On 29 December 2016, the Goverment of Republic Indonesia, has enacted the Government Regulation No. 64 of 2016 on Construction of Low Income Communities Housing (“GR 64/2016”).
PP 64/2016 is the implementing regulation on Law Number 1 of 2011 on Housing and Residential Area ("Law 1/2011") and Economic Policy Package XIII on Housing for Low Income Communities ("LIC"). This matter is in line with the National Development Program of one million houses as a manifestation of the second point contained in the mandate of Nawacita, namely the Government is not absent to build an effective, democratic and reliable government; and also the fifth point, improving the quality of human life of Indonesia.
Based on statistics of Indonesian house ownership by the Central Bureau of Statistics as of 26 May 2017, the average home ownership status in 2016 reached 82.8% (eighty two point eight percent), and the remaining 17.2% (seventeen point two percent) is non house owner.
This is due to the high cost of building a high LIC housing, because to build the LIC houses is required a long licensing process. Therefore, the developers are still reluctant to perform the obligations to build the LIC housing.
Therefore, the GR 64/2016 was issued which contains the principal policy of simplification procedures and acceleration completion on construction permits of LIC house and incorporating some licensing or eliminating various licenses that are irrelevant and unnecessary in the context of LIC housing construction.
Scope of LIC Housing Development
The construction of LIC housing shall be carried out for a land area of not more than 5 (five) hectares and at least 0.5 (zero point five) hectares and located in 1 (one) location designated for the construction of the landed house. The location of LIC housing development as already in accordance with the spatial plan and the standard set by the Minister of Public Works and Public Housing. The construction of LIC housing can be carried out by legal entities established by Indonesian citizens whose activities in the field of housing and residential.
Stages of LIC Housing Construction
The implementation of LIC housing development is conducted in 4 (four) stages:
- construction; and
Legal entity that will carry out the construction of LIC housing prepare a proposal for the development of LIC housing, which contains at least (a) planning and design of LIC housing; (b) planning and design of infrastructure housing, facilities, and utilities of LIC housing; (c) land acquisition; and (d) fulfillment of licenses.
The fulfillment of licenses shall include (a) licenses relating to the approval of the site plan; (b) a statement letter of environmental management and monitoring capability; (c) building permit and approval of technical plan documents.
The legal entity shall submit the proposal for the construction of the LIC housing to the regent/mayor through the One Door Integrated Service (“ODIS”), together with the attachment, namely (a) land certificates or other proof of land ownership; and (b) proof of payment of last year's land and building taxes. ODIS shall approve the proposal of LIC housing development no later than 7 (seven) working days since the application is received by ODIS completely and correctly.
The legal entity shall relinquish the right of the land from the holder or the land owner to the legal entity by making the deed right of relinquishment or right of relinquishment letter in the presence of the head of the land office. The relinquish right of the land and issuance of land rights shall be complete by the land office no later than 3 (three) working days after the application has been received completely and correctly by the land office.
Furthermore, the legal entity shall apply for measurement of plot for LIC housing development to the land office, including measurement and mapping fields, blocks, and plot. Land office shall complete the field measurements such land no later than 14 (fourteen) working days from receipt of correct and complete application.
Legal entity shall submit the application to the land office for the issuance of master certificates on building right of use for the LIC housing in accordance with the prevailing laws and regulations in the field of land. Land office shall complete the issuance of the building right of use no later than 3 (three) working days since the application is received completely and correctly by the land office.
Submission of applications for the construction of LIC housing structures to ODIS to commence construction implementation is carried out by the legal entity by attaching, administrative documents and technical plan documents of LIC housing, infrastructure, facilities and public utilities of LIC housing in the form of buildings. ODIS in order to issue the building construction permit shall ask technical consideration from technical institution. ODIS shall issues a building permit and approval of a technical plan document no later than 7 (seven) days after the application has been submitted by the legal entity completely and correctly.
Implementation of LIC housing construction in the form of LIC housing, infrastructure, facilities and public utilities of LIC housing in the form of buildings is based on technical plan documents approved and approved by ODIS. Activities of construction implementation are includes:
- examination of implementation documents;
- field preparation;
- construction activities;
- final inspection of construction works; and
- delivery of the end result of the work.
In order to utilize LIC housing, the legal entity shall apply the issuance of feasible function certificate for all or part of LIC housing, infrastructure, facilities and public utilities of LIC housing in the form of buildings in accordance with the results of checking the feasibility of building functions to ODIS. ODIS shall issue such feasible function certificate no later than 3 (three) working days since the application has submitted completely and correctly. The feasible function certificate is valid for 20 (twenty) years for single housing and residential property, and valid for 5 (five) years for other buildings.
The legal entity shall apply for the issuance of the land and building tax on the development of the LIC housing to a regional apparatus unit that administers government affairs in the area of regional income by attaching building permit documents. The regional apparatus unit shall issue land and building tax at least 1 (one) working day since the submission of application is received completely and correctly.
The regency/municipality shall determine the amount of duty on the acquisition of the land rights and buildings of the LIC housing based on the value of the house sale price, and the payment of such duty shall be exempted from the imposition of value added tax.
In case that LIC housing has been sold to the public, legal entity shall submit the application to the land office for the splitting the building right to use certificate and the rights transference from the legal entity to the public. The submission of certificate and the transfer of rights together with the deed of sale and purchase from the land deed official. The land office shall complete the issuance of certificate no later than 4 (four) working days since the submission is received completely and correctly.
The legal entity shall apply to regional apparatus unit that carries out government affairs in the area of regional income for the splitting of land and building tax documents on behalf of legal entity to be on behalf of public whose purchased the LIC housing by attaching splitting certificates documents and documents of land and building tax on behalf of legal entity. The regional apparatus unit that carries out government affairs in the area of regional income shall complete the splitting of land and building tax no later than 3 (three) working days since the submission is received completely and correctly.
GR 64/2016 stipulates sanctions for government agencies that does not issue license within the stipulated time frame as follows:
- If the license requirements submitted by the legal entity to ODIS have been fulfilled and licenses are not granted within the stipulated timeframe, the legal entity shall submit to the regent / mayor for the issuance of permits in accordance with the provisions of the laws and regulations in the area of regional government.
- If the licenses are not issued by the regent / mayor, the legal entity shall submit to the governor for administrative sanction in accordance with the provisions of the laws and regulations in the area of regional government.
- Iftha the administrative sanctions have been imposed and licenses are not issued by the regent / mayor, the governor shall take over the grant of such permission.
- If the licensing requirements submitted to the governor have been fulfilled and the licenses are not granted within the stipulated period, the legal entity shall submit to the minister administering governmental affairs in the domestic government for administrative sanctions in accordance with the provisions of the laws and regulations in the area of regional government.
- If the administrative sanctions are imposed and licenses are not issued by the governor, the minister who administers government affairs in the field of domestic government takes over the grant of such license.
- In the case of land related requirements submitted by the legal entity to the land office has been fulfilled and licenses and non-licensing are not granted within the stipulated period, the legal entity shall submit to the minister who conducts the government affairs in the field of land for the issuance of permits and sanctions in accordance with the prevailing law.