Owning Property in Indonesia: Overview

Indonesia’s Agrarian Law called Undang-Undang No.5 Tahun 1960 Article 16 (1) is based on the Indonesian Constitution. It covers seven kinds of ownership structure but for our purposes only four of these apply.

These are:

• Hak Milik or Freehold
• Hak Guna Bangunan (HGB) or Right to Build
• Hak Pakai or Right to Use
• Hak Sewa or Leasehold

An Indonesian citizen is entitled to use any of these structures. A foreigner, however, cannot own property under a Hak Milik (freehold) title.

In December 2015, the government updated the property ownership laws making it easier for foreigners to own land and property under Hak Pakai and Hak Sewa for residential properties and Hak Guna Bangunan for commercial titles.

In all cases, as a foreigner, you need to show that you are partly living, working, retiring or investing in Indonesia. 

• Hak Pakai certificates are valid for 80-years with automatic extensions after 30-years and 50-years.  
• Hak Sewa certificates can range from one year up to the same maximum length as Hak Pakai, for a total of 80-years.

If you’re not comfortable with either Hak Pakai or Hak Sewa another option is to create a foreign owned company (called a PT PMA.) This company can legally have a Right to Build (HGB) certificate. You own the company and the company owns the property.

Apartment Ownership for Foreigners Residing in Indonesia

President Jokowi issued Government Regulation No. 18 Year 2021, concerning management rights, land rights, unit flats, and the land registry.

This rule is a derivative of the provisions of Article 142 and Article 182 Letter B of Law Number 11 of 2020, concerning job creation, otherwise known as the Omnibus Law.

The regulation states that foreigners or foreign citizens can now own an apartment unit.

“Ownership rights to apartment units are granted to Indonesian citizens; legal Indonesian entities; foreigners who have permits in accordance with the provisions of laws and regulations; legal foreign entities that have representatives in Indonesia; or representatives of foreign countries and international institutions that are or have representatives in Indonesia.” 

Not all foreigners are free to live and own a condominium unit, as stated in Article 69.  Instead, only foreigners who have an official immigration permit can own a condominium unit or residence.

What will be the impact of apartment ownership by foreigners on the property industry?

Responding to this, Deputy General Chairperson of Real Estate Indonesia (REI) Bambang Eka Jaya said the apartment ownership policy could encourage growth in the property sector. This will be the case especially in the upper-middle segment of apartments worth more than IDR 5 billion.  

Ownership of residential houses or residences for foreigners as referred to in Article 71 is granted with the following limitations: minimum price; land area; the number of land parcels or units; and designation for residential purposes.

Further provisions regarding the procedures for granting and limiting ownership of residential houses by foreigners, as referred to in Article 69 to Article 72, are regulated in a ministerial regulation.

Furthermore, if a foreigner who owns a condominium unit or occupancy in Indonesia with this usufructuary status dies, the ownership of the condominium unit can be passed onto their heirs. In the event that the heir is a foreigner, the heir must have immigration documents in accordance with the provisions of the legislation.

Government Regulation No. 18 Year 2021 concerning management rights, land rights, unit flats, and the land registry has been in force since enacted on 2nd February 2020. (Source: Indonesia Expat.)

Land & Property

*Price thresholds taken from Government Regulation No.13 Year 2016

Frequent Asked Questions