Indonesia has one of the strictest laws in Southeast Asia when it comes to real estate ownership by foreigners. Except for a few foreign-owned private limited companies that have invested in the country, foreign nationals are not allowed to purchase freehold property in Indonesia. They can only purchase land if they are married to an Indonesian, with a prenuptial agreement, provided that the land is in the name of an Indonesian national. In some cases and under strict conditions, an expatriate may be allowed to buy an apartment.
Many foreign professionals are entitled to accommodation as part of their expatriate package in Indonesia. However, the rental ends at the completion of their employment contract. However, if this does not apply to your situation, you can choose between several types of accommodation, depending on your budget, family situation and location in the archipelago.
Land ownership in Indonesia
As mentioned above, foreigners do not have access to freehold land ownership on Indonesian soil. However, since 2015, expatriates residing in Indonesia are allowed to rent land or a residence on a long-term basis, but under certain conditions. The government has changed the laws in this respect in order to further encourage foreign investment and promote national growth.
Under the new legislation, expatriates can purchase land or a house under the Right of Use category for a period not exceeding 30 years. After the expiration of the initial period, it is possible to renew the right of use contract twice, the first time for the same period of 30 years and the second time for 20 years. If you choose this option, you will be renting a property in Indonesia for a maximum of 80 years.
There are also other options for those who wish to acquire land in Indonesia. For example, you can choose to appoint a local representative to act as your partner in your land transactions.
This can be an interesting solution, as only Indonesian citizens can legally own property in Indonesia. However, such partnerships can quickly backfire on the expatriate. There are many cases where the Indonesian partner incurred debts that led to the seizure of the related property.
There is yet another option if you still want to become a property owner in the country. All you have to do is to set up a company in Indonesia. As a foreigner, you will need to form a company called PT PMA, which is, simply put, a limited liability company founded by foreign capital. This may seem like a daunting process at first, but it is a safer option compared to partnering with a local citizen. In this case, the concerned property will be placed under the company's ownership.
However, the types of land available to foreigners through the acquisition by a PT PMA company are limited to certain categories. It is therefore recommended that you find out under which category the local legislation places the desired land plot before you start your procedures.
Foreigners married in Indonesia to Indonesian citizens may also have access to property in Indonesia. It is important for you to know that, in any case, there are strict conditions attached to the purchase of real estate by a foreigner in this country. For example, you will first need to be a holder of a KITAS (a limited residence permit in Indonesia). Moreover, you will only be able to purchase individual houses or apartments, not land.
Furthermore, the Indonesian government has determined a minimum value for local properties that can be purchased by expatriates. This minimum amount varies according to regions and different geographical areas. In the vicinity of Jakarta, for example, the value of your purchased property cannot be less than 10 million IDR, while in Bali, the minimum is 3 billion.
See below the minimum prices in application in the different Indonesian regions (prices are in Indonesian rupiah):
- DKI Jakarta: 10 billion
- Banten: 5 billion
- West Java: 5 billion
- Central Java: 3 billion
- Yogyakarta: 3 billion
- East Java: 5 billion
- Bali: 3 billion
- NTB: 2 billion
- North Sumatra: 2 billion
- East Kalimantan : 2 billion
- South Sulawesi : 2 billion
- Other areas: 1 billion
How to find accommodation in Indonesia?
If you live in a developed area, such as Jakarta and Bali, you will find many modern, western-style apartments and houses available for rent. In fact, these areas have many single-family on rent. In addition to the luxurious options, note that rental agreements are usually valid for three years. You should also be aware that rents for furnished homes are usually double compared to unfurnished rentals.
Be aware that unfurnished rentals can come expensive, considering that you will need to purchase all the furniture, appliances, plants and decorative items, amongst others. Even if appliances and furniture prices are low in Indonesia, it is still an additional expense that may not be necessary since furnished rentals are very affordable. Furthermore, you will probably have to pay the full-term rental costs upon signing the contract. Otherwise, you can always choose to bring your own furniture with you when moving to Indonesia.
House or apartment?
Most expatriates living in Indonesia rent houses rather than apartments. Even the country's capital, Jakarta, has more houses than skyscrapers or apartment complexes, something rather unusual for a Southeast Asian capital. But, of course, if you absolutely want to live in an apartment, that won't be a problem. You should be able to quickly find what you are looking for and pay less.
