Foreign investors cannot purchase real estate in Indonesia in full ownership. However, there are other forms of ownership in the country that allow you to live and make transactions involving housing.
Forms of ownership
Today, the most popular form of real estate ownership among foreigners is Hak Pakai – the right to use. In fact, the full owner of the property (local developer) transfers the rights to the buyer for a certain period.
This form of ownership is legally secured, i.e. the foreigner is issued a certificate registered with government authorities. Hak Pakai is issued for 30 years, after which it can be extended. The general term of the right to use is 80 years.
At the moment when a foreigner receives the certificate, the developer loses the right to use the site without the consent of the buyer. That is why this option for purchasing real estate for citizens of other countries in Indonesia is considered the most convenient and safe.
It is worth keeping in mind an important nuance: a foreigner is given the right to use only one object, and the size of the plot cannot be more than 0.5 hectares.
Procedure for buying a property in Indonesia
So, you have found a suitable property that can be purchased on a use-right basis and have contacted an agency to help with the transaction. The procedure includes the following steps:
⇒ Document verification. The realtor must make sure that there are no obstacles to purchasing the property. To do this, the seller is asked to provide a number of documents – a land certificate, a building permit, copies of receipts for payment of all taxes and utilities, etc.
⇒ Conclusion of an agreement. The seller and the buyer (or their representative) negotiate and reach the terms under which the transaction can be concluded.
⇒ Transfer of rights. In essence, this is the conclusion of a purchase and sale agreement with 100% payment or an agreement in which the buyer pays a deposit. In the second case, the investor can enter into rights before full payment, if this is provided for by the agreements.
⇒ Real estate transactions are registered in the presence of a state notary. Both parties must pay taxes and provide receipts to a special LDO authority, after which the procedure for re-registering documents to the buyer begins.
⇒ Waiting for the transfer certificate takes no more than 7 days. The buyer has the transfer certificate, land certificate, and proof of tax payment. The entire purchase procedure, including discussing the terms of the deal with the seller, takes a month.
For a foreign buyer, if we are talking about an individual, buying real estate does not cause any particular difficulties. You only need a passport. Moreover, it is not even necessary to be in Indonesia to conclude a deal: the entire procedure can be carried out remotely based on a power of attorney. The power of attorney is issued to a real estate agency lawyer to sign documents on behalf of the buyer within the framework of a specific transaction. Safety and convenience are the main reasons why remote housing transactions in Indonesia are especially popular.
