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Foreign ‘Ownership’ of Land in Indonesia

New Government Decree Issued on Foreign Land Ownership in Indonesia

(4/25/2016) The Minister of Land and Spatial Planning/Chairperson of the National Land Affairs Agency (BPN) has issued Regulation No. 13 of 2016 regarding the transfer of ownership of homes for foreign residents in Indonesia.

The new regulation permits foreign residents of Indonesia to directly purchase homes in Indonesia providing the subject homes meet the following minimum price levels:

The new regulation also stipulate:
Luxury Taxes may apply on the transaction in which a foreign resident acquires an apartment or single-family residence.

While members of the real estate industry welcomed the clarifying legislation, many are adopting a “wait and see” stance in order to obtain a better understanding of actual legal practice as it applies to foreigners involved in Indonesian property transactions.

Other real estate professionals complain that the government has taken too long to open real estate transactions to foreign buyers, announcing deregulating terms only after the market is in a state of decline.

The new regulations may also prove problematic for foreigners seeking to own land in Indonesia. Particularly challenging issues remain with the fact that Indonesian property purchasers have traditionally shown little interest in purchasing land held under “Hak Paki” title, given the expensive and time-consuming proceduresrequired  to convert “Hak Pakai” into “Hak Milik.” This fact may prejudice the saleability and purchase price of a proprery held by a foreigner under "hak pakai" title.

Also raising concerns is a provision that mandates the State can auction a land held by a foreigner if he or she is unable to sell the property within one year after their residency status ends. Many suspect that this process would result in an unfair price far below the property’s actual market value.

For a comprehensive and accurate presentation addressing foreign ownership of property in Indonesia, please read the related article below.

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