Indonesia, with its breathtaking landscapes and rich cultural heritage, has become an enticing destination for travelers and expatriates alike. However, one question that frequently arises among those considering settling in this diverse archipelago is, “Can foreigners buy property in Indonesia?”
In this article, we will delve into the intricacies of property ownership in Indonesia, exploring the legal frameworks, restrictions, and investment opportunities available for foreigners.
Can Foreigners Buy Property in Indonesia?
Can foreigners own land in Indonesia? The answer is no, a foreigner cannot directly own land in Indonesia. However, foreigners can buy property (house, apartment, etc.) in Indonesia through leasehold agreements, which means that they lease the land for a certain period of time, typically 30 years with an option to renew for an additional 30 years. Foreigners cannot obtain full ownership (Hak Milik) of the land in Indonesia. but they cannot obtain full ownership (Hak Milik) of the land.
There are a few reasons for this restriction. One reason is to protect Indonesian land from foreign ownership. Another reason is to ensure that land is used for the benefit of all Indonesians.
While foreigners cannot own land outright in Indonesia, they can still acquire land use rights through leasehold agreements. This gives them the right to use the land for a specified period of time, and to build on it and develop it.
Updated Regulation for Foreign Property Investment in Indonesia
The purchase of property in Indonesia by foreign citizens has been more detailedly regulated through Circular Letter IMI-0820.GR.01.01 of 2022. The regulation provides clarity and convenience for foreign investors who wish to own property in Indonesia.
Also read: Recent Updates on Property Acquisition in Indonesia for Foreigners
Here is the complete guide:
Mechanism for Visa and Second Home Stay Permit Application
- Foreign citizens who wish to own property in Indonesia need to obtain a Second Home Visa and Second Home Stay Permit.
- Applications are made through an application addressed to the Immigration Officer appointed by the Directorate General of Immigration.
- Requirements include a valid passport, recent photo with a red background, and proof of funds or property amounting to Rp. 2,000,000,000.00 or a certificate of property ownership in Indonesia.
Visa and Stay Permit Issuance Process
- The issuance process is conducted electronically through several stages, including account registration, data filling, document upload, and PNBP payment.
- The Second Home Visa and Stay Permit are issued with predetermined validity periods.
Proof of Fund Reporting
- Holders of Second Home Stay Permits are required to report original Proof of Fund documents such as bank statements or property ownership certificates within 90 days of the issuance of the Second Home Stay Permit.
- This reporting obligation does not apply to dependents.
Supervision and Guarantees
- Immigration supervision of Second Home Stay Permit holders is conducted in accordance with applicable regulations.
- Visa and Second Home Stay Permit applications can be made without a guarantor or with a guarantor as specified.
- If the guarantor is a property development corporation, the guarantor needs to obtain approval from the Minister of Law and Human Rights.
Other Provisions
- PNBP payments can be made outside Indonesia through the PNBP payment portal, but if not technically feasible, payment is made by the guarantor in Indonesia.
- Extension of Second Home Stay Permits can be made according to applicable regulations.
Restrictions for Foreign Property Investment
- Foreigners can only own property under a leasehold agreement, which means that they lease the land for a certain period of time, typically 30 years with an option to renew for an additional 30 years.
- Foreigners cannot own freehold property in Indonesia.
- Foreigners can only own one plot of land with a maximum size of 2,000 m².
- The property must have a minimum value. The minimum value of the property varies based on the region. For example, the minimum value for a landed house in Jakarta is IDR 5 billion (approximately USD 325,000).
Also read: Can a PMA Own Land and Properties in Indonesia?
Requirements for Foreign Property Investment in Indonesia
- Foreigners must have a valid passport.
- Foreigners must obtain a Hak Pakai title, which is the leasehold title for property in Indonesia.
- Foreigners must pay all applicable taxes and fees.
- Foreigner have company in Indonesia
Furthermore, foreigners may also need to obtain a visa or residency permit in order to live in Indonesia. The type of visa or residency permit required will depend on the foreigner’s nationality and the purpose of their stay in Indonesia.
For example, foreigners who are married to Indonesian citizens may be eligible for a spousal visa. Foreigners who are retired and have a certain amount of income may be eligible for a retirement visa. Foreigners who are working in Indonesia may be eligible for a work visa.
It is important to note that the process for buying property and obtaining a visa or residency permit in Indonesia can be complex and time-consuming.
To simplify the visa application process, you can rely on InvestinAsia’s services for Indonesia Visa Application.
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Best Area for Property Investment in Indonesia
The best area for property investment in Indonesia will depend on your individual needs and preferences. However, some of the most popular areas for foreign investors include:
Jakarta
The capital of Indonesia, Jakarta is a major economic and financial hub. It is also home to a large expatriate community. (check Can Foreigners Buy Property in Jakarta?)
Bali
Bali is a popular tourist destination with a growing real estate market.
Bandung
Bandung is a major industrial and cultural center in Indonesia.
Surabaya
Surabaya is the second-largest city in Indonesia and a major port city.
Restricted Areas for Property Investment in Indonesia
There are a few restricted areas in Indonesia where foreigners are not allowed to buy property. These areas include:
National security
Some areas are considered to be of strategic importance to Indonesia’s national security. For example, foreigners are not allowed to buy property near military bases or airports.
Environmental protection
Some areas are protected due to their environmental significance. For example, foreigners are not allowed to buy property in national parks or forest reserves.
Cultural heritage
Some areas are protected due to their cultural heritage. For example, foreigners are not allowed to buy property in certain villages or temples.
Foreign policy
In some cases, Indonesia may restrict foreigners from buying property in certain areas for foreign policy reasons. For example, foreigners are not allowed to buy property on the Natuna Islands, which are located in a disputed area of the South China Sea.
Additional Considerations
Before investing in property in Indonesia, it is important to consider the following:
- The cost of living in Indonesia is relatively low, but the cost of property can be high, especially in popular areas like Jakarta and Bali.
- The Indonesian real estate market is relatively immature, so it is important to do your research and work with a reputable real estate agent or lawyer.
- There are a number of taxes and fees associated with buying and owning property in Indonesia. It is important to understand these costs before you make an investment.
Also read: Indonesia Tax Rate in 2023: A Complete Guide
How to Buy Property in Indonesia for Foreigners
The process for buying property in Indonesia as a foreigner can be complex and time-consuming. It is important to have a qualified lawyer to help you through the process and ensure that all of the requirements are met.
Here is a general overview of the process:
- Find a property that you are interested in buying.
- Hire a lawyer to help you with the purchase process.
- Obtain a Hak Pakai title for the property.
- Pay all applicable taxes and fees.
- Register the property with the Land Registry Office.
Also read: Buy Your Property in Bali with PT PMA
It is important to note that the specific requirements and procedures for buying property in Indonesia may vary depending on the type of property and the location. If you want to use the purchased property as a residence, don’t forget to apply for the required visa and stay permit in Indonesia.
To ensure the process goes smoothly, you can rely on our team of experts. We can assist you with the following processes:
- Indonesia business visa application
- Indonesia tourist visa application
- Indonesia work visa / KITAS application
- Indonesia investor visa / KITAS application
- Indonesia spouse visa application
- Indonesia dependent visa application
- And any other related inquiries.
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