This new decree will help drive the growth of the local real estate sector
President Joko Widodo (Jokowi) has announced a new regulation that enables foreigners or foreign citizens to own residential homes or apartment flats in Indonesia, reported Indonesia Expat.
Government regulation no. 18 year 2021 consists of amendments to rules relating to unit flats, land rights, management rights, and land registry. This new decree is the result of the provisions of Article 142 and Article 182 letter b of law number 11 of 2020 regarding job creation, or what the general population knows as the Omnibus Law.
Article 67 state: “Ownership rights to apartment units are granted to Indonesian citizens; Indonesian legal entities; foreigners who have permits in accordance with the provisions of laws and regulations; foreign legal entities that have representatives in Indonesia; or representatives of foreign countries and international institutions that are or have representatives in Indonesia.”
However, article 69 added that not all foreigners will be able to live and own a flat, clarifying that only individuals who have an official immigration permit are allowed to own a condo unit or residence.
The purchase of units or homes by a foreigner also come with restrictions, such as plot size, minimum price, and number of land parcels or units in the development.
Bambang Eka Jaya, the deputy general chairperson of Real Estate Indonesia (REI), said that the approval of foreign ownership could lead to progress in the real estate industry, notably for the upper-middle segment of flats valued over IDR5 billion (USD349,000).
The current demand for middle-class homes has been slow, shared Bambang. With its high rates, an increase in sales in this sector could drive growth.
“Now, sales in the middle-class housing segment are practically suspended. In fact, in percentage terms, the number of units may be small, but the value is large. Imagine that one foreign transaction could be equal to 10 to 20 units of lower-middle property,” he explained.
This means that although the cap unit is only two percent, the value can equate to over 20 percent. Thus, REI is in agreement with the rule limiting foreign purchases of units by price.
The regulation also noted that immigration documents are also needed for foreigners looking to own a house or residence, further highlighting that foreign ownership of a residential home or condo unit will only come with the usufructuary rights status.
Government regulation no. 18 year 2021 concerning unit flats, land rights, management rights, and land registry has been in effect since established on 2nd February 2020.
The Property Report editors wrote this article. For more information, email: [email protected].
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