How a Foreigner can Own/ Buy Property in Indonesia [Per 14 April 2016]

Aside from the right to pass on the Hak Pakai by way of last will and testament, what's new about this?  Hak Pakai leases have always been available to foreigners here in Bali and the rest of Indonesia as well.   

The use of the word "ownership" is misleading however, as the only real instrument for that is the Hak Milik, or freehold. 

If the day ever comes (and I surely hope it doesn't) that Hak Milik freehold ownership of Indonesian land for foreigners is allowed, that will indeed be huge news.

It's a glorified rent, then only for extremely expensive property at the very top of the housing market.
It's probably also a very bad investment as there are so many restrictions.

The recent laws up to 2016 now  - by the President and the Minister mean that Indonesian government is serious in providing certainty to foreign investors who wish to invest in Indonesia by means of property.

You may like it and you may not like it - according to not doing enough or doing too much.
You may not know, but it is a very political situation. To get this far the Indonesian executive government has done a lot of work, within so many opposition of weakening the laws on Indonesian foreign property ownership.  The majority of Indonesian do not agree to foreign property ownership and rightly so the many restrictions still now.

However, the laws are very important way to clarify ambiguity. It sets out a clear structure as well, and speediness when applying at government offices.
Foreigner can get certificate of rights to use or Hak Pakai up to 80 years - It is this Property certificate with the owner's name that is important. No more relying on third party. And clear rules of passing on in the future - has values that you can sell it, and appropriate buyer still can convert it to Hak Milik or upgrade it.

I don't agree with foreign property ownership in Indonesia, with exceptions.
In general, foreign investors invade (or maybe, infest) places like Bali, build like mad, sell to less than bright foreigners with more cash than brains, and ruin the market for locals who just want a place to live.

However, an expat married to an Indonesian with several years of residency should be allowed to buy a single property for the family's own use.

That's just a family buying a house, not some estate agent out for quick profit and not giving a rats about the people who he's pricing out of the market.

@ enduringword

Hak Pakai has been around since 1960 (Law #5), and further defined in Presidential Decree No. 41 of 1996. 

Aside from some minor changes, there really isn’t much about this new law that wasn’t already in place…aside from one glaring tightening up, that being these new minimums…(5 billion or 10 billion). 

You seem to be of the opinion that this is some sort of remarkable and new thing, but it isn’t. 

That said, I have no doubts that a good many real estate agents will be touting this to would be “foreign investors” as something new, and a new way to “own” land in Indonesia, but that will be nothing less than salesmanship and bells and whistles to attract attention. 

You write,

“Foreigner can get certificate of rights to use or Hak Pakai up to 80 years - It is this Property certificate with the owner's name that is important. No more relying on third party. And clear rules of passing on in the future - has values that you can sell it, and appropriate buyer still can convert it to Hak Milik or upgrade it.”

Hak Pakai leases have been administered here in Bali with rights of use going to as long as 90 years.  Hak Pakai certificates here have always had the “owner’s name” (foreigner or otherwise) and never required a third party.  They have always been transferable.  And new buyer’s could always convert it to a Hak Milik so long as the new buyer was Indonesian.  What you write about is nothing new. 

You also say that these new laws are an “important way to clarify ambiguity.”  In Bali, where each of the nine regencies operate with their own land office…that is very doubtful.  Moreover, regardless of any laws, in Bali, land deals are always subject to the approval and the pleasure of the local banjar.

@Ubudian.
It seems you dont understand the function of the new laws. The 2015 law repealed the using of the 1996 laws totally. It is automatic. What you wrote adds nothing new. And the support of the Land Minister in 2016 means it will be applied uniformly across the land offices in the nation.
If these laws doesnt concern you that is fine.
Let other readers benefit from the clear explanations. I am sure it is of interests to others for the purpose of this forum.
You dont have to reply to me on this thread to avoid long discussion with me.

OK, so what you are basically saying is this…repeal the law (which was actually a Presidential Decree) from 1996 and replace it with almost virtually the same thing in 2015 and this is significant.

I’m sorry, but I don’t see anything significant about that, aside of course from the almost certain abuse to come from real estate agents. 

