Legalities of Land Ownership and/or Leasing In Indonesia;
Herein is outlined a summary of the regulations pursuant to land attainment;
1.Hak Milik (Right of Ownership):
A Hak Milik (right of ownership) is exclusive to Indonesian citizens. This type of title can change hands and be transferred to other parties.
2. Hak Guna-Bangunan (Right of Use of Structures/Buildings):
A Hak Guna-Bangunan is a right to construct and possess buildings on land which is no one own for a period of at most 30 years. Upon request of the right holder and in view of the needs and of the condition of the buildings, the term referred can be extended for at most 20 years. A Hak Guna-Bangunan can change hands and be transferred to another party.
Those eligible for a Hak Guna-Bangunan are as follows:
a. Indonesian citizens, and
b. bodies corporate incorporated under Indonesian law and domiciled in Indonesia.
3. Hak Pakai - Right of Use :
A Hak Pakai is a right to use, and/or to collect produce from, land directly controlled by the State or land owned by another individual (tanah milik) which grants authority and obligations as determined in the relevant right-granting decree by the official who is authorized to grant it or as determined in the agreement with the owner of the land, where the agreement is not a land-lease agreement (perjanjian sewa-menyewa) or land-exploitation agreement, given that everything is possible as long as it does not contradict the spirit and provisions of this regulation.
Additional Item (Land certificate):
Another item of extreme importance concerning land ownership is the certificate. Legally owned land is "certificated" to an Indonesian. The certificate outlines the dimensions, location and title of a property. It is literally the only legal method to identify ownership of a any property. It is critical to research and confirm the certificate of any property prior to purchase consideration. We have found several properties that are locked in legal disputes due to certificate issues which are extremely difficult, costly and time consuming to rectify.
Combined with the certificate issue is the local "tribal" considerations. There is still land in Indonesia and in our area of interest that is not certificated but under the control of the local village/tribe. This land is available but "must" be placed on a certificate with the tribal approval and follow Indonesian law as far as land transfer from tribal to certificate and the policies and procedures involved to complete this process.
Needless to say, good relations with the local village and tribe/elders is an important aspect of owning land in Indonesia.
So in summary the legal ramifications in Indonesia are this. Foreigners are not allowed to own land in Indonesia. However,
- foreigners who wishes to "own" land, that's "free hold" or "Hak Milik" can use a local (Indonesian) partner or sponsor or form a "PT" company with a local. The land is purchased in the (sponsors) name or "PT" companies name with a legal agreement made between the local and the foreigner(s) regards joint/partnership ownership of the land. This is the "Nominee Ownership" service we offer for our "Land Banking" and "Dream Property" investment concepts. Or;
- Foreigners who wish to operate or buy a business can do so via an agreement with the local land owner under either "Hak Guna-Bangunan" or "Hak Pakai" to either purchase a business or start/run a business on the leased land. Lease Payment for 10-30 years is made up front and the foreigner via a PT company owns and operates a business but does not own the land. We offer this service under our "Assisted Purchase" and "Development" investment concepts.