Buying/Renting A Land/Property In Bali Safely: The Dos And Don'ts

The Government of the Republic of Indonesia intends to develop the utilization of land for foreigner by giving rights to foreigners to own land/property in Indonesia. The policy is a mandate from the Job Creation Law which is then outlined in: (i) Government Regulation Number 18 of 2021 on Management Rights, Land Rights, Flats Units, and Land Registration; (ii) Regulation of the Minister of Agrarian Affairs and Spatial Planning Number 18 of 2021 on Procedures for Determining Management Rights and Land Rights; (iii) Decree of the Minister of Agrarian Affairs and Spatial Planning Number 1241/SK-HK.02/IX/2022 concerning the Acquisition of Residential/Residential House Prices for Foreigners; and Letter of the Directorate General of Land Rights Determination and Registration Number HR.01/1963/XI/2022 of 2022 concerning Guidelines for the Implementation of the Decree of the Minister of Agrarian Affairs and Spatial Planning Number 1241/SK-HK.02/IX/2022. Based on these regulations, here are some requirements that must be considered by foreigners who intend to buy or rent land/property in Indonesia:

1. The requirements to buy/rent a land/property

Dos:

• Foreigners Requirements

Have a visa, passport, or Limited Stay Permit issued by the Directorate General of Immigration of the Ministry of Law and Human Rights of the Republic of Indonesia.

• Land/Property Requirements:

Buying Land/Property

• The land/property title on right to use of land (Hak Pakai) or rights to manage a land (Hak Pengelolaan). In addition to individual ownership, a right to use of land can be issued to a Foreign Legal Entity that has representation in Indonesia.
• The minimum price of the land/property is 5 billion Rupiah for residential houses that fall into the category of luxury homes and 2 billion rupiah for commercial flats. In addition, flats must be established in special economic zones, free trade zones, free ports, industrial zones, and other economic zones.
• The maximum land area is 2,000 m² and can be expanded if it has a positive economic and social impact.
• Intended for residential homes.

Renting Land/Property

• The requirements fall under Article 1320 of the Indonesian Civil Code on an agreement where must satisfy the following conditions in order to be valid: consent of the parties, legal capacity to enter an agreement, specific subject matters and permitted cause.
• Apply for the Right to Use of land to the National Land Agency. The right to use can be extended and renewed for a maximum of 80 years.
• The parties may apply for the recording of a sale and purchase agreement for land/building (PPJB) or lease agreement on registered land to the National Land Agency.

Don'ts

• We highly recommended that the foreigners comply with the applicable regulations to avoid any sanctions.

2. Due diligence before buying the land/property

Do:

• Land certificate checking to National Land Agency;
• Clearance from the district court;
• Zone checking (ITR);
• Checking on the ownership; and
• Checking the deed of transfer of rights, letter/deed of release of rights, or other evidence of land acquisition to the official certifier of title deeds.

Don'ts:

• Buying or renting a land/property from an owner who does not have adequate legality.
• Buy or rent property on a land in dispute.
• Buy or rent a land/property through an intermediary without the presence of the owner named on the land certificate.

3. The legal documentation on buying/renting a land/property

• Certificate of the Rights to Use of Land (Hak Pakai).
• The Conditional Sale and Purchase Agreement.
• Deed of Sale and Purchase.
• Land and Building Tax Letter.
• Building Permit/Building Approval (PBG/IMB).
• Lease Agreement and/or Sub-Lease Agreement.

In addition to the above, foreigners may own a land/property through a Foreign-Owned Company (PT PMA) with a Right to Build ("HGB") or Right to Cultivate ("HGU"). HGB and HGU can be extended and renewed for a maximum of 80 years. Foreigners shall invest a minimum capital of 10 billion Rupiah to establish a PT PMA.

After the Job Creation Law, foreigners can be more easily to own a land/property in Indonesia. Hope in the future, the latest policy can provide legal certainty for a land/property foreign owner in Indonesia which likely will have a continuous positive economic impact.

Originally published by 10 August, 2023

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.