6 things foreigners may not know about owning a home in Indonesia

How ‘the land of opportunity’ is opening up to foreign home seekers

It’s easier than ever to be orang asing (lit. ‘alien’ or ‘foreigner’) in Indonesia, at least when it comes to buying residential property.

For years, international property seekers had languished under onerous rules keeping them from buying homes across the archipelago.

All that changed in 2015 when President Joko ‘Jokowi’ Widodo — reelected this year for a second, five-year term — began introducing measures that loosened permit procedures for foreign businesses and residences.

In November 2018, the Indonesia Real Estate Association (REI), in collaboration with the government, published a guide for foreigners prospecting for properties in Indonesia.

Although the law has been in place for a few years now, there remains “a need to optimise the implementation of the regulation regarding ownership for foreigners,” said Darmin Nasution, Indonesia’s coordinating minister of economic affairs, in a statement for REI.

In anticipation of the annual PropertyGuru Indonesia Property Awards, brush up on some facts about acquiring property as a foreigner in the country — all 17,508 islands of them.

1. Everyone is welcome

Today, all types of visa holders are permitted to buy property in Indonesia. A permit to buy property comes in the form of a Permanent Residence Permit, Diplomatic Permit, Limited Stay Permit, Service Permit, and even a Visit Permit.

If you hail from visa-free countries, such as ASEAN member-states, you may just apply for visa-on-arrival upon disembarkation in Indonesia.

2. Fight for your (land) rights

A few years ago, the Jokowi administration signed the Government Regulation No. 103 of 2015 on Residential Ownership for Foreigners: effectively allowing foreigners domiciled in Indonesia to buy landed homes for up to 80 years. Under the law, orang asing can own landed residential property under the Right to Use (hak pakai) title, granted initially for 30 years and then extendable for 20 years. Hak pakai may be renewed for 30 years after the expiration of the extended period.

There is one caveat: foreigners can only buy a single plot of land no bigger than 2,000 square metres.

3. If the price is right…

Hak pakai is available to foreign property seekers at certain minimum price limits, depending on the location. For example, landed homes in Jakarta can be acquired only for at least IDR10 billion (USD667,000), while in Bali and Yogyakarta, eligible properties start at IDR5 billion.

Similarly, you can own apartments with Right to Use titles for no less than IDR3 billion in Jakarta and nothing lower than IDR2 billion in Bali. In Yogyakarta, you can buy Right-to-Use apartments for no less than IDR1 billion.

More: 6 places to go in the Brooklyn of Bali

4. Right to use for generations

Despite its limitations, hak pakai has its perks. A Right to Use title can be bequeathed to any heir with a permanent residence permit, temporary residence permit, or visitor visa. If sold to an Indonesian resident, the title of the property will revert to hak guna bangunan (HGB), also known as a Right to Build title.

5. Unlimited number of apartments on offer

The government has not yet regulated the amount of apartment units that can be bought by an orang asing. Foreigners can buy multiple apartments, so long as they are built on land with a Right to Use title or those with Right to Use converted from strata title.

6. The fine print

A landed home and apartment generally levy five types of taxes on foreigners. Buyers face a super luxury tax of five percent for properties above IDR5 billion; luxury sales tax of 20 percent for those above IDR20 billion; VAT of 10 percent; and a continuous property tax. Sellers, on the other hand, pay a final income tax of 2.5 percent.

By introducing deregulation programmes since 2015, Indonesia has truly opened its doors to foreign businesses and residences, said Soelaeman Soemawinata, president of Indonesia Real Estate Association, in a statement.

“By giving opportunities for foreigners to buy property in Indonesia, Indonesia Real Estate Assocition believe that property for foreign investor could be a major milestone in boosting property sector in Indonesia and more Indonesia’s macro economy. Due to these perfect blend and momentum, there isn’t a greater time to invest in Indonesia, especially in the real estate sector as it is one of the most lucrative businesses in Indonesia.

“We welcome you with open arms to the new land of opportunity.”

This article was originally published in the PropertyGuru Property Report newsroom. For more information, visit: https://www.asiapropertyawards.com/award/indonesia-property-awards/