Buying a property in Indonesia can be different from buying a property in different western countries due to several factors, including legal regulations, ownership rights, financing options, and cultural considerations. Here are some key differences:
- Foreign Ownership Restrictions: In Indonesia, there are restrictions on foreign ownership of land. Foreigners are generally not allowed to directly own land. Only Indonesian citizens can obtain property with ownership rights.
- Legal Processes & Due Diligence: In Indonesia, it is crucial to engage a notary and ensure that all necessary permits, certificates are correct. Additionally, Due Diligence is essential to verify property ownership, land status, access to the property/land and potential obstacles. It is a faster process than in western countries and can take approximately 2 weeks to 6 weeks when it comes to Leasehold process.
- Financing Options: Financing options for property purchases can vary between Indonesia and Western countries. In Indonesia, the most common way to make purchases of assets, including properties, is through cash transactions, usually with options of payment terms. The mortgage options for foreigners are limited, and local banks typically offer loans to Indonesian citizens only.
(Hak Milik) Options to obtain a property for foreigners:
- LEASEHOLD rights (Hak Sewa) – between 25 to 30 years, usually the length depending on the landowner. After these years the lessee has the first priority and the right to extend. It is all a matter of negotiation to suit the right terms for the buyer.
- FREEHOLD (Hak Guna Bangunan “HGB”) – the ownership (hak milik) i transferred to a foreign-owned company (PMA). It is the only way for foreigner to acquire freehold property. An HGB is valid for 80 years, specifically 30 years, extendable for 20 years and lastly 30 years. The title can be reverted back to Hak Milik if the ownership is transferred to an Indonesian citizen or certain legal entities.
Lasette can provide specific guidance or get you in touch with legal professionals to help navigate the unique aspects of buying property in Indonesia.
