Foreigners in Indonesia do not have full ownership rights to real estate, but the country has other forms of ownership. Let's understand in more detail the nuances of buying property in Indonesia, the step-by-step process of the transaction, the cost of properties, and the possibilities of buying them on a mortgage.

What types of property ownership exist in Indonesia?

1. Hak Milik (“full right to property”).

Only citizens have the right to own land in Indonesia. However, foreigners can use the following scheme for full ownership: a notarized loan agreement with a local, which will be the purchased property. But note that the actual owner of the object remains a citizen of the country.

2. Hak Pakai (“right to use”).

One of the main requirements for acquiring real estate through Hak Pakai is to have a work visa to Indonesia (KITAS). It is important to note that the Hak Pakai can only be applied to one piece of real estate, and the land must not be larger than half a hectare.

Having bought a property through the Hak Pakai, a foreigner receives an individual certificate—he is registered in a special state service. This document gives the non-resident full right to use the land or house.

An Individual Hak Pakai certificate is issued for an initial period of 30 years, which can be renewed for another 20 and then an additional 30 years. That is, the total period of validity reaches 80 years.

It is important to note that this method is only suitable for those who plan to reside permanently in Indonesia. If you leave the country, you need to transfer the rights to the property to another person within one year. Otherwise, the state has the right to seize it.

3. Hak Guna (“right to build”).

Hak Guna is suitable for companies registered in Indonesia. It gives legal entities the opportunity to own or build several properties.

The company gets the right of ownership for up to 30 years, which can be extended up to 80 years. At the same time, the company can sell the land or real estate, transferring the rights to these objects to other people.

4. Hak Sewa (a form of real estate ownership through leasing).

Hak Sewa involves the conclusion of an ordinary lease agreement. It is usually notarized but does not require registration with state authorities.

Hak Sewa allows the tenant to use the property for a certain period of time according to the terms of the agreement.

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What does buying property in Indonesia mean?

Buying property in Indonesia does not give you any privileges in obtaining visas and residence permits.

Buying property in Indonesia, step by step

Let's understand how to buy a property in Indonesia under the Hak Pakai, Hak Milik, and Hak Guna schemes:

1. Checking the property.

It is important to conduct a thorough check on the object you like to make sure it is legally clean and free of any debts. This is usually done by a realtor.

After conducting a thorough background check and documenting the payment of taxes by the seller and the buyer, you must provide the appropriate documents to the Land Deed Official.

2. Execute a conditional sales contract.

The seller and buyer usually sign a conditional sale agreement (CSPA) before transferring the land. A CSPA is often seen as a tentative agreement to lease the land for a long period of time. In some cases, the CSPA may require an upfront payment.

3. Conclude the contract of sale.

The buyer and seller sign the sales contract in front of the Pejabat Pembuat Akta Tanah authority, which draws up the documents for the land.

4. Pay the balance of the transaction amount.

This step is done immediately after signing the contract. The parties will decide how to transfer the funds in accordance with their individual agreements.

5. Registering the right of ownership.

Within seven days after all the documents are signed, the certificate of the transfer of the right to a long-term lease and the accompanying papers are prepared.

It is possible to make the deal remotely; you only need to draw up a power of attorney for a lawyer.

Associated costs when buying property in Indonesia

Here are the additional costs that you should expect:

  • Transfer Tax: 5% (this percentage is charged to both buyers and sellers).
  • Sale of land: 1% (paid by the buyer).
  • Lawyer Fee: 0.5%–1.5% (paid by the buyer).
  • Registration fee: 0.2% (paid by the buyer).
  • The realtor's fee is 5% (paid by the buyer).
  • Notary services: 1% (paid by the buyer).
  • Average house prices in Indonesia

You can buy an apartment of 90 sq.m. in Indonesia for €75,000–€141,000.

The rent price for a studio apartment in Indonesia is about €166–270 per month. You can rent a two-bedroom apartment in the country for €400–700.

Utility bills in Indonesia average €57 per month (plus €27 for internet).

Buying a home in Indonesia with a mortgage

Foreigners can get a mortgage loan from an Indonesian bank; however, it is important not to rush and to study the different proposals of different banks.

The interest rate on a 20-year fixed-rate mortgage in Indonesia is 9.53%.

On our website, you can find the right real estate agency in Indonesia.