Real Estate Law – Implementation of Housing and Residental Areas (Government Regulation No. 14 of 2016)

Backgroundresidence-area

On last 27th of Mei 2016, the government issued new regulation namely Government Regulation No. 14 of 2016 regarding Implementation of Housing and Residental Areas (“PP”).

This PP revoke Government Regulation No. 44 of 1996 regarding House Occupancy by Non-Owner and Government Regulaion No.88 of 1999 regarding Stand Alone Ready to Build Zone and Ready to Build Environment. This PP is the implementing regulation of Law No. 1 of 2011 regarding Housing and Residential Area. Furthuremore, the purpose of this PP is to bring order and provide legal certainty for all stakeholders in implementing duty and authorities as well as rights and obligations in the implementation of housing and residential area.

Implementation of Housing

Activities in the implementation of housing includes planning, development, utilization, control and supply of homes for low-income people.

In carrying out the implementation of housing, there are several provisions which should be noted such as:

1. Housing Planning

In implementing housing planning, the construction and development plan document that refers to Residential Area Plan document (“RKP”) is necessary. RKP have to be specified in the long-term development plans, medium-term development plans and annual plans.

The construction and development plan document that have been issued by the Regent/Mayor (specifically for DKI Jakarta by the Governor), have to be reviewed at least once every 5 years.

2. Obligation of Balanced Residential

If the large-scale housing construction conducted by the legal entity, then there will be an obligation of balanced residential application, except for housing development aimed for the fulfillment of public house.

The obligation of balanced residential should be done in a single stretch or in one of the district / city, (especially for Jakarta, it has to be in a same province). In addition, if the balanced residential is not in single stretch, then the legal entity is required to provide access from public houses to the service center or workplace.

3. Marketing

If the single or row house is still under construction, it is still can be marketed through a preliminary/conditional sale and purchase agreement (“CSPA”) in accordance with the provisions of the prevailing law after fulfill the following requirements:

  • land ownership status;
  • terms of the agreement;
  • ownership of constructing holding building;
  • availability of infrastructure, facilities and public utilities;
  • construction progress already at 20%.

Legal entity that build a single house and / or the row house, must not be handed over to and / or withdraw funds more than 80% from the buyers before the above-mentioned requirements are fulfilled.

4. Housing Utilization

House can be used in business activity on a limited basis without harming and interfere with the function of occupancy as well as ensure the maintenance of housing and residential area.

5. House Occupancy

Everyone has the right to reside or inhabiting the house with:

  1. right of ownership in accordance with the prevailing law;
  2. lease and not lease (if there is consent from the house owner and the written agreement with the minimum provision of rights and obligations, time period, rental rates and the condition of force majeure).

It should be noted that the house that currently in a dispute can not be leased.

Exclusively for the rental house intended for low-income people, the rental price is determined by the government.

Implementation of Residential Area

Activities of the implementation of Residential inside this PP has a direction on integrated development area and sustainable settlements. In the implementation of residential, there are provisions that still must be considered such as:

Planning

Residential planning can be conducted by anyone include government and local government to produce RKP document.

RKP Document specified above issued by Regent/Mayoy (especially for DKI Jakarta by Governor) and become a reference in the preparation of construction plans and housing development, and should be reviewed at least once in 5 years.

Integration of Infrastructure, Facilities and Public Utilities for Housing and Residential Area

Construction of housing and residential area infrastructure, facilities and public utilities can be conducted by government or anyone and must be comply with the plan accepted by the government. The construction can be carried out with cooperation between:

  • Government and Local Government
  • Local Government with another Local Government
  • Government and/or Local Government with legal entity;
  • Legal entity with another legal entity.

Maintenance and Improvement

Everyone is obliged to maintain the house that have been build completely. House that still not been handed over to the owner is still under the responsibility of developer at least 3 (three) months since the house is build completely and it have to be conducted in accordance with the prevailing law and regulation.

Improvements or repairs of house are conducted in the form of rehabilitation or restoration. House improvements done by houseowners themselves, while for facilities, infrastructure and public utilities carried out by the appropriate local government authority (if it still has not been handed over to the local government, then it is still the responsibility of the developer).