Apartments and residential complexes can only be found in major cities like Jakarta, Surabaya, Bandung, Medan, Semarang, Bekasi or Tangerang. However, you can find houses of all kinds for rent all over Indonesia, even in remote areas.
A one-bedroom apartment in downtown Jakarta should cost you around US$250 per month, while the same type of accommodation on the capital's outskirts will come up to around US$140 per month. A three-bedroom furnished, luxurious apartment ideally located in the city center would normally cost more than US$500 per month or can go even higher in some cases. It's also worth noting that housing in Jakarta is generally much more expensive than in other major Indonesian cities, especially if you choose to live downtown.
As far as house rental prices are concerned, it all depends on factors such as the location of the residence, its layout, its size, the availability of amenities and facilities such as swimming pools, sports fields, gyms, etc. Many expatriates choose to reside in gated communities, a type of accommodation that has greatly increased in Indonesia in recent years. These communities are usually promoted by conglomerates made up of Chinese and Indonesian real estate developers. They are mostly located on the outskirts of major cities, mainly around Jakarta.
Good to know:
Although many houses have air conditioning, only the more modern houses, such as those in high-end residential areas, tend to have hot water tanks.
Western-style apartments and houses may be slightly harder to find in more remote areas of Indonesia and outside the main cities. It is, however, possible to find houses in villages and smaller towns, although most of them have been occupied by Indonesian families for several generations. If you choose this option and manage to find a suitable home in a small town or village, be aware that you will probably be far from essential amenities such as hospitals, good schools, pharmacies, shopping centers, etc.
As a single person on a budget, a kost can come out very handy for you. It is usually an informal guesthouse, comprising between 5 and 30 small rooms rented individually along with a shared kitchen and bathroom. The kost is similar to a guesthouse or residential hotel, and some are unisex. This type of accommodation is particularly prized by foreign students or young single professionals. Some have their own private bathroom, and the duration of rental contracts is more flexible.
It is also possible to rent a room in a local's home and negotiate for meals and laundry so that these costs are included in the rent. This type of homestay rental is usually informal, and arrangements are made through friends or with an Indonesian family.
Alternatively, you can rent a hotel room or a penginapan (lodge) on a long-term basis. The price can be negotiated depending on the length of your stay.
Rental agreements in Indonesia
Indonesia is one of the few Asian countries where it is common for landlords to require tenants to pay rent in advance for the entire term of the lease, which is typically a one- or two-year contract. However, the amount (including potential payments) and duration can often be negotiated through a rental agency. Furthermore, given the exponential increase in available living space in Indonesia over the last few years, the bargaining power of tenants has increased tenfold. As a result, you should have no trouble negotiating payment of your rental in installments or even paying your rent monthly. Be aware, however, that the latter option is quite rare across Indonesia.
In Indonesia, rental is normally quoted in US dollars. However, keep in mind that all rentals must be paid in Indonesian rupiahs. The price of accommodation quoted in US dollars is usually exaggerated. As for the payment method, you should be able to negotiate the cost of your rent with the landlord. Be careful when converting dollars to Indonesian rupiahs, as they may be trying to make money at your expense.
Unfortunately, construction codes are not always enforced on residential properties in Indonesia. In fact, some landlords rent out properties that do not meet safety standards. Given the costs and risks involved, before signing anything, tenants are advised to be very careful when considering a long-term rental commitment. It is important to commission a thorough check of the property, including examining the furniture, structure, electrical system, plumbing, air conditioning and waterproofing. You can hire a specialized company to do this audit. Once again, make sure you get their credentials right before proceeding.
Make sure that your future home is equipped with a circuit breaker provided by the authorities. While such a device is inexpensive, many landlords will choose not to install it. In that case, it is strongly advised to avoid renting the unit, as this could mean that the electricity might be coming from an illegal source.
Before you sign the lease, you should outline any problems or hazards you have discovered based on the audit report. A formal written list will give you more bargaining power with the landlord to request that defective or missing items be repaired or installed.
Finally, be sure to read your contract carefully and sign it in the presence of a notary, especially if it contains specific terms.
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