asep Wijaya for more details well-nigh these documents. If you're a mixed-married international couple, nigh probable you tin can't execute whatsoever transaction without this understanding;
2. Family unit card. This would besides be required in order to identify your legal next of kin. This document has the information on your Nomor Induk Kependudukan/NIK (Residency Registration Number) that volition refer to your tax data. This is very of import when we validate revenue enhancement applicable to this transaction;
3. Marriage certificate. We need to know your status, and how the state will treat the belongings under the current condition, i.e., separate belongings or articulation property. This certificate will have to come up with the marital agreement, if applicable;
4. NPWP. They need a re-create of your taxpayer number in order to validate the tax applicable to this transaction.

Sale and Purchase Agreement

Your intention to conduct a sale and purchase transaction must be written in the class of an agreement. It's chosen a Sales and Purchase Agreement (SPA). Both the seller and the heir-apparent must be present to sign the SPA. You must come with your spouse if you lot're married.
A valid document similar a marital understanding must exist presented as well in the event you accept a separation of belongings in your marriage. A prenup or postnuptial can serve as the document that you require with no assist from your spouse. With this document, your spouse doesn't have to come with you to sign the SPA.

A valid SPA must exist lodged at the state registry office in order to transfer the title from the seller to the heir-apparent. One thing you need to exist aware of is payment of the current year'south taxation must be settled before the title is being transferred. A tax validation volition be carried out before the title transfer is conducted.

Ownership of the Belongings

When you lot're purchasing land and/or a firm in Indonesia, you're dealing with a seller or the representative of the seller. You lot must deal with the owner of the property in guild to protect your future investment. The owner must have legal rights to own the property that you are interested in ownership. If he has the legal rights in the belongings, he must have the title of ownership that can be transferrable to yous as the buyer.

He must be able to present his certificate of title to prove his ownership. The certificate is issued by the government of the Indonesia. The authorized government agency that is responsible for issuing a document of title is the Badan Pertanahan Nasional (National Land Registry), likewise referred to as the BPN. They have offices in every major metropolis in Indonesia.

The document of the title if the house you are going to buy is issued by the land registry office where the property located. Holding such as state, houses, and apartments are classified under the category of Immovable Property. The legal owner of the immovable property is the person whose name is printed on the title certificate.

The ownership of immovable property is unlike from the ownership of movable property, such as cars, etc. The legal owner of this blazon of belongings is the ane whose name(south) is printed on the certificate of title. If the owner has passed abroad, his next of kin is the property'south legal owner. This usually consists of the surviving spouse, and his/her children. Then, if the possessor of the belongings is deceased, make sure you're dealing with the right person.

As for movable avails such as cars, the person that controls the holding can exist considered the owner, although you lot might want to check the ownership of the certificate every bit well. Please contact me should yous wish to discuss this.

The certificate of championship in real manor property is strong evidence that serves equally proof of ownership, as well every bit proof of registration from the local land registry. Article xix of Basic Agrarian Law certifies that the government of Republic of indonesia is conducting country registration in order to provide legal privilege to the owner whose name is printed on the certificate of title. The possessor will automatically be included within the country registry database and therefore are subject to the prevailing laws and regulations in Indonesia.

Purchase of Holding by an Expat/Indonesian Couple

The crucial preparation for purchasing property is whether or non the Indonesian spouse and the expat spouse have a prenuptial agreement for separation of property. If you do have this agreement, it would mean that the couple could legally purchase the holding. This agreement must exist signed BEFORE you are married.

Under Indonesian law property is jointly owned afterward marriage, unless there is a prenuptial understanding, and this means that property owned by the Indonesian spouse as well becomes the property of the foreign spouse, which is illegal co-ordinate to the Agrarian Constabulary. Therefore the property must be sold within i year of marriage to a foreigner or converted from "hak milik" (right of ownership) to "hak pakai" (right of utilize) which decreases the value of the property. (Pasal 26 ayat ii)

Transfer of Title

You need to perform a championship transfer when y'all purchase real estate. Your name must be registered equally the latest possessor of the belongings afterward yous execute the auction and buy understanding, and remit the payment to the seller. They will include the details of the agreement y'all executed with the seller of the belongings, equally well as the date when yous entered into the agreement.

Your proper name volition be noted equally the electric current owner of the property on the document of championship. This proceeding involves the local land registry where the real manor property is located. You will be recognized equally the legal owner after the proceeding completed. Delight contact me should you wish to discuss any further about this.