You also wrote earlier that this means that the “Indonesian government is serious in providing certainty to foreign investors who wish to invest in Indonesia by means of property.”

I surely hope that isn’t the case because woe will be the day Indonesia starts to sell off its land to attract foreign dollars.  For Bali, that will be the beginning of the end. 

And finally you wrote,

"And the support of the Land Minister in 2016 means it will be applied uniformly across the land offices in the nation."

I wouldn't be so sure about that insofar as things go in Bali.  As it is, there is little if any uniformity with how real estate laws and regulations are applied here.  Nine regencies, each with their own land office and each with their own ways.   

“You dont have to reply to me on this thread to avoid long discussion with me.”

I’m well aware of that and I hope you understand, that works both ways. 

Cheers!

There are changes, mostly the contract length and minimum prices, but that's about it from a practical point of view.
It might well be of advantage to well off expats and retirees, but I see this as limited unless estate agents get in on the act to forces prices even higher, hoping for really daft expats with no clue as to the real cost of living.
At lest the minimum pricing will protect locals, so that's one good thing.

Ubudian wrote:

OK, so what you are basically saying is this…repeal the law (which was actually a Presidential Decree) from 1996 and replace it with almost virtually the same thing in 2015 and this is significant.

I’m sorry, but I don’t see anything significant about that, aside of course from the almost certain abuse to come from real estate agents. 

You also wrote earlier that this means that the “Indonesian government is serious in providing certainty to foreign investors who wish to invest in Indonesia by means of property.”

I surely hope that isn’t the case because woe will be the day Indonesia starts to sell off its land to attract foreign dollars.  For Bali, that will be the beginning of the end. 

And finally you wrote,

"And the support of the Land Minister in 2016 means it will be applied uniformly across the land offices in the nation."

I wouldn't be so sure about that insofar as things go in Bali.  As it is, there is little if any uniformity with how real estate laws and regulations are applied here.  Nine regencies, each with their own land office and each with their own ways.   

“You dont have to reply to me on this thread to avoid long discussion with me.”

I’m well aware of that and I hope you understand, that works both ways. 

Cheers!

I can see that it doesnt concern you, since you are in Bali only.

Good thing we have this law for the whole of Indonesia.
You are welcome to disregard this thread if this doesnt add to your need.

@ enduringword

“I can see that it doesnt concern you, since you are in Bali only.”

What a strange thing to write after you yourself wrote in the original post: 

“Though the rules are still out of reach of many ordinary foreigners, and appeals mostly currently in Bintan, Batam and Bali - seemingly holiday homes.”

Of course this will impact Bali as it will certainly be used/abused by real estate agents to their advantage and to further promote “foreign investment” in areas already way too over developed.

Ubudian wrote:

Of course this will impact Bali as it will certainly be used/abused by real estate agents to their advantage and to further promote “foreign investment” in areas already way too over developed.

I would tend to agree with this. I'm not exactly a fan of estate agents as I believe they cause a lot more problems than they ever solve, usually most of the reason property prices get silly.
This is likely to be pretty much the same, so I expect to see adverts for really stupid prices on new builds aimed at the very rich.

Will it bring investment? Yes, but most of that cash won't go anywhere near local people, only big business. It could herald a new type of very rich expat, changing areas of Bali and other places into enclaves for the super rich.
I suppose it could bring jobs.

Fred wrote:

There are changes, mostly the contract length and minimum prices, but that's about it from a practical point of view.
It might well be of advantage to well off expats and retirees, but I see this as limited unless estate agents get in on the act to forces prices even higher, hoping for really daft expats with no clue as to the real cost of living.
At lest the minimum pricing will protect locals, so that's one good thing.

I agree with you Fred that it brings balance on both needs of the investors and the local Indonesian.

Indonesian government wants money and investment to come in, for the intention of this law.

That might well be fine for the rest of Indonesia, but for Bali “Bali, tidak di jual!”