Administrative Sanction

This PP regulates spesificly regarding the administrative sanctions, such as:

1. Everyone who do the planning and design of the house but does not have expertise in the field of house design can be sanctioned gradually as follows:

  • written warning;
  • restrictions on business activities no later than 1 year;
  • business license suspension for maximum of 2 year;
  • administrative sanction (i) for individual between Rp 50.000.000,- to Rp 200.000.000,-, (ii) for legal entity between Rp 100.000.000,- to Rp 1.000.000.000,-.

2. Everyone who do the planning and design of the house but do not fulfill the requirements of the technical, administrative, spatial and ecological will by subject to administratve sanction gradually as follows:

  • written warning, which will be administered twice;
  • revocation of business license for legal entity no later 6 months;
  • revocation of incentive;
  • administrative sanction (i) for individual between Rp 10.000.000,- to Rp 50.000.000,-, (ii) for legal entity between Rp 100.000.000,- to Rp 500.000.000,-.

3. Everyone who conduct the planning of infrastructure, facilities and public utilities but do not have expertise in the planning of infrastructure, facilities, and general utility will be subject to sanction gradually as follows:

  • written warning, which will be administered twice;
  • restrictions on business activities no longer than 1 year for legal entity;
  • suspension of business license no later than 2 years;
  • administrative sanction (i) for individual between Rp 50.000.000,- to Rp 200.000.000,-, (ii) for legal entity between Rp 100.000.000,- to Rp 1.000.000.000,-.

4. Legal entity that does not conduct the balanced residential for housing may be subject to sanction gradually as follows:

  • written warning, which will be administered twice;
  • temporary or permanent suspension of construction work;
  • administrative sanction between Rp 1.000.000.000,- to Rp 10.000.000.000,-.

5. Legal entity that conducted (i) housing construction with balanced residential but not in in a single stretch, and (ii) construction of public house that is not conducted in one district/city, especially fo DKI Jakarta ini one province can be subject of sanction gradually as follows:

  • written warning, which will be administered twice;
  • restrictions on construction activities;
  • suspension of building construction license by sealing the building for no later than 30 days;
  • revocation of building consruction license;
  • building demolition order;
  • administrative sanction between Rp 1.000.000.000,- to Rp 10.000.000.000,-.

6. Construction of house and housing that not in accordance with spatial layout plan can be subject to sanctions gradually as follows:

  • written warning, which will be administered twice;
  • suspension of building construction license by sealing the building for maximu 30 days;
  • revocation of building construction license;
  • building demolition;
  • administrative sanction (i) for individual between Rp 10.000.000,- to Rp 100.000.000,-, (ii) for legal entity between Rp 100.000.000,- to Rp 500.000.000,-.

7. Entity conducting the house construction and handed over or withdraw funds more than 80% from buyers before fulfilling the existing requirements as been regulated in article 22 of PP will be subject to sanction as follows:

  • written warning, which will be administered twice;
  • suspension of business license for no later than 1 year;
  • insentive revocation;
  • administrative sanction between Rp 10.000.000,- to Rp 100.000.000,-.

8. Everyone who undertakes the construction of infrastructure, facilities, housing and public utilities according to plan, design and licensing can be sanctioned gradually as follows:

  • written warning, which will be administered twice;
  • temporary suspension of woring construction no longer than 1 year;
  • demolition order;
  • administrative sanction (i) for individual between Rp 10.000.000,- to Rp 50.000.000,-, (ii) for legal entity between Rp 100.000.000,- to Rp 500.000.000,-.

9. Everyone who utilize the house not for residence but not ensure the maintenance of residential area and residential environment as been stipulated in Article 26 paragraph (2) of PP can be subject to sanctioned gradually as follows:

  • written warning, which will be administered twice;
  • suspension of house owning certificate;
  • administrative sanction (i) for individual between Rp 10.000.000,- to Rp 50.000.000,-, (ii) for legal entity between Rp 10.000.000,- to Rp 100.000.000,-
  • revocation of house owning certificate.

10. Anyone who conduct the construction of residential area but does not comply with residential planning and construction license of residential environmental and its supporting activities can be subject to sanctions gradually as follows:

  • written warning, which will be administered twice;
  • suspension of business license for 1 year maximum;
  • incentive revocation for legal entitiy;
  • administrative sanctions between Rp 100.000.000,- to Rp 1.000.000.000,-.

 

  • If you require further information, please feel free to contact us at query@lekslawyer.com

 

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Real Estate Law – Implementation of Housing and Residental Areas (Government Regulation No. 14 of 2016)
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