Mortgagor Protection

When you fund the purchase of the holding one hundred percentage, and you desire to include your Indonesian spouse as the belongings holder, yous potentially need mortgage protection. Legally, the owner of the asset is the one whose name is printed on the holding document. If you don't see your name on the certificate, and y'all did sign a prenuptial agreement, so the property belongs to the spouse. This is free from claim by any party, particularly you. This is normal when the couple is of different nationalities.

If y'all remember you need to protect your original investment, and so the mortgagor protection is for you. The holder of the title will non be able to sell the property without first reimbursing you for your full contribution, then the capital proceeds is divided evenly. Your name as the Mortgagor will be printed on the title certificate together with the Indonesian spouse'due south proper noun every bit the holding holder. This is potent enough to give you protection of your fiscal interest in the assets, and to avoid you lot having to walk abroad from the marriage with nil in paw.

Purchasing an Apartment or Part nether Strata Championship

Buying of offices and apartments is possible through strata title deeds, but you lot need to exist very cautious when dealing with the laws and regulations to ensure that your buying of an apartment in a loftier rise building is secure.

The 1996 regulation (No. 41/1996) states that foreigners who reside in Indonesia, or visit the country regularly for business purposes, can purchase a dwelling, apartment or condominium as long equally it isn't a part of a government-subsidized housing evolution. Nevertheless, foreigners can but concur land-use (hak pakai) deeds, and the development holds the "Hak Pakai" (correct-to-build) deed. Information technology'due south not possible for someone to have a land-utilise act for a sub-unit of a right-to-build deed. The length of these titles varies besides. Therein lies some of the difficulties and unclear ownership issues.

This means that foreigners tin effectively lease (non truly own) an apartment for up to lxx years, but not a gratuitous standing house. Within this lxx-year flow, foreigners must also periodically renew their right to utilize. The initial Hak Pakai period is for 25 years, and then is renewed for an additional 25 years and finally a xx year period.

Convertible Lease Agreement

One mode for foreigners to go ahead an buy property despite these legal ambiguities is to sign a Convertible Lease Understanding with the flat property direction role to purchase an flat. Basically what this agreement entails is that the foreigner may purchase the apartment, but the title is still held in the name of the developer or belongings management firm, or an Indonesian nominee. This charter agreement is for a definite period.

The Convertible Lease Agreement states that if and when the prevailing laws and regulations permit the Lessee to become legal owner of the apartment/strata title unit, both the Lessor and the Lessee shall be obligated to sign a Deed of Sale and Purchase and the title shall be transferred to the strange owner.

If you are interested in purchasing a condominium through this type of agreement, investigate the property direction visitor thoroughly. Many holding developers have undergone serious economical pressures and construction on many backdrop has been postponed or canceled. Evidence your contracts to a bona fide lawyer to ensure that all legal implications are covered thoroughly.

Further Annotation: When asked near the legality of Convertible Lease Agreements, lawyers we consulted stated very clearly that this is a VERY BAD thought and that lawyer should never advise that you to sign a Convertible Lease Understanding. As a foreigner you are entitled to Hak Pakai and you should insist that legal holding status from the flat building or developer and then that the title is in your proper noun. With a convertible charter agreement…you lot are totally at the mercy of the "appointed party" and that if they decide to change their minds y'all practice non have much of a legal case against them as the understanding that the expat has betwixt themselves and the Indonesian "appointed party" is not really a legal document.

It is best to merely insist that the Hak Pakai is in your name. If the developer cannot provide a Hak Pakai document in your name, it may be considering they do non have Hak Bangunan championship. If this is the case, DO Not Buy It.

Using an Indonesian Nominee/Friend to hold your Title

Some other way that you lot tin can buy a condo is by paying for the property but putting the championship in the proper name of an Indonesian citizen. Needless to say, this must be someone you trust implicitly since, co-ordinate to the law, this person would be the legal possessor, no thing what verbal or written agreement that you may have between the two of y'all.

About lawyers volition advise that you should Non exercise this as again yous practice not have any "legal" document that says the holding is yours. Y'all are Really putting yourself in a vulnerable position. We've heard many stories of people who have lost major investments by trusting an Indonesian "friend" with property the title to their purchased holding.

Using a nominee to shelter strange ownership of property is really illegal in Republic of indonesia. If investigated and pursued, the government could seize the land and the buying would revert dorsum to the land.

Single Family unit Dwellings - Houses

Buying of single family unit dwellings faces even greater legal issues as foreigners are not allowed to own land in Indonesia. Where the home you desire to purchase is part of a housing development, the developers tin often piece of work something out for you to 'buy' a home through a long term lease agreement.