And the people are rising against selling off Bali more and more:

http://jakartaglobe.beritasatu.com/news … benoa-bay/

Fred wrote:

I would tend to agree with this. I'm not exactly a fan of estate agents as I believe they cause a lot more problems than they ever solve, usually most of the reason property prices get silly.
This is likely to be pretty much the same, so I expect to see adverts for really stupid prices on new builds aimed at the very rich.

Will it bring investment? Yes, but most of that cash won't go anywhere near local people, only big business. It could herald a new type of very rich expat, changing areas of Bali and other places into enclaves for the super rich.
I suppose it could bring jobs.

This List of Property with land that could be bought by foreigners with minimal Prices covering the whole Indonesia.
http://properti.kompas.com/read/2016/04 … rang.Asing

Berikut daftar harga minimal pembelian rumah tunggal oleh orang asing:

DKI Jakarta Rp 10 miliar
Banten Rp 5 miliar
Jawa Barat Rp 5 miliar
Jawa Tengah Rp 3 miliar
Yogyakarta Rp 3 miliar
Jawa Timur Rp 5 miliar
Bali Rp 3 miliar
Nusa Tenggara Barat Rp 2 miliar
Sumatera Utara Rp 2 miliar
Kalimantan Timur Rp 2 miliar
Sulawesi Selatan Rp 2 miliar
Daerah lainnya Rp 1 miliar

let us not forget we are on the "ring of fire"  which has been pretty active recently , if it "kicks off " down here ,  what price your house when its on the floor in bits ? , bali south java and ntt are on warning of earthquakes currently . I think an escape plan may be more valuable for you and yours .

http://m.detik.com/news/berita/3189872/ … us-waspada

@tel522
Valid news. Coastline is susceptible to tsunami as well, as the big one happened in the last decade.

Ubudian wrote:

That might well be fine for the rest of Indonesia, but for Bali “Bali, tidak di jual!”

And the people are rising against selling off Bali more and more:

http://jakartaglobe.beritasatu.com/news … benoa-bay/

There lies the danger.
I see some nasty pieces of work trying to buy up as much land as possible in order to build extremely expensive properties, but destroying the locals' ability to earn a living in the manner they prefer.
I'm unsure I'm a fan of this move.
I suppose you could rename the island, Monaco mark II, and build a formula 1 circuit.

tel522 wrote:

what price your house when its on the floor in bits ? , bali south java and ntt are on warning of earthquakes currently

Do you think an estate agent will care once he's unloaded the property?
People will buy them, eventually there'll be an event, but no one will remember after a year or so.
How long did it take tourists to return to Thailand?

That's a bit of a side issue, the main one being I'm unsure this move will be good for the people of Indonesia, even though estate agents will make a killing.

The one bright spot in all of this is that ever increasing numbers of Balinese are getting wise to what is happening to their culture.  For southern Bali, it’s already too late.  For the rest of Bali there is still hope.  Time will tell…as it always does.

Ubudian wrote:

The one bright spot in all of this is that ever increasing numbers of Balinese are getting wise to what is happening to their culture.  For southern Bali, it’s already too late.  For the rest of Bali there is still hope.  Time will tell…as it always does.

I watch some old youtube films about Bali in the 1930s, paradise.
I've also watched a good few films showing drunks infesting the tourist traps there, paradise lost.

This isn't the same as we're talking about the very rich, so less likely to be drunken fools, but these likely developments will cause extreme change, and I'm unsure the consequences will be good for the people of Bali.

Money has a nasty habit of talking, and big money tends to ignore anyone who disagrees with it, commonly removing them from their land or taking away their lifestyle.

Back to Bali and that bay.
Are the fishermen really doing well there, and would they be better off doing something else?
They probably don't earn much, but what else could they do?
I suppose they could get jobs as gardeners or security for the new development, still not earning much, but unhappy because they don't want to work like that.

Perhaps there should be an added tax on these places that must go directly to fund free schools for local people. Less get it right, if you can afford such a place, an extra 10% probably means nothing to you, but could send a lot of poor kids to school.

Slow development, starting with education is good - rapid massive change is generally bad news.

