Quick Guide to Foreign Ownership of Property in Indonesia

What are the main types of property ownership in Indonesia? 

In Indonesia, there are 4 primary private property titles: Hak Milik (Ownership Rights), Hak Guna Bangunan (Building Rights), Hak Guna Usaha (Cultivation Rights) and Hak Pakai (Usage Rights). Additionally, the Indonesian State and its government bodies can control property that is subject to Hak Pengelolaan (Management Rights) title. 

Can an individual foreigner legally own property in Indonesia? 

The only primary private property title that can be owned by a foreigner is Hak Pakai (Usage Rights).  

Is foreign corporate ownership of property possible in Indonesia? 

A Foreign Investment Company (PT PMA) can own property that is subject to the title of Hak Pakai (Usage Rights), Hak Guna Bangunan (Building Rights) and Hak Guna Usaha (Cultivation Rights).   

What Indonesian private property titles cannot be owned by a foreign individual or foreign investment company (PT PMA)? 

Only an Indonesian citizen can own Hak Milik (Ownership Rights) property. For comparative purposes, Hak Milik (Ownership Rights) title is the closest equivalent to Freehold title under the common law system.   

Can a foreigner use an Indonesian nominee to own property? 

There are instances of foreigners using Indonesian nominees as their legal owners of Hak Milik (Ownership Rights) property. However, this type of nominee arrangement comes with many practical and legal risks.  For example, what happens to the property under the relevant inheritance law if the Indonesian nominee dies or if the nominee acts fraudulently? There is also the more fundamental view that such nominee arrangements are contrary to the government’s policy on foreign investment in Indonesia. We do not recommend this type of nominee arrangement. 

What exactly is a Hak Pakai (Usage Rights) title to property? 

Property that is subject to the title of Hak Pakai (Usage Rights) gives the owner primary property rights for an initial period of up to 30 years. This title is extendable for 20 years. Upon expiration of the 50 years, the title can be renewed for another 30 years.  

Is Hak Pakai (Usage Rights) title the same as a lease? 

People often confuse the legal status of Hak Pakai (Usage rights) with the legal status of a contractual lease. However, they are not the same. The owner of Hak Pakai (Usage Rights) title has primary property rights. Whereas, a contractual lease provides a party (the tenant) with secondary personal rights to temporarily lease property that is legally owned by somebody else (i.e. the landlord who owns a primary property title).  

When can a foreigner convert property to Hak Pakai (Usage Rights) title? 

If you are a foreigner who is buying Hak Milik (Ownership Rights) property from an Indonesian citizen, then the conversion to Hak Pakai (Usage Rights) occurs upon the sale and purchase of the property. Conversion is also possible for a bequest, exchange, auction, or other means of transferring property to a foreigner.  

Can a foreigner acquire a Hak Pakai (Usage Rights) title without converting the Hak Milik (Ownership Rights) title? 

A foreigner can acquire a Hak Pakai (Usage Rights) title on top of an underlying Hak Milik (Ownership Rights) title. In fact, this type of arrangement is common in Bali for purchasing villas. When the Hak Pakai (Usage Rights) title held by foreign owner expires, the full title reverts to the Indonsian owner of the Hak Milik (Ownership Rights).  

Are there restrictions on the value of property that a foreigner can own?  

The current legal framework restricts foreigners from buying cheap Hak Pakai (Usage Rights) property. Foreigners holding a valid residential stay permit (ITAS or ITAP) may only acquire a Hak Pakai title if the landed house or apartment is above a certain value. The minimum value is based on location. For example, in DKI Jakarta, a foreigner can only own a landed house that is valued above Rp10 billion, or they can own an apartment that is valued above Rp3 billion. Other locations in Indonesia have a lower minimum value for the Hak Pakai (Usage Rights) property that can be owned by a foreigner.  

Can Hak Pakai (Usage Rights) property be used as security for a loan? 

Residential Hak Pakai (Usage Rights) property owned by a foreigner may be pledged as collateral against a loan.  The Hak Pakai (Usage Rights) title can also be converted back into Hak Milik (Ownership Rights) or Hak Guna Bangunan (Building Rights) title should such property be transferred to a third party at time the debtor cannot settle its debt. 

Does a foreigner have to reside in Indonesia to own property?  

Ownership of the Hak Pakai (Usage Rights) property is contingent upon the foreigner maintaining a valid residential stay permit (ITAS or ITAP).  

What taxes are incurred in a transfer of property by an individual? 

A transfer of property is subject to 2.5% income tax (PPh) and 5% title deed duty (BPHTB), as well as government administrative fee (PNBP).  

How can property be owned by a foreign investment company (PT PMA)?  

