FREEHOLD
Freehold is a type of property ownership that grants an individual or entity the right to own and use property indefinitely. They are also allowed to transfer or pass on the ownership to another individual or entity, provided they comply with any legal restrictions or regulations.
In Indonesia, only citizens are permitted to own private freehold property, known as Hak Milik.
For foreigners, the acquisition of freehold property is possible by establishing a PT PMA company. It requires a deposited capital of IDR 10,000,000,000 (10 billion rupiahs) or around USD 650,449. You can learn more about how to set up a PT PMA company here.
Through PT PMA, foreigners can obtain Hak Guna Bangunan (HGB) rights, which entitle them to land ownership for up to 80 years. The HGB title provides a greater level of control over the property than a regular leasehold, allowing the title holder to transfer the ownership during the validity period.
Furthermore, if the property is sold to an Indonesian citizen, the HGB title can be converted back to Hak Milik, providing flexibility in the sale of the property. It is important to note that the HGB title is intended for commercial purposes, distinguishing it from Hak Milik, which is reserved for private use.
Therefore, for those looking to acquire property in Indonesia, it is advisable to consider establishing a PT PMA company and obtaining the HGB title, which provides a secure and long-term option for foreign investors. However, seeking legal advice is recommended to ensure compliance with the relevant regulations and laws.
LEASEHOLD
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.
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