I live around 10 min from the bay , I pass over the toll road around twice a week ,you might see a couple of jukungs fishing the traps , the most iv seen at 1 time is 10 so its hardly big biz , as I have said b4 , the protests ,supposedly "ecological protection" , I have my doubts , I am sure its more "pecuniary" in nature  thats why the lascar and baladika are involved . I am not saying south bali needs more hotels or villas for sure it does not . further development in the south will only cause fresh water resources to dry up more quickly , no water equals no people , end of story .

@ Fred

“This isn't the same as we're talking about the very rich…”

Except that according to the list from Kompas that enduringword published in his post #15, the minimum value property now to be included as eligible for Hak Pakai is only 3 billion.  That’s about US $231K which is hardly enough to cover the cost of 10 are of raw land in all but the more remote areas of Bali.  That makes me even more concerned about another wave of real estate promotion on Bali by agents, as that amount is affordable to many more than the very rich. 

Already there in a huge overbuild of hotels on Bali, and the percentage of occupancy of those rooms has been dropping in recent years.  As I write, many hotels on Bali are on the edge of bankruptcy.  Some in the Provincial government are calling for a five year moratorium on future hotel development, while others want to build another airport in the north, add a train system and more highways, and of course, more hotels.  With private villas, the story is much the same. 

Personally I don’t see this restatement with slight revisions in Hak Pakai as anything that will benefit the poor of Bali.  Traditional leases are commonplace here, even among Balinese to Balinese.  Short term leasing is far better for the locals as they are then more able to establish the pricing of their lease extensions (at the end of the short term lease)  based on then current real estate values rather than having to “crystal ball” the future value of their land under a long duration lease.  I know for certainty that in our own village, folks will be at least discouraged, if not outright held in violation of adat if they engage their land using Hak Pakai.  And our village is hardly unique in this new movement, (or call it education) of what really is best for them in both the short run, and the long run.

The smart and well informed Balinese these days in most all situations will not sell or engage a Hak Pakai (80 year) lease on any property they own.  For the less educated or less well off Balinese who is not as savvy with finances, I see this Hak Pakai issue as more a determent for them.  Once that land is sold, it’s gone, and it’s gone for good. 

Basically it boils down to:  Do you want to sell your children’s and their children’s future, or do you want to preserve their future for them?  A twenty year lease is plenty (and I argue that is even too long).  At the end of the lease, the land is back “in the family” and able to be re-engaged producing income for that generation.

Thanks for uploading the updates.

I think that even though the thresholds are not all that high, the conditions are not really all that interesting, especially as it needs to be a new property bought from a developer.

Most of the response here has been about Bali with some strong arguments against allowing foreigners to buy property in Bali. Of course we are hearing only one viewpoint.

Personally, I can imagine Bali becoming like Hawaii with more development and ownership by foreigners and some protected areas like National Parks. Of course it would need strict controls on the developers so that it is done tastefully, perhaps in the way that Nusa Dua has been developed.

The example given for Jakarta is Rp10 billion for a house and Rp5 billion for an apartment. Would that then mean for Bali it would be Rp3 billion for a house and as little as Rp1.5 billion for an apartment?  If such a tastefully developed apartment complex was built at such a low cost then I'd certainly be interested in buying a unit, although I fear the units would be quickly sold out before they even appeared on the market.

I mentioned earlier that the complex should need to be tastefully designed. In Jakarta we are only recently seeing more tastefully designed apartment buildings. In Bandung they all look oldish in style. So I would like to see low-rise apartment buildings being developed in places like on the Bukit and in strategic locations.

I understand that there are some who prefer no change so that traditional ways of life are preserved, but change will indeed come to all of Indonesia. It is just a matter of time. As I think someone mentioned earlier, "money talks".

“Most of the response here has been about Bali with some strong arguments against allowing foreigners to buy property in Bali. Of course we are hearing only one viewpoint.”

Yes, a singularly expressed viewpoint, but it is the viewpoint of the overwhelming majority of Balinese and expats alike.  Nobody here wants to see Bali’s land sold off to foreigners. 

“Personally, I can imagine Bali becoming like Hawaii with more development and ownership by foreigners and some protected areas like National Parks.”

