Hak Pakai Issues

A public meeting was held at The Best Western Hotel in Kuta to discuss the crisis facing people who have bought land and property in Bali under a nominee ownership agreement. There was a large turnout of 300 people including many lawyers and advisers.

It is estimated that there are 48,000 expatriates living in Bali and that there are 6,400 homes and 3,000 commercial buildings owned illegally under nominee ownership agreements. It was also reported that there are around 140 nominee ownership disputes currently in the courts.

It was determined that in nominee ownership agreements an Indonesian owns the land but a foreigner “controls” the ownership. This is contrary to the Agrarian Law and so is illegal and a court would declare all documents invalid and the land would be returned to the state.

Probably the safest way of proceeding is to hand the land back to the government and take out a Hak Pakai (right to use land title) over the land.

1  Hak Pakai is available for foreigners who have resident or temporary resident permits (KITAP and KITAS). They give the person full rights over the land.

2  Hak Pakai is for a period of 25 years which can be extended by a further 20 years and can be renewed for a further 25 years and, presumably, extended for another 20 years. This suggests a maximum of 90 years however at the meeting legal experts suggested that if a person complies with conditions of the Hak Pakai they can be renewed indefinately.

3  Cost of Hak Pakai is nominal – 0.2% of the land value.

4  A foreigner can only own one property under Hak Pakai.

5  Hak Pakai is between the foreigner and the government and so is solid and safe.

For those people who are not residents of Indonesia but have bought a holiday home a solution is not obvious at this stage however for example a Long Term Rental agreement could be an option.

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