When researching the Indonesian real estate market, you will likely encounter the term Hak Milik (HM). This title is highly valued and essential for property ownership in Indonesia. However, not everyone is eligible for the HM title, as specific requirements must be met before applying.
What is Hak Milik?
Hak Milik, also known as Sertifikat Hak Milik (SHM), is Indonesia’s highest form of property ownership. It means ‘Right to Own’ and is registered as a land title with the National Land Agency, similar to a freehold title. Unlike other land ownership titles in Indonesia, Hak Milik has no time limit and can be transferred freely to those eligible. The HM title can also be used as collateral.
Only Indonesian nationals and some legal entities under Indonesian law can hold the SHM title. It’s important to understand that an Indonesian legal entity, such as a PT or PT PMA, can’t obtain the HM title. Instead, they must convert the Hak Milik title to a Hak Guna Bangunan (HGB) title.
Can foreigners buy Hak Milik property in Indonesia?
Foreigners can’t buy property under the Hak Milik title in Indonesia. According to Basic Agrarian Law No. 5/1960, only Indonesian nationals and some Indonesian entities can hold property under the Hak Milik title. This indirectly means foreigners can’t buy freehold property in Indonesia. Instead, foreigners can purchase Indonesian property in several other ways:
- Hak Pakai (HP): Foreigners can buy property in Indonesia under a Hak Pakai title, but only if certain conditions are met, such as meeting investment standards and possessing a valid work permit. Not all properties are eligible for this type of title.
- Hak Guna Bangunan (HGB): The Hak Guna Bangunan title allows legal entities to own a building on Indonesian land for up to 80 years. Requirements must be met to obtain the title.
- Leasehold: Foreigners often use leasehold agreements to buy property, which grants them a long-term lease of land and buildings for up to 25 years. It’s a popular option for residential and commercial purposes, especially for individuals and PT PMAs.
- PT PMA: Foreigners can invest in Indonesian real estate through a foreign-owned company called PT PMA. This allows foreigners to obtain a temporary stay permit valid for two years.
- Passport: A foreigner can buy a property with only their passport if they meet the required minimum capital investment.
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Frequently Asked Questions (FAQs)
What is sertifikat Hak Milik in English?
The meaning of Sertifikat Hak Milik (SHM) in English is ‘certificate right to own’ and is a property freehold title in Indonesia. This title, also known as HM, gives the owner complete ownership over the land or building.
How to apply for Hak Milik?
Indonesian nationals can apply for Hak Milik by registering a property under the HM title at the National Land Agency. Foreigners can’t apply for Hak Milik.
Is it possible to transfer Hak Milik to Hak Guna Bangunan?
Transferring Hak Milik to Hak Guna Bangunan is possible if a business entity, such as a PT PMA, buys the land or property. The land title change must be registered at the National Land Agency.
