5 steps to start property rentals in Jakarta

Jakarta is one of the best places to start your property rentals. While there are uncertainties in the housing market in Indonesia, Jakarta’s rental yields remain moderately good. To maximize the potential of this market, it is crucial to have a solid understanding of the best practices on how to start property rentals in Jakarta.

1. Starting a PT PMA for property rentals in Jakarta

The first step in starting a rental business is establishing a company, particularly a PT PMA. A PT PMA is a limited liability company with foreign ownership, and this is the only way for foreigners to engage in the real estate business in Jakarta. 

One of the reasons why you need a PT PMA is due to land ownership restrictions. To legally own properties, PT PMAs must acquire both Hak Guna Bangunan (HGB) and Hak Pakai certificates, which allow for property development and use. Along with the HGB, a Persetujuan Bangunan Gedung (PGB) or building permit is also required, which may take considerable time to obtain. These ownership certificates are crucial to start rent our property. 

How much does it cost to set up a PT PMA?

Establishing a PT PMA in Jakarta is cheaper as it costs between IDR 15 million ($945) to IDR 30 million ($1,890). 

2. Dealing with taxes

Another thing that you have to be aware of are the taxes involved when starting a rental business. 

Land and building tax

Pajak Bumi dan Bangunan (PBB) is a state tax on land and buildings. Payment of the PBB grants individuals or entities the right to control and own the ground at a rate of 0.01% or 0.3%. However, Jakarta extends relief for payment of PBB to private houses worth below IDR 2 billion ($126,000). You can also get discounts if you pay PBB earlier in the year. 

Rental Income Tax 

The rental income tax is an annual tax where Indonesian tax residents, including both Indonesian nationals and foreigners, are subject to a 10% rental income tax. In comparison, non-tax residents pay a higher rate of 20%. However, in the absence of a Double Tax Agreement (DTA) between Indonesia and the non-resident’s home country, the default withholding tax rate of 20% applies.

Corporate Income Tax

In addition to the rental income tax paid by foreign individuals, PT PMA companies are also subject to corporate income tax levied at a fixed rate of 25%.

Personal Income Tax

Those living in Jakarta who earn income must also pay a personal income tax based on their earnings. The rate varies between 5% and 35%, depending on the income bracket. 

3. Hiring cleaners and security

To increase your chances of receiving positive reviews and attracting repeat guests, it’s crucial to provide high customer service and ensure that your property is clean and well-maintained. One way to achieve this is by hiring a maid or housekeeper who can regularly clean the villa, manage the utilities, and assist guests during check-in and check-out. 

Additionally, installing security cameras or hiring a security guard to monitor the property at night can enhance its security and provide guests with a sense of safety.

4. Marketing your property

Marketing your property through Airbnb and Booking.com can effectively reach a large audience of potential guests. These platforms allow you to showcase your property’s unique features and amenities through photos, descriptions, and reviews. When listing your property, you must be as detailed as possible about its location, size, and any additional services or amenities you offer.

You can also go through the traditional route through word of mouth. Collaborating with local travel agencies and tour operators helps make marketing your property more accessible. 

5. Maintenance

While a successful launch is important in the rental business, focusing on ongoing maintenance is essential to sustain that success. Regular upkeep and repairs ensure the property remains in top condition and help attract and retain guests.

Property management companies offer various services to help owners maintain their rental properties. They can handle routine maintenance tasks such as cleaning, repairs, and regular inspections, ensuring the property stays in top condition. In addition, property management companies can help with tenant screening, rent collection, and lease renewal to ensure that the property remains occupied and generates consistent rental income.

Outsourcing to property managers

Property management companies offer various services to help owners maintain their rental properties. They can handle routine maintenance tasks such as cleaning, repairs, and regular inspections, ensuring the property stays in top condition. In addition, property management companies can help with tenant screening, rent collection, and lease renewal to ensure that the property remains occupied and generates consistent rental income.

Want to know more? Make things easier for yourself, and talk with our property manager to discuss the possibilities for your property in Jakarta.

Conclusion

 Although starting a villa rental business in Jakarta may seem simple in theory, the process can take several months and involves various obstacles. Despite these challenges, venturing into the villa rental business can be a rewarding experience both financially and personally. Developing a solid brand identity, fostering enduring relationships with guests, and delivering exceptional service are some ways to build a prosperous villa rental business in Jakarta. 

Frequently Asked Questions (FAQs)