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How to Buy Property in Indonesia as a Foreigner: Your Step-by-Step Guide
Purchasing property in Indonesia presents a unique set of challenges and opportunities for foreigners. There are specific regulations and restrictions in place that dictate how and what type of property can be acquired by non-Indonesian nationals. While full ownership, known as “Hak Milik,” is not available to foreigners, there are legal avenues such as leasehold agreements or “Hak Pakai” (Right to Use) titles that allow for long-term property investment. Understanding the intricacies of the Indonesian property market and its legal framework is fundamental for any foreigner looking to invest in real estate within the country.
Navigating the purchase of property as a foreigner in Indonesia requires thorough research and often the assistance of legal experts. The process entails several steps, starting from identifying a suitable property to navigating the legal paperwork. Prospective foreign buyers must be well-versed with the leasehold system, as well as the various forms of property titles and the implications of each. It is essential to consider the long-term view when entering such leasehold agreements, often stretching for an initial period of 30 years with options for renewal.
Key Takeaways
- Foreigners can invest in Indonesian property through leasehold agreements or Hak Pakai titles.
- Full ownership is not permissible for non-Indonesian nationals, emphasizing the need for alternative arrangements.
- The purchasing process is multifaceted, necessitating legal guidance and a comprehensive understanding of Indonesian property law.
An attractive city for property investment in Indonesia is the capital of East Java, Surabaya.
Click here to read about the advantages and benefits of investing in property in Surabaya.
Learn about what types of residential properties there are in Surabaya by clicking here.
Or find out more about what to do in Surabaya with kids through this story.
Understanding Property Ownership in Indonesia
In Indonesia, property ownership regulations for foreigners are distinctly outlined and subject to legal constraints. Such nuances necessitate a comprehensive grasp to navigate the real estate market effectively.
Types of Property Rights for Foreigners
Buyers from abroad are not allowed to own land in Indonesia. Foreign individuals can typically engage in property transactions under specific types of ownership rights:
- Hak Pakai (Right to Use): Allows foreigners to use and derive benefits from land that is not personally owned. This right can be obtained by foreign residents or those legally domiciled in Indonesia.
- Hak Guna Bangunan (Right to Build): Permits the construction of buildings on land owned by another party for a certain period.
Legal Restrictions and Requirements
Foreigners must adhere to several stipulations when acquiring property in Indonesia:
- Land Size Limits: There is a maximum area of land that foreigners can own under Hak Pakai, differing by region.
- Ownership Duration: Hak Pakai is typically granted for 25 years and can be extended up to a total of 70 years, provided the conditions are met.
Entities must ascertain compliance with the Indonesian Law concerning property acquisition and seek professional advice to navigate these legal frameworks.
Government support
As mentioned above, there are some restrictions for foreigners buying real estate in Indonesia. However, the government has in recent years introduced initiatives such as tax incentives and simplified regulations. The Indonesian government further aims to attract foreign investors through infrastructure development and urban planning. It is advisable for foreign buyers to seek local expert advice as government policies tend to change over time.
Purchasing Process for Foreigners
The purchase of property in Indonesia for foreigners involves a nuanced process that requires attention to legal details and compliance with specific regulations. The steps range from selecting the ideal property to completing the transaction legally with all the necessary paperwork.
Selecting a Property
Foreigners interested in Indonesian real estate must adhere to certain regulations, such as minimum price requirements that vary by region. For instance, in Jakarta, the minimum price for landed houses starts at IDR 10 billion, while apartments are set at IDR 5 billion. One needs to research and identify properties that align with these regulations and personal preferences.
Hiring Legal Assistance
It is highly recommended that foreigners seeking to buy property in Indonesia hire legal assistance. An experienced local attorney will help navigate the legal intricacies, ensuring that all actions are compliant with local laws and the purchasing process proceeds smoothly.
Obtaining Necessary Permits
Foreigners must secure the necessary permits for property ownership. This involves providing required documentation, like immigration documents, which could include a passport or visa. The exact documents needed may be specific to the type of property and individual circumstances.
Residency is not a strict requirement for buying property in Indonesia. However, a tourist visa will not be enough to purchase real estate. A work permit or a long-term visa will make the process a lot easier.
Here is an overview of buying pocess including all permits required:
1. Register as a PT PMA (Perseroan Terbatas Penanaman Modal Asing). This is a type of company that is designed for fereigners.
2. Apply for the property certificate at the Indonesian National Land Office (BPN)
3. Complete the payment and show proof of payment
4. Ensure that the conditions for Hak Pakai and Hak Guna Bangunan are satisfied
5. Obtain the building permit (PGB) which offers construction rights
6. The Indonesian National Land Office (BPN) will issue the property certificate in the regsitered PT PMA name
Financing the Purchase
Securing financing as a foreigner can be complex. Traditional mortgage options may be limited, and one must consider alternative funding sources like personal savings or overseas loans. It is important to have a clear understanding of the payment process, which might include leasehold agreements for a set period.
Completing the Transaction
The final step in the purchase process is completing the transaction. This typically involves signing a leasehold agreement, which can last for an initial 30 years with the option to extend. All necessary fees and taxes must be paid, and the leasehold title should be registered under the foreign buyer’s name.
Final thoughts on buying property as a foreigner in Indonesia
The Indonesian government has introduced incentives for foreign investors which simplifies the buying process considerably. However, there are still a lot of bureaucratic loops to jump through before finalizing a purchase. Obtaining local expert advise is highly recommended.