Can foreigners buy property in Jakarta?
Foreigners can buy property in Jakarta. Yet, it is more difficult for foreigners to invest in Indonesian real estate than for Indonesian nationals. Only Indonesian residents can purchase real estate property with the highest land title, called Hak Milik (HM). Foreigners cannot buy a property with Hak Milik but can invest in real estate through a foreign-owned company called PT PMA.
How can foreigners buy property in Jakarta?
Foreigners can invest in real estate in Jakarta in a number of ways. For example, some foreigners buy real estate through an Indonesian nominee, where the property is bought in the name of the nominee. The foreigner is appointed as the owner through another additional agreement.
However, according to Indonesian law, the nominee is always the legal owner, which can cause many problems. This way of investing in real estate in Jakarta is even illegal. It can cause serious legal issues for the foreigner. Therefore, it is better to buy real estate through a PT PMA.
Buy property in Jakarta through a PT PMA
A PT PMA is a company in Indonesia that foreigners can own. This PT PMA can buy and own land or a building (freehold or leasehold). Leasehold means renting the real estate object for a certain period. The agreement is valid for 25 years. After that, the contract can be extended for another 25 years and another 30 years.
One must apply for the Hak Guna Bangunan (HGB) certificate to build on the land. Before one can begin construction, a building permit (PBG) is also required. One must apply for Hak Pakai (HP) to use an existing property. These regulations apply to both freehold and leasehold property.
Foreigners can rent out their property in Jakarta through a PT PMA to tourists and expats, both Indonesian and foreign. However, one needs to acquire the Hak Sewa (HS) certificate to do so.
Understanding property tax
Various taxes must be paid for buying, owning, and leasing property in Jakarta. It is essential to be aware of these taxes before buying the property. These taxes may include the following:
- Annual Land and building tax / Property tax
- Rental income tax / Lease tax
- Land acquisition tax
- Transfer tax
- Corporate income tax
- Construction tax
- Document stamp tax
Our Indonesia property tax guide provides all the crucial information about these taxes. Knowing the legal fees you must pay to notaries, lawyers, brokers, and government agencies is also important.
Reasons to invest in Jakarta real estate
You can buy an apartment or house in Jakarta to live by yourself. But it’s also possible to buy property to earn an income by renting it out. The ROI and rental yields on real estate in Jakarta can be very attractive, attracting many investors to the Jakarta real estate market. There are several other reasons why investing in Jakarta real estate can be a smart decision:
- High demand: Jakarta, the capital of Indonesia with a population of over 10 million, is one of the region’s most populous and rapidly developing metropolises. There is a great need for residential and commercial real estate in the city.
- Solid economic development: Jakarta serves as Indonesia’s financial and commercial hub. Because of this, commercial assets, including offices, malls, and hotels, are in high demand.
- The government stimulates foreign investments: There are several initiatives by the government, such as the amendment of the Negative Investment List, which allowed foreign investment in previously closed industries. These changes have already attracted foreign investors to Indonesia’s real estate market.
- Expanding middle class: Demand for residential buildings, especially luxury flats and condos, has increased in Jakarta due to the city’s growing middle class.
- Improving infrastructure: The government has invested heavily in infrastructure development, including the MRT and LRT, which have increased the city’s connection and accessibility and made it simpler for residents to commute and travel.
- Attractive returns: Investors looking for big returns will find Jakarta’s real estate pricing competitive compared to other major cities in Southeast Asia, like Singapore and Hong Kong.
Work with a real estate agent in Jakarta
When you let a real estate agent in Jakarta assist you, you save time and avoid headaches. Imagine no more hassle in finding the right buyers or tenants, handling paperwork, or negotiating deals. The real estate agent handles property viewings, ensures smooth transactions, and helps you get the best value for your property. You can also seek assistance for just one specific aspect of the selling or renting process.
Conclusion
Foreigners can buy an apartment, a house, or land in Jakarta through a PT PMA. This foreign-owned company and legal entity can buy and hold real estate through various land titles and certificates. Before buying property in Jakarta, make sure you are aware of all the taxes and legal fees that are involved to prevent yourself from any financial surprises.
Valuable insights and practical advice, distilled from years of expertise and real-world experience.
Frequently Asked Questions (FAQs)
Can foreigners buy an apartment in Jakarta?
Yes, foreigners can buy an apartment in Jakarta. Buying an apartment or condo can be done by leasing or buying it through a PT PMA, which is a foreign-owned company.
Why are houses in Jakarta so expensive?
Houses in Jakarta are so expensive because of the high demand. Jakarta is the capital city of Indonesia and one of the fastest-growing cities in Southeast Asia. The population in Jakarta is over 10.5 million people who are all in need of housing.
How can foreigners buy property in Jakarta?
Foreigners can buy property in Jakarta through a PT PMA. This legal entity is a company that can be (partially) owned by foreigners. It allows them to invest in Indonesian real estate. With a PT PMA, foreigners can use the property (with Hak Pakai title) or rent it out.
