Amendment to the Regulation of The State Minister of Agrarian Affairs/Chairman of the National Land Agency No 7/1996
Foreigners may purchase the Right of Utilization (Hak Guna Bangunan) over land with the Right of Proprietorship (Hak Milik) from the Holder of said Right of Utilization along with houses or purchase the Right Utilization and later contract houses on it. The purchase of the Right of Utilization shall be conducted pursuant to the effective stipulations that are, by virtue of a deed made by land conveyance, which shall later be registered in the Land Office. Likewise, the requirements or construction of houses must abide by the prevailing stipulations, for example with respect to the Building Construction Permit (IMB).
Foreigners may own a house and obtain the title on land by means of the following:
Purchasing or contracting a house on land with the right utilization with the right proprietorship
Purchasing an apartment unit contracted on land with the right of utilization over state land
Purchasing or contracting a house on land with the right of Proprietorship or the Right of Lease over building on the basis of a written agreement with the owner of the land title concerned
For many years Indonesia has decreed that land in Indonesia can only be owned by Indonesian citizens. Thus, if you want to buy a house (as a foreigner), they wouldnt have let you in the past.
In the late 90s, new laws were enacted so that foreigners are now permitted to purchase apartments and office space in Indonesia if the building has a strata title status. This enables the foreigner to own the apartment or office space but not the land on which it stands.
PURCHASING AN APARTMENT OR OFFICE UNDER STRATA TITLE
Ownership of offices and apartments is possible through strata title deeds, but the set of laws and regulations that were enacted in 1996 are still somewhat unclear and ambiguous. Therefore, to our knowledge, no foreigner has actually been able to receive a strata title certificate of ownership to reflect their office or apartment ownership.
The 1996 regulation (No. 41/1966) states that foreigners who reside in Indonesia, or visit the country regularly for business purposes, can purchase a home, apartment or condominium as long as it isnt a part of a government-subsidized housing development. However, foreigners can only hold land-use deeds, and most developments hold right-to-build deeds. As it stands now, its not possible for someone to have a land-use deed for a sub-unit of a right-to-build deed. The length of these titles varies as well. Therein lies some of the difficulties and unclear ownership issues.
CONVERTIBLE LEASE AGREEMENT
One way for foreigners to go ahead a purchase property despite these legal ambiguities is to sign a Convertible Lease Agreement with the apartment property management office to purchase an apartment. Basically what this agreement entails is that the foreigner may purchase the apartment, but the title is still held in the name of the developer or property management firm. This lease agreement is for a definite period.
The Convertible Lease Agreement states that if and when the prevailing laws and regulations permit the Lessee to become legal owner of the apartment/strata title unit, both the Lessor and the Lessee shall be obligated to sign a Deed of Sale and Purchase and the title shall be transferred to the foreign owner.
If you are interested in purchasing an condominium through this type of agreement, investigate the property management company thoroughly. In the current economic downturn many property developers are undergoing serious economic pressures and construction on many properties has been postponed or canceled. Show your contracts to a bona fide lawyer to ensure that all legal implications are covered thoroughly.
Another way that you can purchase a condo is by purchasing the property and having it in the name of an Indonesian citizen. Needless to say, this must be someone you trust implicitly since, according to the law, this person would be the legal owner.
SINGLES FAMILY DWELLINGS
Ownership of single family dwellings faces even greater legal issues as foreigners are not allowed to own land in Indonesia. Where the home you want to purchase is part of a housing development, the developers can often work something out for you to purchase a home through a long term lease agreement.
By Indonesian law a foreigner cannot own land in Indonesia.
If a foreigner chooses, he/she can own land indirectly. To do this you need to have an agreement between the foreigner and an Indonesian, signed with the witness of a notary public. In the agreement the Indonesian is the legal owner while acknowledging that the foreigner is the rightful owner of the land and thus the Indonesian owner would carry out any instructions from the foreigner regarding the land, including selling the land at certain price with the funds to be paid to the foreigner owner