Property Titles in Indonesia

Lease villa in Indonesia

The land law in Indonesia is very different from the laws in the occidental countries. Nevertheless it is possible to invest in total security by respecting carefully the proceedings.

In order to do it correctly specific notaries from Bali will be necessary. About the certified land in opposition to the non-registered land to the national register (Badan Pertanahan Nasional). There are 5 categories of rights in virtue of the land law, 3 only concerning the foreigners:

1- Hak Milik (freehold)

This title can only be obtained by an Indonesian citizen.

2- Hak Pakai (right of use)

Similar to a 25 year rent extensible for 20 years and renewable, also available for private individual foreigners (under specific conditions).

3- Hak Guna Bangunan (building right)

Conditions close to Hak Pakai but only for the PMA.

In reality the 2 main ways usually used by foreigners to purchase a land in Indonesia are the followings:

I - The loan of an Indonesian name (Nominee agreement also called "freehold") :

Due to the fact that only an Indonesian citizen can own a land (Hak Milik), the asset will be bought in front of a notary under his name; he will sign several documents giving you the full power of purchasing like for example :

A free hold contract stipulating that the nominee borrowed you money for the equivalent value of the price of the land or the villa.

An irrevocable power of attorney giving you the right to sell, to mortgage, to rent or to use in any different manners the asset without a prior agreement.

A permanent right of use guaranteed in case of the death of the nominee.

A certificate notifying that he is the << fictive >> owner of the property.

There are more advanced agreements that can represent more than 10 different documents.

This method practiced for years by the majority of notaries may be contested in court. It has frequently been doubted by some notaries and politicians.

II - Leasehold

It is a rental contract for 25 years minimum signed in front of notary and renewable once.

Each individual benefits from this right, whatever his nationality is.

This contract will give you the right to change, to build, to operate a business or to rent the place.

It will end at the expiration date and all the new construction present at that time will become then the property of the land owner if no extension had been signed.

III - Long Term Rent / Yearly Rent

Renting a villa on Long Term basis is free of any issues. Renter rents the property directly from owner based on a Rental Agreement between Owner and Renter only.

Usually Long Term Rental periods are between 1 and maximum 5 years. In case of a rental period longer than 5 years we would advise to consider a Lease Agreement

made up by a notary in Bali.


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