Freehold is a type of property ownership in which an individual or entity has the right to own and use the property indefinitely, as long as they comply with any legal restrictions or regulations. In contrast to leasehold property, where the individual or entity only has the right to use the property for a specified period of time.
In Indonesia, only citizens are allowed to own freehold property. Foreigners are not allowed to own freehold property in the country and instead can only hold property through a leasehold agreement. This means that a foreigner can only have temporary possession and use of the property for a certain period, after which the property will revert back to the Indonesian citizen or the state.
When you lease a property you will lease it for the period in the lease contract which is usually a basic of 25 years, but can be anything between a couple of years to more than 50 years, as most of the time you can get an option for extending the lease until 25/30 years (depending on the lease agreement being offered and what you want). In this case, the total amount of the property transaction has to be paid upfront before the lease period starts.
Basically, when obtaining a lease contract, you become the effective owner of that property for the period of the lease with all obligations and privileges that come with the property. You have the right to sell the lease and you should also include it in your will. If the lease contract does not have an agreed extension condition then the property will be returned to the landlord after the agreed period and he/she can put it on the market again or do whatever he/she wants to do with it. In most cases, the purchasing price will be less than a property with a freehold title.
– Details : Hak Milik/ Hak Pakai :
It seems, however, that the Indonesian government has responded to the need for foreigners to be able to invest in a home in Bali, without needing an Indonesian nominee. This arrangement is called “Hak Pakai”. Hak means right, and Pakai means to use, so it’s “Right of Use”. Hak Pakai can be issued to (foreign) individuals, but also to companies, which are domiciled in Indonesia. Hak Pakai is for people living here, therefore in possession of a permanent resident visa, a document named Kitas. It does not mean that you cannot leave Indonesia, or cannot own property in other countries as well. It just means that you spend the major time of the year in Indonesia. Hak Pakai is not the same as Leasehold (Hak Sewa). Leasehold is a notary contract with an owner, and the ownership certificate doesn’t change. Hak Pakai is an official certificate issued by the land offices. A foreigner can only have one Hak Pakai title on his or her name. The Hak Pakai certificate is valid for an initial 25 years and can be renewed after that. Some companies seem to offer prepaid renewals for up to a total of 100 years. It’s freely transferable to another name, so you can buy and sell existing Hak Pakai titles. So, if you want property in your own name in Indonesia, and you are planning to live here, use the Hak Pakai arrangement.