What is Hak Guna Bangunan (HGB) in Indonesia?
Hak Guna Bangunan, which means Right to Build in English, is a land certificate in Indonesia that gives holders the right to own a building on land owned by someone else. The HGB certificate only concerns the structure, not the land, such as when somebody builds a villa on leased land. The HGB title can only be obtained by Indonesian nationals or legal entities, such as a PT PMA. Foreign nationals (WNA) can’t get the HGB title but can buy a property with the Hak Pakai title.
The Hak Guna Baguna certificate is valid for 30 years and can be extended to 20 or 30 years, totaling 80 years. Alternatively, you can apply for a new HGB certificate for the same property. Nevertheless, failure to renew or convert the HGB title to another land title after the specified period will result in the property being returned to the original landowner.
Apply for Hak Guna Bangunan in 3 steps
A PT PMA is a foreign-owned company that can obtain the HGB title in Indonesia by following three steps:
Step 1: Conduct a land survey
Before signing the land lease agreement, always conduct a land survey to ensure that the land is suitable for development and that there are no legal or zoning issues with the land. Make sure to conduct due diligence and check the owner’s land certificates.
Step 2: Obtain the necessary permits
You must obtain several permits from the local government authorities to develop the land, including Building Approval (PBG), environmental permits, and other relevant licenses. For some of these permits, you need a blueprint of the property you want to build, which might require working with an architect.
Step 3: Apply for Hak Guna Bangunan at the BPN
Once you have the necessary permits and documentation, you can apply for HGB at the local land office, Badan Pertanahan Nasional (BPN). You submit your application and the required documentation and pay all the relevant fees. The land office will check the submitted documentation and issue the HGB certificate once everything is right according to the laws and regulations.
How much does Hak Guna Bangunan cost?
You can calculate the cost of Hak Guna Bangunan by dividing the HGB period by 30 years and multiplying by 1%. The outcome is multiplied by the Land Processing Value (NPT), deducted by the NPT Not Charged with Income Tax (TPTTTKUP), and multiplied by 50%. The outcome is the price of HGB in Indonesian Rupiah.
For this example, we apply for Hak Guna Bangunan in Bali, which is valid for 20 years. The HGB title is for land with a size of 500 m2. The NPT value of the land is IDR 800 million ($48,800). These are the calculations:
- 20/30 x 1% = 0.0067
- 0.0067 x 800,000,000 x 50% = IDR 2.68 million ($163)
Hak Guna Bangunan (HGB) vs. Hak Milik (HM)
HGB and Hak Milik (HM) are land certificates with differing rights and obligations. As mentioned, HGB gives the right to own the building on someone else’s land. On the other hand, Hak Milik is a freehold title, meaning that the holder has absolute rights over the property and land. Hak Milik has the most substantial land ownership rights; only Indonesian citizens can get this title. Indonesian nationals can also convert the property’s HGB title to HM.
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Frequently Asked Questions (FAQs)
What is Hak Guna Bangunan (HGB)?
Hak Guna Bangunan is a land title in Indonesia that grants the holder the right to own a building on someone else’s land. The HGB title is valid for 30 years and extendable for another 20-year and 30-year period.
Do I need Hak Guna Bangunan in Indonesia?
You need Hak Guna Bangunan if you have a PT PMA and want to use the building or construction on somebody else’s land. For example, if you lease land in Indonesia and build your villa on the ground with a PT PMA, you need Hak Guna Bangunan to own and use the villa.
How to apply for Hak Guna Bangunan?
The first step is to obtain the necessary Building Approval (PBG) and other permits in Indonesia. Afterward, you can apply for Hak Guna Bangunan in your local land office. When using Hak Guna Bangunan, working with a legal or real estate agent experienced with HGB is recommended.
Do I need Hak Guna Bangunan in Bali?
You need Hak Guna Bangunan in Bali if you lease land with a PT PMA and want to own the building on this land. In that case, you are not the land owner and need the HGB title to own your building. You also need HGB in Bali if you build a villa for rental purposes.
Hak Guna Bangunan vs. Hak Pakai
Hak Guna Bangunan can be obtained by a PT PMA and is needed to own the structure on land owned by someone else. In contrast, Hak Pakai can only be obtained by an individual and gives the right to use a property for residential purposes.
11 Responses
Hi, I’m looking to buy an Investment property in Kuta Lombok. If I establishing a foreign-owned company in Indonesia will the company then have full rights to the land and be fully owned or is it still only a lease arrangement ? Thank you
Hi Daniel,
That depends on the property you buy. A foreign-owned company can buy freehold land and freehold property. However, many foreigners purchase land and property through a leasehold agreement, even though a PT PMA can buy freehold real estate in Bali.
Important to note: Buying freehold real estate with a PT PMA doesn’t make you the legal owner as the individual.
Hopefully, my answer is clear!
^ Matt
Hello, my question is, how long does the approval process take, or how long does this process take in the case of extending the right?
Hi Helen,
Applying for a new one can take a few weeks, depending on the location of the office you go to. Extending one can take days to one or two weeks. Working with a property agent can speed up the process.
^ Matt
Hi, if I have a freehold land in Jakarta and it is currently leased out to a company, meaning they have the Hak Bangunan, what happens if I want to sell the land? Do I need to get the Hak Bangungan transferred to my name? Can I sell the land immediately? Thank you in advance for your help.
Hi Vady,
You can sell the land, but this should not interrupt the lease agreement between you and the company. Ensure to communicate clearly with the company to avoid any problems or misconceptions.
^ Matt
Hi Matt, I have a recently acquired a Hak Guna Bangunan, and have two questions. Whats the process and costs involved with extending the certificate beyond the initial 30 years? And can I sell the land to another party? Does this mean they have it for the remainder of the initial certificate, and will need to renew?
Hello Ace! For extending a Hak Guna Bangunan (HGB) in Indonesia beyond the initial 30 years, you’ll need to apply for an extension with the local land office. The process involves submitting an application and paying the required fee, which varies depending on the location and size of the land. Yes, you can sell the land to another party; the new owner will take over the remaining duration of the HGB and can apply for renewal themselves when it expires.
Thanks for the answer matt, that’s great.
Another question – we aim to split the property into 4 parcels/villas and sell these. Is it possible to sell these to foreigners with and wihout their own PT PMA?
Yes, it’s possible to sell HGB (Hak Guna Bangunan) parcels to foreigners. If the buyer has their own PT PMA, they can hold the property directly. If they don’t, they may need to use other legal structures, such as a nominee arrangement, but this comes with risks and legal considerations.
Hi Matt,
Thanks is in advance for any help/replies.
I am looking at investing in 2 properties in Ubud, Bali. One already has a Villa/Structure (small-ish villa and owner is currently in process of renovating and making larger but I would stop his construction and begin/design my own) and the other is vacant land, of which he has already sold/leased 2 others next to it and both have begun construction.
Both properties I want are owned by the same guy.
What title/lease agreement would you recommend I apply for to obtain both these properties?
I intend to build on the vacant land for rental purposes and on the other, I would live and also rent out.
He is offering up to 35years for both.
Thanks again.
Heath