Everything to Know about Villa & Land ownership Rights in Indonesia

​​Expatriates in Indonesia have a rightful concern regarding land use and ownership. ​Only Indonesian citizens may have a Right to Own Principle (Hack Milik, Freehold)

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     With the emergence of foreign investment and business in Indonesia, many foreigners need buildings or land. A foreign who wants to have their own house or business building can obtain under these following rights:

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Right to use (Hak Pakai)

     A person or legal entity has the right to lease another's land. This right belongs to Indonesian citizens, foreigners, and legal entities (such as PT/limited liability companies) established under Indonesian law and domiciled in Indonesia or the representative office from a foreign legal entity. The lease and the leaser can make an agreement to arrange it,

     The maximal duration of this agreement is 25 years but could have an extension for 20 years more.

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Building Rights on Land (Hak Guna Bangunan)

     The safest and increasingly popular solution for foreigners to buy a property is to acquire HGB (Right to Build, Hak Guna Bangunan) through the formation of a foreign-owned company (PT PMA).

      Right to build title cannot be owned by a foreign individual but can be owned by a 100% foreign-owned PMA-licensed company, which then has the freedom to construct and develop buildings on the land during the term of the HGB. This structure therefore can provide a foreign investor with direct legal control over the company and land. The duration of the HGB is for 80 years, split as 30 years + 20 years + 30 years.

   Registration of the company could be done from abroad, just sending a letter of atorney to someone in Indonesia to make the company on his name. 

     Price approximately 7.000$, duration 3 months.

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Leasehold (Hak Sewa) 

     This is a notarized lease agreement that can be signed for 25 years with the right to extend the lease

      One person or a legal entity in Indonesia could possess the right to lease of land and use the land for purposes of a building by paying the owner a sum amount of money as leased, based on Article 44 Act 5/1960. The right belongs to Indonesia citizens, foreigners, as well as legal entities registered in Indonesia

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      Agreements for long-term leases, which are notarized by a public notary (PPAT) and recorded with the Indonesian Ministry of Law. Under the Indonesian Civil Code, leasehold rights are protected in the event of death/bankruptcy of the lessor in the event of a sale of the freehold land. In both cases, the lease will continue for its full duration. Investors own the rights of the lease for the durati on that has been paid and they have the right to on-sell the remaining years left of the lease as well as pass the lease title on via inheritance. This structure is the most secure and legal way f or fore ign citizens to purchase property. 

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TAX

 

-The seller and the buyer are required to pay all legal costs involved in the land transaction/settlement. This varies in accordance with the size of the plot being purchased however as a rough guide it comes to about 8% of the purchase price of the land including taxes required to be paid to the govt by the buyer

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-Depending on the arrangement reached with your Notary there will usually be a fee required to be paid which is generally 1% of the sale price. 

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