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Residential Property Ownership by Foreigners in Indonesia

By : AYMP

02-Jun-2016

On 21 March 2016, the Minister of Agrarian Affairs and Spatial Layout / Head of National Land Agency (“Minister of Agrarian”) has enacted a new Minister of Agrarian Regulation No. 13 Year 2016 regarding Procedures for Granting, Relinquishing and Transferring Ownership of Residential Property for Foreign Citizens Domiciled in Indonesia (“Minister Regulation No. 13/2016”) as a further implementation of Government Regulation No. 103 Year 2015 regarding Ownership of Residential Property of Foreign Citizens Domiciled in Indonesia (“Government Regulation No. 103/2015”), which regulates on the further guidelines of foreign citizens in Indonesia to obtain, relinquish or transfer their residential property.

Residential Property with the Right to Use

Under Government Regulation No. 103/2015 jo. Minister Regulation No. 13/2016, any foreign citizens who are generally deemed to give benefit to Indonesia or live, work or invest in Indonesia (the “Foreigners”), may own the residential property with the right to use (hak pakai) land title, provided that the Foreigners shall have a valid residential permit. Right to use will grant the holder with the right to use and collect the results of any production from the land which is either owned by the government or an Indonesian citizen which possesses a right of ownership (hak milik) land title. Furthermore, the residential permit can be in the form of diplomatic stay permit, services stay permit, excursions stay permit, limited stay permit and permanent stay permit (as applicable to such Foreigners).

The Foreigners may own the residential property with the following ways:

1. purchasing the single house (rumah tunggal) over the land with the following land title:
2. right to use over the Government land (for the maximum period of 30 (thirty) years and may be extended for 20 (twenty) years);
3. right to use over the right to manage (hak pakai di atas hak pengelolaan) land title, or right to use over the right of ownership land title (hak pakai di atas hak milik) (for the maximum period of 30 (thirty) years and may be extended for 20 (twenty) years); or
4. purchasing the apartment units over the land with the right to use over the Government’s land or right to use over right to manage, 

with a note that Foreigners shall only purchase a new residential property as above directly from developers or land owners. In other words, Foreigners are prohibited from purchasing the secondhand property or from a secondary market.

Minimum Price 

Moreover, it is also stipulated that the Foreigners can only purchase the new residential property which meets a certain minimum-price threshold as follows:

No.	Location	Price of Property (in Rupiah)  (≥)
		House	Apartment
1.	DKI Jakarta	10 billion	5 billion
2.	Banten	5 billion	1 billion
3.	West Java	5 billion	1 billion
4.	Central Java	3 billion	1 billion
5.	Yogyakarta	3 billion	1 billion
6.	East Java	5 billion	1.5 billion
7.	Bali	3 billion	2 billion
8.	West Nusa Tenggara	2 billion	1 billion
9.	North Sumatera	2 billion	1 billion
10.	East Kalimantan	2 billion	1 billion
11.	South Sulawesi	2 billion	1 billion
12.	Other location	1 billion	750 million

 

In the case of the Foreigners purchase the single house (rumah tunggal) over right to use over the right of ownership land title, the assignment agreement of the title over such single house shall be made before a land-deed official between the holder of right of ownership and Foreigners (as the holder of the right to use over the right of ownership land title). The foregoing assignment agreement shall be registered in the respective land book and the certificate of the land.

Encumbrance, Transfer and Relinquishment of Residential Property of the Foreigners 

Under Minister Regulation No. 13/2016, the purchased residential property by the Foreigners may also be encumbered with the security rights (land mortgage / hak tanggungan). However, the Foreigners shall first obtain the consent of the following relevant parties to encumber their residential property:

1. The holder of right of ownership, if the Foreigners encumber the single house with the right to use over the right of ownership land title; and
2. The holder of right to manage, if the Foreigners encumber the single house or apartment units with the right to use over the right to manage land title.

Minister Regulation No. 13/2016 also regulates that the Foreigners may transfer its rights over the residential property to other party (e.g. their heirs, Indonesian citizens, other foreigners), provided that their heirs or the other foreigners shall also have a valid residential permit in Indonesia. 

In the case of their heirs or the other foreigners, who get the transfer over the residential property, do not have or cease to have any valid residential permit in Indonesia or no longer residing in Indonesia, then the ownership of such residential property shall be relinquished and further transferred to another eligible party in the maximum period of 1 (one) year.

As the consequences, if the property has not been relinquished or transferred within the prescribed period, then the residential property will be:

1. auctioned off by the state and the auction gains will then be transferred to the former residential property owner (if the residential property built on the land with right to use over the Government land title);
2. returned to the holder of right of ownership or right to manage title (if the property built on the land with the right to use over the right of ownership land title or right to manage land title).

This summary only highlights particular issues under
Government Regulation No. 103/2015 and Minister Regulation No. 13/2016 and may not reflect the entire issues and conditions of residential property ownership by Foreigners in Indonesia.  

Please visit our website at www.aymp.law for more information about our firm.

For more specific inquiry about this matter or other emerging legal issues in Indonesia, please contact the following lawyers: 

- Richard Yapsunto (richard@aymp.law)

- Gunadarma (gunadarma@aymp.law)

- Arista Hambali (arista@aymp.law) 

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