One reader writes of his positive (and successful) experience in this matter:

"Basically, I hold full championship to the house, in my ain name. The fact that my married woman is Indonesian was not considered (in fact, my wife was not considered at all). She also owns property, and nosotros could see no difference in the title and rights of mine. The developer owns the country the house is built on, and I own a xxx-year fully paid up lease on the state, which past constabulary the developer has to extend for a farther 30 years on asking. At that time they tin charge me a nominal rent, which I can opt to pay for now at United states of america $35 per yr. I tin can sell or bequeath (but not sub-lease) the lease together with ownership of the house as I cull. The developer can sell the land, but but under the aforementioned covenants every bit already exist. These provisions apply to Indonesians every bit well, although Indonesians could purchase the land outright if the developer agreed to sell, and Indonesians could sub-charter the land if they want.

If my wife was non Indonesian, and I was not residing in Republic of indonesia for a full calendar yr, in theory the state could take my house unless I could prove that reasonable efforts to sell had failed, only merely being anywhere in Republic of indonesia for ane twenty-four hours would re-set the clock. As my wife is the sole beneficiary of my will and is Indonesian, this dominion does non apply in my instance.

I purchased the firm without finance; I'm not sure what consequence there would be in championship if yous took a loan or mortgage to assist with the buy. I would imagine getting a mortgage would be the hardest part for a greenhorn, and the finance company would definitely retain powers to reclaim in issue of default. Such things are very closely regulated at habitation, but they probably have a lot more than scope for legally lining their own pockets here. On the subject of payment, I paid the deposit in rupiah cash, considering that's what the programmer wanted at the time, merely and so he preferred dollars for the residual, so I paid dollars at a mutually acceptable rate. At that place are no restrictions on how you pay for a personal transaction - yous could pay with groats (or even goats!) if you agreed upon that."

Purchase of Land by a Foreign Company

If a foreign company is recognized by the Indonesian regime as a legal entity, the foreign investors tin can buy either of the ii types of state titles, Correct to Build (Hak Guna Bangunan), is valid for 30 years and can exist extended for another 20 years, and/or Right to Use (Hak Guna Usaha), which is valid for 35 years and can exist extended for twenty years.

Buying Country

Past Indonesian agrarian law a foreigner cannot legally ain land in Indonesia. If someone is telling you that y'all tin can ... buyer beware ...! As a Dki jakarta Expat article put it "The 1960 Agrarian Law states that Republic of indonesia'south country is a "souvenir from God" to the Indonesian people and the nature of this human relationship is eternal. The land is a "national treasure" to be controlled past the state for the maximum prosperity of the people."

If a greenhorn chooses, he/she tin own land 'indirectly'. To exercise this you need to have an agreement between the foreigner and an Indonesian, signed with the witness of a notary public. In the agreement the Indonesian is the 'legal owner' while acknowledging that the foreigner is the 'rightful owner' of the country and thus the Indonesian owner would comport out whatever instructions from the foreigner regarding the land, including selling the land at certain price with the funds to exist paid to the foreigner owner. Once again, if the Indonesian "owner" changes their heed, you will not have any legal title to the state.

It is clear, as well, that these types of agreements are Non at all enforceable under Indonesian law and the foreigner is at risk in the true ownership of his investment. We do NOT advise inbound into this blazon of agreement!

All land titles inside Greater Jakarta (DKI) are subject to the conditions of Presidential or Governor's decrees. Essentially, this affects the provisions for Hak Milik titles in the Jakarta DKI surface area.

Special Provisions for Batam

The rules for property buying by foreign nationals in Batam fall under Decree No 068/KPTS/KA/III/1999. This regulations states that foreign nationals or companies are permitted to 100% own residential or commercial property in the Barelang area (Batam, Rempang and Galang). The merely properties excluded from this prescript are low toll and very low cost housing, but includes all other types of building structures.

Even though at that place is a "special provision" for the special economic zones in Batam and Borneo, the land law notwithstanding falls under the "Hukum National" (Indonesian national police) and the same overall laws and principals still apply, no affair where y'all are in the country.

Hak Guna Bangunan vs Hak Milik

Hak Guna Bangunan is only the right to use a building for a certain period of time and so has to exist extended. The possessor of HGB country is the Indonesian government. HGB is also translated every bit - Provisional Corporate Ownership.

Only with Hak Milik do you actually own the country or building. Hak Milik does non demand to be extended.

Hak Pakai allows you lot the use of the facilities, but not the ownership. Hak Pakai is also translated equally - Conditional Ownership.

