Are there specific local real estate laws in Jakarta?
Foreigners who consider buying property in Indonesia’s capital city should be aware of local real estate laws in Jakarta, including:
- Different property prices for foreigners
- Domicile letter exemption
- Exemptions for PBB payment
These local real estate laws in Jakarta only apply to the city of Jakarta.
1. Different minimum investment capital required for foreigners
Foreigners with a residency permit, such as KITAP or KITAS, can buy property in Jakarta under specific land titles, such as Hak Pakai (HP). According to local real estate laws in Jakarta, there are minimum prices set for foreigners who want to buy properties under these titles. In Jakarta, for instance, the price of a house must be no less than IDR 10 billion ($630,000), while for an apartment, it must be no less than IDR 3 billion ($189,000).
When buying property in Jakarta with only a passport, a minimum value of IDR 5 billion ($315,000) is set for Jakarta, Banten, West Java, Central Java, East Java, Special Region of Yogyakarta, and Bali.
2. Domicile letter exemption
One of the ways for foreigners to own property in Jakarta is by establishing a PT PMA. A PT PMA, which stands for Perseroan Terbatas Penanaman Modal Asign, is a foreign-owned company with foreign investment. Setting up a PT PMA requires extensive procedures and numerous documents, such as a Deed of Incorporation, Company Registration Certificate, and tax ID.
However, one of the perks of establishing a PT PMA in Jakarta is that you do not have to acquire a domicile letter. Usually, the local district authority issues a domicile letter to confirm the company address, and it takes up to three days to process. Omitting this requirement helps improve the ease of doing business and makes it easier for you to establish a foreign-owned company in Jakarta for real estate purposes.
3. Exemptions to PBB payment
A notorious reason for entrepreneurs thinking twice about investing in Jakarta is the high property prices. The sentiment is reasonable because it is Indonesia’s central business hub. The Land and Building Tax (PBB) mandates that property buyers pay an annual tax ranging from 0.01% to 0.3% depending on the property’s valuation.
In Jakarta, however, Governor Regulation 5/2023 has extended relief for payment of PBB. Private houses worth below IDR 2 billion ($126,000) are tax-free. In addition, discounts are also given when you pay your PBB earlier in the year. These tax reliefs make it ideal to invest in Jakarta.
Frequently Asked Questions (FAQs)
Can foreigners buy real estate in Jakarta?
Foreigners can buy real estate in Jakarta under specific conditions. They are typically allowed to purchase property under a leasehold agreement or through a foreign-owned company (PT PMA). Freehold ownership is not available to foreigners, but they can hold property through the Hak Pakai title.
Are there local real estate laws in Jakarta for foreigners?
Jakarta, like the rest of Indonesia, has local real estate laws that apply to foreigners. These laws stipulate that foreigners can lease property but cannot own land. They can, however, own apartments or houses under the Hak Pakai title, provided they meet certain conditions such as residency status.
Why does Jakarta have different property laws for foreigners?
Jakarta has different property laws for foreigners to regulate land ownership and ensure national and economic security. These local real estate laws in Jakarta are designed to balance the interests of foreign investors with the rights and privileges of Indonesian citizens, preserving land for future generations of Indonesians.
