Bali Utama Property

Frequently Asked Questions (FAQ) About Legal Aspects Of Land Foreign Ownership In Indonesia:

Many foreign investors don't understand the laws in Indonesia that rule the order or process of the property investment. Here we write some questions that are often asked in the form of Q (Question) and A (Answer).

How is the rule to purchase property in Bali?

Q : May foreigner owns a land in Indonesia individually?
A : The Land Code states that any individual foreigner can own a land in Indonesia with status of Hak Pakai (Rights of Usage) or through leasehold. The Hak Pakai can be applied to either government land or Hak Milik (Freehold) land. Only Indonesia citizen may own land (property) with the title of Hak Milik (Freehold Title). If foreign investor insist to own a freehold property, he/she can use Indonesian as a nominee, with numbers of contracts and other documents which must be prepared by and signed in front of a qualified notary. These include the Purchase or Rental Contract for the property transferring the rights from the previous owner to the nominee; a Loan Agreement for the purchase/rental price between the investor and the nominee; and an irrevocable and transferable Power of Attorney to sell, transfer or otherwise dispose of the property and to represent the nominee in any dispute regarding the property, given from the nominee to the investor. The nominee will also be asked to hand over all original land titles to the foreign investor.

Q : Is Hak Pakai similar with leasehold?
A : Leasehold is a purchasing directly between purchaser and the land owner by the lease agreement validated by the notary but it is not registered in land affairs. Hak Pakai is a right obtained from releasing of a certain right on the government or Hak Milik land. Therefore Hak Pakai can be registered in the land affairs then a certificate will be under the purchaser's name.

Q : How long does the application of Hak Pakai over the land?
A : The government regulation states that the Hak Pakai over government land may be applied for 25 years and can be extended. However, after the time period was over you should renew (not extend) it by the notary. You may ask an advance renewal before purchase the land by our company and the staffs will be pleased to assist you.

Q : What should I do if I want to secure the land by a company?
A : The Land Code states any local company that established comply with the Indonesia law and/or foreign one that has representative in Indonesia region may own land and has a right to land in the form of Hak Guna Bangunan (right to erect a building) over government land or Hak Milik land. Therefore, you need to set up a foreign direct investment company in Indonesia (Penanaman Modal Asing /PMA) first to obtain and secure the land.

Q : Now, What is a Hak Guna Bangunan?
A : Hak Guna Bangunan is a right to erect building on a particular land. It can be applied on government or Hak Milik land. It also can be registered to the Land Affairs, and they will issue the certificate on a name of the company.

Q : How long does the application of Hak Guna Bangunan over the land?
A : The Hak Guna Bangunan over government land may be applied for 30 years and can be extended. It is also over Hak Milik land with the same time period and renewable. The advance one may be obtained before purchasing by our company.

Q : Can individual foreigner get the Hak Guna Bangunan?
A : Individual foreigner may not own land with Hak Guna Bangunan status, but the one with Hak Pakai. The Land Code states it is only for Indonesia citizen or company that complies with Indonesia law and established in this region.

Q : Let me know which status is safe for foreigner to own land
A : It depends on the needs. When the purchasers are two people or more the Hak Guna Bangunan is the best but setting up a PMA company is a must, without this one the status only Hak Pakai. But it will be useful when the land is wide enough to be sub-divided. It is also the best status if the purchaser is a single person. However both statuses are safe for foreigner.

Q : It means that the Hak Pakai or Hak Guna Bangunan may only be applied to the land of the Indonesia citizen with Hak Milik status.
A : Yes it is, since the Hak Milik is a title given only to Indonesia citizen. The best way to secure your property is by Hak Pakai or Hak Guna Bangunan, because with those Haks the land owner has released his/her title to the one.

Q : Should the land owner provide specific document to secure my property?
A : Yes. You yourself purchase the land in reality. Since the foreigner has no title to the land in Indonesia then the owner's Hak Milik should be transfer into Hak Pakai or Hak Guna Bangunan by several legal mechanisms.

Q : Does the bank accept both rights if I will mortgage the land?
A : Most banks in Indonesia accept both rights, although there may be some different policy between one and the other.


Bali Utama Property