Written by: Yusty Riana P, S.H.

As we can see at this time that more foreigners or foreign citizens in Indonesia, either with temporary stay permits or permanent stay permits. Therefore, they certainly need a legitimate place to live in Indonesia. Besides, it cannot be denied that many foreign citizens are interested in owning land and/or buildings in Indonesia for business reasons, especially considering that Indonesia has many world-class tourist attractions which are certainly very promising from the business side. If so, do foreign citizens have land rights in Indonesia?

Foreigners living in Indonesia have rights to land and buildings, but are limited to the right of use and right to lease. As stipulated in Law Number 5 of 1960 concerning Basic Regulations on Agrarian Principles (“UUPA”) as follows:

Article 42

Those who may obtain the right of use are:

  1. Indonesian citizen;
  2. foreigner residing in Indonesia;
  3. corporation which have been established according to Indonesian Law and having they seat in Indonesia;
  4. Foreign corporations having a representation in Indonesia.

Article 45

Those who may become holders of the right to lease are:

  1. Indonesian citizens;
  2. foreigner residing in Indonesia;
  3. corporation which has been established according to Indonesia law and having their seats in Indonesia;
  4. foreign corporation having a representative in Indonesia.

Based on the provisions above, foreign citizens living in Indonesia can only own the land and buildings with the right of use and right to lease. This was further clarified in the Regulation of Minister of Agrarian Affairs and Spatial Planning/Head of the National Land Agency Number 29 Year 2016 on The Procedure for Granting, Releasing and Transferring Ownership of Houses or Housing to Foreigners Domiciled in Indonesia (“MOA Reg. 29/2016”) as follows:

Article 3

  1. Foreigners who hold a residence permit in Indonesia in accordance with the provisions of the laws and regulations, can have a residence with Right to Use.
  2. In the event that foreigners die, the residence as referred to in paragraph (1) can be inherited.
  3. In the event that the heirs as referred to in paragraph (2) are foreigners, then the heirs must have a residence permit in Indonesia in accordance with the provisions of the legislation.

Article 4

The residence that can be owned by foreigners as referred to in Article 3 paragraph (1) are:

a. Individual houses constructed on land under:

  1. Right of Use;
  2. Right of Use over freehold title occupied under an agreement granting a Right of Use over freehold title drawn up in a Deed made by a Land Official; or
  3. Right of Use derived from the transformation of a Freehold Title or a Right to Build.

b. Apartment units in a building built on land:

  1. under a Right of Use;
  2. derived from the transformation of Freehold Title to an Apartment Unit.

Furthermore, the MOA Reg. 29/2016 also explicitly regulates the minimum price limit on residential houses that can be owned by foreign citizens, as can be seen in the table as follows:

Minimum  Price (Rupiah)

Location Individual House Apartment
DKI Jakarta 10 Milyar 3 Milyar
Banten 5 Milyar 2 Milyar
West Java 5 Milyar 1 Milyar
Central Java 3 Milyar 1 Milyar
Yogyakarta 5 Milyar 1 Milyar
East Java 5 Milyar 1,5 Milyar
Bali 5 Milyar 2 Milyar
West Nusa Tenggara 3 Milyar 1 Milyar
North Sumatera 3 Milyar 1 Milyar
East Kalimantan 2 Milyar 1 Milyar
South Sulawesi 2 Milyar 1 Milyar
Other locations 1 Milyar 750 Milyar

In addition to the minimum price limit as specified above, there are additional provisions for residential houses, namely:

  1. 1 (one) plot of land per person/family; and
  2. the area of the land cannot be more than 2,000 (two thousand) square meters.

However, in certain circumstances that have a significant positive impact on the economy, it may grant foreigners an area of land of more than 2,000 (two thousand) square meters based on the Minister’s permission. The limit in those provisions does not apply to Residential Properties owned by Representatives of Foreign Countries and/or International Agencies.

Furthermore, on 22 December 2015, the President of the Republic of Indonesia signed the Government Regulation Number 103 Year 2015 concerning Ownership of Dwelling of Residency House by Foreign Person Domiciled in Indonesia (“GOV Reg. 103/2015”). Basically, GOV Reg. 103/2015 regulates the same thing as MOA Reg. 29/2016, which regulates the ownership of residential house by foreign citizens domiciled in Indonesia, namely that the residential house that can be owned by foreign citizens is individual house by Right of Use or Right of Use over freehold title occupied under an agreement granting a Right of Use over freehold title drawn up in a Deed made by a Land Official, and apartment units which are built on land under a Right of Use. The requirement for foreign citizens to own a residential house is that they must have a residence permit in Indonesia in accordance with the provisions of the applicable legislation. If the foreign citizens die, then the residential house can be inherited, and if the heirs are foreigners too, then the heirs must also have a residence permit in Indonesia.

GOV Reg. 103/2015 and MOA Reg. 29/2016  also regulate the term of the right of use for both individual house and apartment units. The term can be extended and renewed as long as the foreign citizen still has a residence permit in Indonesia.

In addition, GOV Reg. 103/2015 also explicitly regulates the obligation for foreign citizens to relinquish their rights regarding residential house ownership as described above. When foreigner or heir who is a foreigner, who uses a house built on the grounds of the Right of Use or under an agreement with the holders of land title is no longer domiciled in Indonesia, within a period of one (1) year shall release or transfer the right on the house and land to other party which meets requirements. If within the period, the right on the house and the land have not been released or transferred to other party, then house is state auctioned in case of being built on the grounds of the Right of Use on state lands; and the house becomes property of the holder of land title, in case the house was built on the grounds under an agreement. The result of the auction becomes a right of the former right holder.

Thus, foreign citizens can have a residential house in Indonesia only with the Right of Use and Right to Lease. The presence of existing regulations are expected to be able to accommodate the existence of foreign citizens without the need for fears of land ownership by foreign citizens exceeding the rights of Indonesian citizens themselves.

 

Type of Residential House Type of Land  Term 
 

 

Individual House

Land under Right of Use

 

30 (thirty) years, extendable for 20 (twenty) years, and renewable for 30 (thirty) years

Land under Right of Use over freehold title under an agreement

30 (thirty) years, extendable for 20 (twenty) years, and renewable for 30 (thirty) years, according to agreement with holder of land title

Land under Right of Use derived from a Freehold Title

 

30 (thirty) years, extendable for 20 (twenty) years, and renewable for 30 (thirty) years

Land under Right of Use derived from a Right to Build (HGB)

 

 

granted for the remainder of term of the Right to Build (HGB), extendable for 20 (twenty) years, and renewable for 30 (thirty) years

Apartment

A Right of Use over an Apartment Units (Hak Pakai atas Sarusun) which was first obtained from the holder of the new Freehold Title

 

30 (thirty) years, extendable for 20 (twenty) years, and renewable for 30 (thirty) years

A Right of Use over an Apartment Units (Hak Pakai atas Sarusun) derived from a Freehold Title of the Apartment Unit (Hak Milik atas Sarusun)

 

 

granted for the remainder of term of the Freehold Title of the Apartment Unit, extendable for 20 (twenty) years, and renewable for 30 (thirty) years