Property Ownership in Indonesia:
What Foreigners Need to Know
Many foreigners visiting Indonesia—whether it's Bali, Java, Sumba, or other islands—are drawn to the beauty, culture, and lifestyle this diverse archipelago offers. It's no surprise that some wish to invest in property, either as a residence, a holiday home, or a business venture. However, Indonesia has strict regulations when it comes to foreign ownership of land and property.
Understanding the legal framework is essential to avoid complications and ensure your investment is secure. Below, we provide a practical overview of property ownership options available to foreigners in Indonesia.
Can Foreigners Own Property in Indonesia?
By law, foreigners cannot directly own freehold land (Hak Milik) in Indonesia. All land ownership must be registered under an Indonesian citizen or legal entity. However, there are several legal alternatives available to foreigners that provide long-term usage or ownership rights.
Legal Ownership Structures for Foreign Buyers
1. Leasehold (Hak Sewa)
Foreigners can lease land or property for a fixed term—typically 25 to 30 years—with options to extend. Lease agreements should clearly specify the extension clauses. During the lease term, you have full rights to use the land and any buildings on it.
Villas can be constructed, lived in, or resold, provided the lease contract allows for it.
Key points:
- Entire lease amount must be paid upfront.
- Extensions are negotiable but depend on market prices at the time.
- Leasehold rights can be transferred to a new buyer.
2. Right to Use (Hak Pakai)
Foreigners with a valid KITAS (temporary stay permit) can apply for a Hak Pakai title, which allows them to use a property for residential purposes. This title is valid for an initial 30 years and can be extended by 20 + 30 years.
Requirements:
- Property must be used as a residence (not for rental).
- Minimum investment: IDR 5 billion for houses, IDR 2 billion for apartments.
- Maximum land size: 2,000 sqm.
- Property must be built on land with a freehold title converted into Hak Pakai.
A local notary can assist with the legal conversion and registration process.
3. Right to Build (Hak Guna Bangunan / HGB) through a PT PMA
For commercial purposes, foreign investors can establish a PT PMA (foreign-owned company), which may hold HGB title over land and build on it.
This title is valid for up to 80 years (30 + 20 + 30 years).
Requirements:
- Minimum investment: IDR 10 billion.
- At least two shareholders (can be foreign).
- HGB allows commercial use such as resorts, guesthouses, or retail.
Setting up a PT PMA requires legal assistance and regulatory approval.
We recommend working with a professional legal firm to guide you through this process.
4. Strata Title (Hak Milik atas Satuan Rumah Susun)
Strata titles are commonly used for apartments in larger cities like Jakarta, Surabaya, or Bali’s urban areas. Foreigners can legally purchase individual units within a building developed on HGB land.
The developer owns the land, while buyers own their unit and share access to common facilities. This is one of the few titles considered “ownership” for foreigners under Indonesian law.
5. Freehold Ownership (Hak Milik)
Hak Milik is the highest form of land ownership in Indonesia, but it is reserved for Indonesian citizens only. Foreigners are legally prohibited from holding land under a Hak Milik title.
Some foreigners attempt to acquire property through nominee arrangements—using an Indonesian citizen to hold the title on their behalf. However, this method carries serious legal risks.
Because the nominee is the legal owner, you have no enforceable rights if a dispute arises. Indonesian law does not recognize side agreements made to transfer control to the foreign party.
There are a few legal exceptions:
- Foreigners married to an Indonesian citizen under a prenuptial agreement may jointly control assets.
- A Hak Milik title can be converted into a Hak Pakai (right to use), under specific conditions (KITAS visa, residential use, minimum investment, etc.).
We strongly recommend avoiding nominee arrangements and opting for legal structures such as Hak Pakai or PT PMA where appropriate.
Final Advice
Navigating property ownership in Indonesia requires understanding local regulations, choosing the right legal structure, and working with trusted professionals. Whether you're looking to lease a villa in Bali, invest in a resort in Lombok, or buy an apartment in Jakarta, we advise seeking guidance from qualified legal experts to ensure your investment is compliant and protected.
