There are several land titles and certificates in Indonesia to know about regarding property ownership in Indonesia. Knowing about these different types of land ownership and certificates is especially important for foreigners. Although foreigners can buy property in Indonesia, various real estate laws apply. This article guides foreigners interested in buying a house in Indonesia through the most important land titles and other types of property ownership.
Land titles and certificates in Indonesia for property ownership
Indonesia has several types of property ownership in the form of land titles and land certificates. From freehold to leasehold ownership, each title and certificate has special rights and obligations that buyers should know. These are the seven most essential land titles in Indonesia:
- Hak Milik (HM) – Right to Own
- Hak Guna Bangunan (HGB) – Right to Build
- Hak Pakai (HP) – Right to Use
- Hak Sewa (HS) – Right to Lease
- Hak Guna Usaha (HGU) – Right to Cultivate
- Hak Milik Atas Satuan Rumah Susun (HMSRS) – Right of Ownership on Multi-Story Building Units
- Hak Pengelolaan (SHLP) – Right to Manage
1. Hak Milik (HM) – Right to Own
Hak Milik is the highest freehold land title in Indonesia, as this land title gives full land ownership rights. Owning land in Indonesia with Hak Milik is a right only Indonesian nationals have. This means foreign nationals (WNAs) and foreign-owned companies (PT PMAs) can never buy and own property with the Hak Milik land title. Property with this land certificate of ownership can be sold, transferred, inherited, and mortgaged to any other individual entitled to his land title. Indonesian nationals can also transfer the Hak Guna Bangunan title to Hak Milik.
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2. Hak Guna Bangunan (HGB) – Right to Build
Hak Guna Bangunan means Right to Build and gives the owner of the land title the right to own the building on land owned by someone else. In most cases, the land where the building is built is owned by the state or an Indonesian national, with Hak Milik leasing the land to a foreign-owned company. Only legal entities such as a PT PMA can hold the Hak Guna Bangunan title, which means a foreign individual can not obtain the HGB title.
Holders of the HGB land title may use the building for private or commercial purposes, such as by setting it up as an office or for mortgage and securitization purposes. In some industries, additional certificates or titles are required to perform commercial activities.
The Hak Guna Bangunan title can be sold, bought, and inherited. It covers the same planning and land use provisions as Hak Milik’s. Only Indonesian nationals can transfer property with a Hak Guna Bangunan title to a Hak Milik title.
The National Land Agency (PBB) grants HGB titles. The title is valid for 30 years and can be extended for another 20-year and 30-year period. It’s possible to apply for a new HGB title once the HGB title has expired.
3. Hak Pakai (HP) – Right to Use
Indonesians or foreign nationals with a residency permit, either KITAS, KITAP, or a Second Home Visa ITAS, can buy a property in Indonesia with the Hak Pakai title. Using Hak Pakai is a very popular way for foreigners to purchase property in Indonesia. Each foreigner can have only one Hak Pakai title in their name and only use the property for residential purposes. This means you can not rent a property to someone else if you own it through Hak Pakai.
Hak Pakai can be granted for the use of a building for a specified period. According to the newest Hak Pakai rules, the title is valid for 30 years and can be extended for another 20-year and 30-year periods. After 80 years, one can apply for a new Hak Pakai certificate.
4. Hak Sewa (HS) – Right to Lease
Hak Sewa (HS) is the land title that gives the owner of land or a building the right to lease or rent the property to a foreign national or Indonesian citizen. Hak Sewa is available to Indonesian citizens who own land or property through Hak Milik and foreign-owned companies who own a building through Hak Guna Bangunan. Owners of the Hak Sewa property title are authorized to rent a property and receive income from the tenant.
5. Hak Guna Usaha (HGU) – Right to Cultivate
Hak Guna Usaha (HGU) is granted to locals and legal entities, including foreign-owned ones, and gives the right to cultivate or use the land for agricultural and farming purposes. However, this Indonesian land title is subject to certain limitations, including a 25-year validity extending for another 35 years. The land certificate is registered and granted by the National Land Agency and is generally under government supervision.
6. Hak Milik Atas Satuan Rumah Susun (HMSRS) – Right of Ownership on Multi-Story Building Units
Hak Milik Atas Satuan Rumah Susun (HMSRS) is also known as the Strata Title in Indonesia and gives a right of ownership over a unit in a multi-story building. This certificate for Strata property ownership in Indonesia also provides the right to use the facilities inside the building. The holder only holds ownership over the unit with the Strata property ownership in Indonesia, which means the license does not extend to the land. The land must remain under a Hak Milik title, while the building might stay under the Hak Guna Bangunan title.
Foreigners can obtain the Hak Milik Atas Satuan Rumah Susun property ownership title if they have a valid temporary residency permit (KITAS) or permanent residency permit (KITAP). Besides that, the total area of foreign-owned units within a building or complex can not exceed 49% of the total floor area to ensure that most units remain available for Indonesian citizens.
7. Hak Pengelolaan (SHLP) – Right to Manage
Hak Pengelolaan (SHLP), which means Right to Manage, is the most restrictive land certificate available. In this instance, the government owns and operates the land, while the holder is granted the authority to manage it. In essence, a Hak Pengelolaan certificate designates an individual or entity to manage land on behalf of the government. The holder functions as an extension of the state.
Which land titles can foreigners obtain for foreign property ownership in Indonesia?
Foreigners can apply for the Hak Guna Bangunan, Hak Pakai, Hak Sewa, Hak Guna Usaha, and Hak Milik Atas Satuan Rumah Susun. Sometimes, foreigners can only apply for these land titles through a foreign-owned company (PT PMA), such as Hak Guna Bangunan. For some property ownership titles, foreigners can apply individually if they have the right residency permit visa (such as KITAS or KITAP).
How can foreigners buy property in Indonesia?
Foreigners can buy property in Indonesia in several ways, where the PT PMA is the most common way. Choosing this option, the foreigner establishes a PT PMA, which can hold several property ownership titles to own the property. The PT PMA can buy freehold or leasehold land, although many foreigners choose to lease land with their PT PMA and purchase or construct a building with Hak Guna Bangunan. Finding property, such as Bali real estate for sale by owner, is best done by working with a local real estate agent.
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Frequently Asked Questions (FAQs)
What are the types of land ownership in Indonesia?
Indonesia has many types of land ownership, including Hak Milik (Right to Own), Hak Guna Bangunan (Right to Build), Hak Pakai (Right to Use), Hak Sewa (Right to Lease), Hak Guna Usaha (Right to Cultivate), and Hak Milik Atas Satuan Rumah Susun (Right of Ownership on Multi-Story Building Units). Each of these land titles has its restrictions, benefits, and disadvantages.
What is the Indonesian law on land ownership?
Indonesian law only grants Indonesian nationals the right of freehold (Hak Milik). Therefore, a foreigner may only own property via a PT PMA or by obtaining the Hak Pakai or Hak Guna Bangunan title.
How can a foreigner own land in Indonesia?
A foreigner cannot own land in Indonesia, as only Indonesian nationals can through Hak Milik. However, a foreigner can own or purchase land through a PT PMA, which is a legal entity in Indonesia.
Can foreigners buy property in Indonesia?
Yes, foreigners can buy property in Indonesia by using the right land titles for property ownership. Hak Guna Bangunan and Hak Pakai are the most popular titles for foreign property ownership in Indonesia.