Indonesia Real Estate Law – House or Residential Ownership by Foreigner

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As Indonesian government action to provide opportunity for foreigner to own residence in Indonesia, the Government has enacted Government Regulation Number 103 of 2015 on House or Residence Ownership by Foreigner Domiciled in Indonesia (“PP No. 103/2015”) and its implementing regulation Minister Regulation of Agrarian Affairs and Spatial Planning/Head of the National Land Agency Number 13 of 2016 on the Procedure for the Issuance, Relinquishment, or Transfer of Right over House or Residence Ownership by Foreigner Domiciled in Indonesia (“Permen ATR No. 13/2016”). Nevertheless, Permen ATR No. 13/2016 was considered as suboptimal, and therefore, Minister of Agrarian replaced Permen ATR 13/2016 with the Minister Regulation Number 29 of 2016 regulating the same matter (“Permen ATR No. 29/2016”).

Ownership Right of House or Residence

Foreigner having a resident permit and domiciled in Indonesia can own a house or residence in Indonesia with right of use. It is able to be inherited as long as their heir has resident permit in Indonesia.

Foreigner can own a house over land with (i) right of use, (ii) right of use over right of ownership possessed according to the agreement of granting of right of use over right of ownership before land conveyancing officer (Pejabat Pembuatan Akta Tanah/PPAT), or (iii) right of use deriving from alteration of right of ownership or right to build (Hak Guna Bangunan / HGB”).

Foreigner may also own condominium unit (i) built over right of use land, or (ii) deriving from alteration of right of ownership over condominium unit.

Limitations of House or Residence

The limitations of house or residence under Permen ATR No. 29/2016 are price and provisions. The regulated price limitation is the minimum house or condominium unit price for foreigner, for example in Jakarta the minimum house price is Rp 10bio and Rp 3bio for the condominium unit. In Bali, foreigner is allowed to own a house with a minimum price of Rp 5bio and Rp  2bio for the condominium unit. Please see below the table showing the minimum price of house or condominium unit in Indonesia applicable to foreigner:

Location

Minimum Price

House

Condominium Unit

Jakarta IDR  10.000.000.000 IDR  3.000.000.000
Banten IDR  5.000.000.000 IDR  2.000.000.000
West Java IDR  5.000.000.000 IDR  1.000.000.000
Central Java IDR 3.000.000.000 IDR  1.000.000.000
Yogyakarta IDR  5.000.000.000 IDR  1.000.000.000
Bali IDR  5.000.000.000 IDR  2.000.000.000
East Java IDR  5.000.000.000 IDR  1.500.000.000
West Nusa Tenggara IDR  3.000.000.000 IDR  1.000.000.000
North Sumatera IDR  3.000.000.000 IDR  1.000.000.000
East Kalimatan IDR  2.000.000.000 IDR  1.000.000.000
South Sulawesi IDR  2.000.000.000 IDR  1.000.000.000
Other regions/provinces IDR  1.000.000.000 IDR  750.000.000

Permen ATR No. 29/2016 as also regulates that:

  1. 1 (one) piece of land per person/family; and
  2. maximum land area of 2.000 m2 (two thousand meter square).

Minister may allow house ownership with land area over 2.000 m2 (two thousand meter square) if there is specific condition that gives tremendous effect to the economy.

Alteration of Right of Use over House or Residence

The significant difference between Permen ATR No. 13/2016 and Permen ATR No. 29/2016 is the stipulation on direct alteration of any type of right to right of use.

A house deriving from right of ownership or HGB will become state land which is directly granted along with the alteration to right of use for the foreigner. As well as condominium unit built over HGB or right of management (“HPL”), the right of ownership over the condominium unit will be granted along with the alteration to right of use over condominium unit.

It is unnecessary to change the record on land certificate with regards to the common land, common facility and common equipment of condominium unit, unless the ownership of the entire condominium units is transferred to foreigner. The land will be relinquished to become state land and will be directly granted with the alteration to right of use.

The registration request to change house or condominium unit ownership shall be submitted to the head of land office and the registration fee has to comply with the applicable tariff of non-tax state revenue.

This alteration of right will be performed by land officer by crossing out the wordings of right and its number in the book of land,  certificate, land maps and specific piece of land, to become wordings of rights and number of right of use. At the alteration column, there has to be a statement informing the alteration as per this regulation.

Time Period of House or Residence Ownership Right

The ownership period of (i) house over right of use deriving from right of ownership or (ii) condominium unit initially obtained from right of ownership unit of a new condominium unit built over HGB or HPL, will be given for 30 (thirty) year, extendable for 20 (twenty) years, renewable for 30 (thirty) years.

As for (iii) house with right of use deriving from HGB or (iv) condominium unit with right of use deriving from right of ownership over condominium unit built over HGB or HPL will be given for the remaining period of HGB or HPL, extendable for 20 (twenty) years and renewable for 30 (thirty) years.

Encumbrance and Transfer

The house or residence ownership by foreigner can be mortgaged for loan, and can be transferred to another party.

Right of use for (i) house deriving from right of ownership or HGB, or (ii) condominium unit deriving from alteration of right of ownership over condominium unit built over HGB or HPL that has been transferred to Indonesia citizen, can be reversed to right of ownership over condominium unit. The time period for house that has been reversed to HGB, and condominium unit that has been reversed to right of ownership over condominium unit built over HGB or HPL shall follow the remaining period of the previous right of use over the condominium unit. The alteration of “right of use” to become “right of ownership” must be registered through the land office.


Author :  Evelyn Hutami Gunawarman SH.

 

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Indonesia Real Estate Law – House or Residential Ownership by Foreigner
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