Obtaining a Loan from an Indonesian Banking company to Purchase Property

The Indonesian banks volition Non lend money to property owners that only have Hak Pakai status for their holding. The land title MUST be Hak Milik in order for the bank to utilise the title as collateral. Therefore, expats accept traditionally not been able to get loans to purchase property in Republic of indonesia, because they cannot have Hak Milik titles. This applies to anybody....even Indonesians. The normal length on firm loans in Republic of indonesia is v years, not twenty-30 years as it is in the w.

Reporting of the Purchase to the Money Laundering Watchdog Agency

Beginning in March 2012, all property developers in Indonesia must written report the purchase of residential properties valued at over US$55,000 to the Financial Transaction Reports and Analysis Heart (PPATK). This bureau is the authorities'south money laundering watchdog. The goal of this new regulation is to deter money laundering from official corruption that was going on through the purchase of luxury residences and condos.

Indonesian Agrarian Constabulary Undang Undang No. five Tahun 1960 Tentang: Peraturan Dasar Pokok Agraria.

Pasal 21:

(1) Hanya warga-negara Indonesia dapat mempunyai hak milik.

(Only Indonesian citizens can take a hak milik - free hold country title)

(2) Oleh Pemerintah ditetapkan badan-badan hukum yang dapat mempunyai hak milik dan syarat-syaratnya.

(The Regime is to determine which corporate bodies tin can accept a hak milik and the conditions for it.)

(three) Orang asing yang sesudah berlakunya Undang-undang ini memperoleh hak milik karena pewarisan tanpa wasiat atau percampuran harta karena perkawinan, demikian pula warga-negara Indonesia yang mempunyai hak milik dan setelah berlakunya Undang-undang ini kehilangan kewarga-negaraannya wajib melepaskan hak itu didalam jangka waktu satu tahun sejak diperolehnya hak tersebut atau hilangnya kewarga-negaraan itu. Jika sesudah jangka waktu tersebut lampau hak milik itu dilepaskan, maka hak tersebut hapus karena hukum dan tanahnya jatuh pada Negara, dengan ketentuan bahwa hak-hak pihak lain yang membebaninya tetap berlangsung.

(A foreigner who, following the enactment of this Law, acquires a hak milik by way of inheritance without a will or by way of joint ownership of holding resulting from marriage and an Indonesian denizen belongings a hak milik who, post-obit the enactment of this Law, looses Indonesian citizenship is obliged to relinquish this right within one year following the date the hak milik is acquired in the case of the erstwhile or post-obit the engagement upon which Indonesian citizenship is lost in the case of the latter. If following the expiry of the said time catamenia, the correct is not relinquished, so the said right is nullified for the sake of constabulary and the state falls to the State with the proviso that the rights of other parties which encumber the lands remain in existence.)

(four) Selama seseorang disamping kewarga-negaraan Indonesianya mempunyai kewarga-negaraan asing maka ia tidak dapat mempunyai tanah dengan hak milik dan baginya berlaku ketentuan dalam ayat (iii) pasal ini.

(Equally long as one with Indonesian citizenship concurrently holds foreign citizenship, he/she cannot have land with a hak milik status, and the provision as meant in paragraph 3 of this article should apply to him/her.)

Pasal 26:

(ii) Setiap jual-beli, penukaran, penghibahan, pemberian dengan wasiat dan perbuatan-perbuatan lain yang dimaksudkan untuk langsung atau tidak langsung memindahkan hak milik kepada orang asing, kepada seorang warga-negara yang disamping kewarganegaraan Indonesianya mempunyai kewarga-negaraan asing atau kepada suatu badan hukum kecuali yang ditetapkan oleh Pemerintah termaksud dalam pasal 21 ayat (2), adalah batal karena hukum dan tanahnya jatuh kepada Negara, dengan ketentuan, bahwa hak-hak pihak lain yang membebaninya tetap berlangsung serta semua pembayaran yang telah diterima oleh pemilik tidak dapat dituntut kembali.

Besides, Read the full 1960 Agrarian Law

Read the 1996 law (in Bahasa Indonesia) - Peraturan Pemerintah Republik Indonesia Nomor 41 Tahun 1996 tentang Pemilikan Rumah Tempat Tinggal atau Hunian Oleh Orang Asing yang Berkedudukan di Republic of indonesia

Related Articles

Flow Chart presentation regarding rights of married couples - foreigners/Indonesians to own land in Indonesia
Foreign Ownership Rights Relating to Country in Indonesia

This thread on the Living in Indonesia Expat Forum has a years long discussion of the regulations for strange buying of belongings in Indonesia.

Our appreciation to Asep Wijaya, Managing Managing director of Wijaya & Company, who provided the information on the Real Estate Transaction paperwork for this article.

Concluding updated BNovember 29, 2021

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Source: https://www.expat.or.id/info/buyingproperty.html