The day Bali become like Hawaii, that is the day Bali died.  I’d rather see Gunung Agung devour the entire island than to ever see Bali become like Hawaii.  Bali is far more than just some land waiting for land excavators and building contractors.  Bali is the soul of the Balinese people, and its land holds deeply religious meaning.   

As for Nusa Dua, most of us regard Nusa Dua as Bali’s Disneyland…contrived, artificial, and very little authentically Balinese about it.  God forbid any other parts of Bali ever be developed like it, as we would lose the essence of Balinese art and architecture forever. 

It’s a shame so many visitors and guests of the multiple five star resorts in Nusa Dua never get out of that area and see the real Bali.  A stay in Nusa Dua is no more remarkable than a stay at any world class beach resort in the world. 

In Bali, building licenses are at the control of each of nine regencies.  So also are the architectural plans and designs for proposed projects, including private residences.  Some regencies have done a horrific job of maintaining the “Bali Style” while others have done far better.  There is talk of a more centralizing and overall stronger control as to what designs are approved, and which are not.  Without this, Bali could eventually lose one of its greatest appeals to tourists…its style and grace.

Change is indeed inevitable everywhere, but that doesn’t need to mean that change requires a complete abdication of culture and traditions.

just to stay a good word  for nusa dua

I live about 10 mins from mengiat beach , great snorkling and clean water , full of fish

ya you may call the area contrived , but it has the only sewage plant which all the hotels feed into so therefore the sea is clean , not like kuta  legian and seminyak, full of " BROWN TROUT" and other detritus which is so unhealthy to swim or surf in .

the main exit pipe for all this untreated human waste enters the water on tuban beach and the currents take it up past kuta   , water tests were done on kuta beach around 5 years ago , ya it was kept pretty quiet , with the levels of all the toxins , the beach would have been black flagged in europe etc .

so one could argue that in some cases planning of infrastructure is good especially when it affects human health.

Yes, I agree with you.  The waters around Nusa Dua are indeed fine…again, just like one would expect in any exclusive five star tropical beach resort development world wide.   

I say that Nusa Dua is contrived because that’s exactly what it is.  Prior to TS and others coming in during the 1970’s and expanding the “two islands” with land fills, there was virtually nothing there. 

And, as you probably already know from my past comments, I am no fan of Kuta, Legian, and Seminyak either…for some of the reasons you mention, and as with Nusa Dua…they aren’t the real Bali.

All of these areas are already way too overdeveloped, and no longer recognizable as they once were.

hmmm ya , I like the ocean for snorkeling ,so yeh I can suffer the "twee" planning  for the benefits it brings to the sea .

Of course I agree the south is overdeveloped , and the general beauty of bali has disappeared , plus all the other problems  we have spoken about , water etc.

Have you snorkeled on the wreck of the USS Liberty in Tulamben?  If not, it’s simply amazing and the best spot for the greatest variety of marine life.  Well worth a trip up there if you haven’t already been…but wait until June when the water is very, very clear.

Cheers!

ya I have been up to tulamben , its good snorkeling  , I fancy nusa penida next , the last time I tried to get there , the old ferry started to sink in the harbour at padang bai , from what I read its like bali 50 years ago , one day!

Better than Nusa Penida is Menjangan, but for you that would more than just a day trip.  In fact, it would be hard to imagine a longer drive from where you are to there and still be on Bali. 

Nusa Penida is indeed a good look into the past.  Some Balinese call it Bali's Australia because at one time it too was a "prison" island...a place for cast offs and such. 

My balian built a retreat for high priests at the highest point of the island, dead center.  Better views from there than even on the summit of Gunung Agung, but overall the island is a bit too rugged and primitive for me.  Bring LOTS of water as it’s hotter than Hades there!

Cheers!

ya I did some reading on the social history all the way back to the dutch period  ,  the population had a hard life, droughts , poor diet causing some reduction in height, I was planning to spend a couple of days over there with my bike to have a good look .

Indonesian economy polices is bulls***, its a mixture of capitalism and communism, it seems they stuck in between, they cant move on, hope they can learn from China, Malaysia or Singapore.

enduringword, thanks for taking the time to break down point by point on this new rule that many wouldn't have the time to read even us, the Indonesians. 
Number 3 is not so appealing for property owners who are interested to make the sale to foreigners as they can only purchase newly developed houses which in this case, BSD, is the happening of residential area now in Jakarta.  Even foreigners now rent there.  Alright, this is just my two-cent on the topic of this post.

