Land, Title & Property
What a foreigner can hold, and under what title.
Indonesian land law does not offer a foreigner freehold. Hak Milik, the strongest title, is for Indonesian nationals. Everything available to a foreign buyer is a lesser right with a term attached, and the question is which one fits what you are trying to do.
There are three routes people are usually shown: a leasehold right over land, a right of use held personally, and land held by a foreign-owned company under a building right. They are not equivalent and they are not equally safe.
There is a fourth that gets offered and should not be: registering the land in an Indonesian friend’s name with a private agreement on the side. We will not paper one, and the reason is below.
Scope
We can assist with the following, and more.
Which title
- Hak Sewa — a leasehold right over land
- Hak Pakai — a right of use held by a foreign individual
- Hak Guna Bangunan — a building right held by a foreign-owned company
- Strata title in an apartment building
Before you commit
- Verifying the certificate at the land office
- Who the registered owner actually is
- Zoning, and whether your intended use is permitted there
- Encumbrances, caveats and unresolved inheritance
Doing the deal
- Conditional sale and purchase agreements
- Deeds executed before a land deed official
- Deposits, and what happens if it does not proceed
- Transfer taxes, and who bears them
Holding it
- Term, extension and renewal, and when to deal with them
- Transferring or mortgaging the right you hold
- What happens on death, and to whom
- Exit, and who is permitted to buy from you
Nominee arrangements
Land in someone else’s name is not your land.
The arrangement is common and it is still wrong. A foreigner funds the purchase, an Indonesian national is registered as owner, and a private agreement is signed to record who the land really belongs to.
Indonesian courts have treated those agreements as attempts to evade the restriction they sit behind, and declined to enforce them. The practical result is that the person named on the certificate owns the land, and the person who paid for it holds a claim that will not run.
If this has already been done, say so early. There are sometimes routes out of it. There are none once a dispute has started.
Questions
Frequently asked questions.
Can a foreigner buy freehold in Indonesia?
No. Hak Milik is reserved to Indonesian nationals. What is available to a foreigner is a right of use or a lease, each with a term.
How long do those rights last?
Each has an initial term with provision for extension and renewal. The terms differ by title and the rules have changed over time, so take the current position for the specific title you are considering.
What is the difference between Hak Pakai and HGB?
Hak Pakai is held by an individual. HGB is held by a company, and is the route where the building is a business asset. Which is right depends on whether you are living in it or running it.
Is a nominee structure really that risky?
Yes. The supporting agreements have been held unenforceable, which makes the risk neither theoretical nor insurable.
Do we have to be in Indonesia to buy?
Deeds are executed before a land deed official, and there are formalities about attendance and authority. It can be managed, but not casually.
Who checks the title?
AFS, on the ground, at the land office. A certificate that has been photographed and emailed to you has not been verified.