New Regulation: Foreigners Can Own Landed Houses in Indonesia
Indonesia's Cabinet Secretary announced on Tuesday (12/01) that Indonesian President Joko Widodo signed a government regulation on 22 December 2015 (Government Regulation No. 103/2015 on House Ownership of Foreigners Residing in Indonesia) that allows foreigners to own landed houses in Indonesia for a period up to 80 years. This regulation is designed by the Indonesian government in order to provide more legal certainty to foreigners regarding property ownership.
Foreigners eligible to own houses in Indonesia for the designated period are those non-Indonesians who live or work in Indonesia or in other ways bring advantage to the country (for example investors). The foreigner, who needs to have a valid residence permit, will own the house under the so-called ‘right-of-use’ category (in Indonesian: hak pakai). On 28 December 2015 this new regulation came into effect according to the statement on the website of Indonesia's Cabinet Secretary.
After this new regulation it means that expats can now buy either a landed house or an apartment in Indonesia. However, there are certain requirements and conditions that are important to take into consideration. Based on the new regulation an expat can buy a landed house under the right-of-use category for an initial period of 30 years. After this period, the foreigner can extend the ownership twice, once by 20 years and then extend it by a further 30 years (hence ownership can reach a total of 80 years). Moreover, ownership of the house is inherited by the foreigners' offspring.
However, if the foreigner (or its heir) leaves Indonesia to reside in another country, then he/she needs to release or transfer the ownership rights to another person who meets all requirements to own the property in Indonesia (this can be another foreigner or an Indonesian citizen) within one year after departing from Indonesia. If ownership is not released within one year after the expat has left Indonesia, then the Indonesian government has the right to confiscate the house.
Read more: Analysis of Indonesia's Residential Property Sector
Regarding apartments, foreigners were already allowed to purchase an apartment under the ‘right-of-use’ category earlier in 2015. However, this only involves luxurious apartments priced over IDR 10 billion (approx. USD $719,424), which is an absurd price for Indonesian standards.
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