Hello Myjak,
You are welcome. I hope the points are made to be easy to read.

I recently saw a condominium development for sale in Singapore. The price is more than 2 million SGD for a mere 60 m2. With government tax up to 20 percent or more of the value.

I dont see how it is appealing. In comparison, Indonesia in general still has the potential.
An apartment in a small city in China is already comparable to the price in Jakarta in a central business district area.
Whereas in Shanghai it is 4 times than here in Jakarta.

As an investor, my own personal feelings are that the government needs to allow freehold ownership to foreigners without tough conditions. Just take a look at Singapore and Malaysia and Hong Kong. Foreigners can easily purchase property there, safely, without all these complicated and negative conditions that are confusing and quite frankly "worrying". Anyone can go to Malaysia and buy a property, landed or apartment, and that has not led to Malaysia being bought up by foreigners. Most property speculators are still rich locals with very few foreigners buying up lots of property, indeed foreigners usually buy just one place for themselves to live. I don't see that it needs to be any different in Indonesia except perhaps for Bali and Lombok which should have some limitations such as limiting them to buying apartments only.

I see the government as wanting foreigners to invest their money in property here, but quite frankly giving up as little as possible in the way of ownership of those properties. They want the investment but are making it too difficult and complicated. So in my opinion they really need to open up further.

My opinion on freehold selling of Indonesian land to foreigners has been offered many times in the past, and I am happy that my opinion is shared by the vast majority of Indonesians…do not allow the sale of Indonesian land to foreigners.

It is a red herring argument that by allowing foreign purchase of land, it will increase foreign investment.  There are no studies or facts to support that.  Moreover, what other countries do is their business and I am very grateful that Indonesia is rarely influenced by what other countries do and do not do.  This is Indonesia, not Malaysia, not Singapore, not Hong Kong, or anywhere else in Asia or SE Asia.  Any foreigner who prefers how things are in other countries of Asia and SE Asia should consider moving there, and not to Indonesia.    

Long term leasing more than provides a foreigner with the opportunity to secure a good dwelling for the duration of their life.  And, given the huge increases year to year of foreigners moving to Indonesia, clearly there is no demonstrated need to change current laws regarding land ownership in Indonesia.

I would like to see some changes, but limited to a very few people.
Those would include foreigners married to an Indonesian, hold a KITAP and have stayed in Indonesia for greater than 5 years continuous (or 10 years on and off), along with those who own a PT or above.
This would also be limited to one property, so no holiday homes.

I would not like to see property ownership allowed to anyone as I believe that's very likely to price locals out of the market in some places.

OK, so let’s talk about that for a minute.

If foreign ownership of land was allowed on the basis you suggest, would that ownership by the foreign spouse be allowed to continue should that Indonesian/other marriage dissolve via divorce?  I sure hope not, and surely you can see where I’m headed with this.   

If the Hak Milik (land deed) was in the name of the foreign spouse…who makes sure that the Hak Milik is changed back to the Indonesian spouse (as in the case of divorce as described above)?  Can you envision some sort of coordination between the various land offices throughout all the regencies within all the provinces of Indonesia with the Civil Office?  I can’t. 

As you surely know, under current law/regulations, the only way a foreigner can have his/her name on the Hak Milik is if that foreigner obtains Indonesian citizenship.  For a foreigner who is deadly serious about their commitment, both in their marriage, to their family, and their love of Indonesia, to me, citizenship is the ultimate path.

Fred wrote:

I would like to see some changes, but limited to a very few people.
Those would include foreigners married to an Indonesian, hold a KITAP and have stayed in Indonesia for greater than 5 years continuous (or 10 years on and off), along with those who own a PT or above.
This would also be limited to one property, so no holiday homes.

I would not like to see property ownership allowed to anyone as I believe that's very likely to price locals out of the market in some places.

Fred, out of interest, would you be eligible under those requirements?