Real EstateHow Can Foreigners Buy Property in Indonesia?

Many foreigners are keen on acquiring property in Indonesia. Whether it’s the allure of owning a piece of paradise, an investment prospect, or a desire to reside in this tropical paradise, there are compelling reasons driving foreign interest in Indonesian real estate. 

Starting in 2023, the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency has implemented significant revisions to property regulations, simplifying the process for foreigners to own property in Indonesia, which is now accessible with just a passport or visa. 

If you’ve ever considered purchasing property and living in this country, this article provides a comprehensive guide on how foreigners can buy property in Indonesia.

Property Type and Regulations for Foreign Ownership

Before we delve into the specifics, it’s important to understand foreigners are permitted to own certain types of property in Indonesia. They can own condominium units within a building as long as they do not exceed 49% of the total units in the building. 

Furthermore, foreigners can acquire landed houses through a valid lease agreement, but specific restrictions and requirements apply to these purchases. Firstly, these houses must meet the criteria for luxury homes according to regulations. Secondly, foreigners can buy a property in Indonesia with a maximum land area of 2,000 square meters per family. If their presence has a positive impact on the economy and society, they may be granted more than one piece of land or an area larger than 2,000 square meters with the minister’s approval.

Additionally, there are minimum price requirements that vary based on the region. For instance, landed houses in Jakarta and Bali must have an average price of Rp5 billion, while flats in Jakarta have a minimum price of Rp3 billion, and Rp2 billion in Bali.

Ways for Foreigners to Buy Property in Indonesia

While foreigners can indeed purchase property in Indonesia, it is important to note that they cannot directly acquire property in their own name. Nevertheless, there are various methods available to achieve property ownership.

1. Invest through PT PMA

PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a foreign-owned company established in Indonesia. It allows foreigners to own property under the Hak Guna Bangunan (Right to Build) title, which permits legal entities to build and own freehold property on leased land owned by Indonesian citizens or the government. Setting up a PT PMA typically takes around six to ten weeks and costs between Rp15 million ($974) and Rp35 million ($2,275). However, before utilising property purchased through a PT PMA, additional land titles and certificates are required.

2. Buy Leasehold Property

Acquiring property under a leasehold agreement is a practical option for foreigners, allowing them to use real estate for an initial period of up to 25 years, with the possibility of extending it for another 25 years. This approach is suitable for both residential and commercial purposes.

3. Use Hak Pakai Title

Hak Pakai (Right to Use) is a title that grants foreigners the right to buy and use property in Indonesia. This option is available to foreigners with residency permits like KITAS, KITAP, or a Second Home Visa. The maximum period of Hak Pakai is typically 30 years, extendable for another 20 years, and renewable for a maximum of 30 years.

4. Use Hak Guna Bangunan Title

The Hak Guna Bangunan is a right-to-build title that applies to land owned by Indonesian citizens or the government. Previously, this title could be obtained by Indonesian nationals or legal entities like PT PMAs, which means foreigners cannot hold this title directly. However, in 2023, the Indonesian government announced that foreigners could buy condominium units under Hak Guna Bangunan. Prior to this, they could only own flats through a Hak Pakai title.

5. Buy Property Using a Passport

In a groundbreaking move, the Indonesian government declared in 2023 that foreigners can now purchase property simply with a passport or visa. This eliminates the need for a residency permit, such as KITAS and KITAP, or establishing a foreign-owned company. Still, specific requirements must be met, a process that warrants careful consideration and adherence.

6. Use Indonesian Nominee

Another method that has been employed by foreigners to acquire property is through an Indonesian nominee. In this scenario, an Indonesian national officially holds ownership on paper, while an underlying agreement designates the foreigner as the actual owner. However, it’s crucial to note that this method is illegal, and if discovered, the government retains the authority to reclaim the property.

Thanks to significant regulatory changes by the Indonesian government, now foreigners can buy property in Indonesia more easily. Nevertheless, it remains important to understand the revised regulations and choose the right method. While the process may appear complex, with proper guidance and adherence to legal frameworks, owning property in Indonesia can become a reality for foreigners seeking their own piece of paradise in this tropical nation.