In the foreign corporate ownership model, a foreigner owns shares in a limited liability company that has been approved for foreign investment, what is referred to as a PT PMA. Then, the PT PMA company, not the individual shareholder, owns the property title. Thus, in foreign corporate ownership, the foreigner owns the company, and the company owns the property. (For more information, see our Quick Guide to Establishing a Foreign Owned Company (PT PMA))

What property can be owned by a foreign investment company (PT PMA)? 

The scope of property that can be owned by a PT PMA is wider than for a foreign individual. A PT PMA can own property that is subject to Hak Pakai (Usage Rights), or Hak Guna Bangunan (Building Rights), or Hak Guna Usaha (Cultivation Rights). Foreign corporate ownership of property is becoming more common in Indonesia as property investment becomes more attractive or people seek to end existing risky nominee arrangements. For example, a foreigner could set up a PT PMA to manage luxury villas. In order to carry out its scope of business, the PT PMA would purchase property that is subject to Hak Guna Bangunan (Building Rights) title, or it could convert an existing Hak Milik (Ownership Rights) title to Hak Guna Bangunan (Building Rights) title. Then, it would be possible to use the company as a vehicle for attracting new foreign investors, and to expand the portfolio of properties under management.  

What is the duration of the Hak Guna Bangunan (Building Rights) title? 

The Hak Guna Bangunan (Building Use Rights) title is valid for up to 30 years and is extendable for an additional 20 years, upon expiration of which it may be renewed for another 30 years.  

What is the tax exposure when selling the property owned through a PT PMA? 

The transfer of property by an individual or by a company is subject to 2.5% income tax (PPh), plus approximately 5% title deed duty (BPHTB), and a government administrative fee (PNBP). In addition, any PT (PT PMA or local PT) selling property incurs a 10% Value Added Tax (PPN).  The proceeds from the sale of property is retained within the company until dividends are disbursed to shareholders, upon which dividend tax of 10% would be incurred pursuant the Income Tax Law.  Additionally, there is withholding tax for foreign shareholders, and the amount depends on the country of tax domicile and any tax treaty with Indonesia.   

What happens if I liquidate the company or sell the shares in the PT PMA? 

Liquidation is a complicated process that may take over a year, involving a tax audit, newspaper announcements, notarial deeds, Ministerial approval and appointment of a liquidator. Alternatively, selling the shares in the company would incur a progressive income tax (PPh 21) amounting to a maximum of 30% from the capital gains, i.e. the difference between the transaction and nominal value of the shares in the company.  It is not advisable to sell company shares at their nominal value if the company holds a property of much higher value. 

How long does it normally take to finalize the transfer of property title? 

If no conversion of property title is needed, then the process as follows: 

  1. The Execution of Sale and Purchase Agreement   
    After it is executed, the seller’s income tax and the purchaser’s duty on land and building right acquisition must be paid and validated.  
  2. Transfer of Property  
    The conveyancer will register the Sale and Purchase Agreement with the National Land Agency. The transfer process will take 2 months.    

If the property title needs to be converted to Hak Pakai (Usage Rights) or Hak Guna Bangunan (Building Rights), then the process is as follows:    

  1. The Conversion Process  
    If the purchaser is foreigner, the title must be converted to Hak Pakai (Usage Rights). 
    If the purchaser is foreign investment company (PT PMA), the title must be converted to  Hak Pakai (Usage Rights) or Hak Guna Bangunan (Building Rights). This conversion will take 1 month. 
  2. The Execution of Sale and Purchase Agreement   
    After it is executed, the seller’s income tax and the purchaser’s duty on land and building right acquisition must be paid and validated.  
  3. Transfer of Property  
    The conveyancer will register the Sale and Purchase Agreement with the National Land Agency. The transfer process will take 1 month.  

What are the actual deliverables a client receives when purchasing property? 

The deliverables a client receives are: 

  • Land Certificate (that has been transferred in the name of the purchaser)  
  • Sale and Purchase Agreement   

What documents are normally required to purchase property? 

For foreign individual ownership: 

  • ID Card or Passport  
  • Tax Identification Number (NPWP)  

For corporate ownership by a foreign investment company (PT PMA): 

  • ID Card or Passport of Board of Directors  
  • Tax Identification Number (NPWP) 
  • Tarde Business License (SIUP) 
  • Certificate of Business Domicile (SKDP)  
  • Company Registration Certificate (TDP) 
  • Business Identification Number (NIB)  
  • Principle License (Izin Prinsip)   
  • Company Establishment Deed/Article of Association (AoA)any amendment of AoA and the decision of the Minister Of Justice And Human Rights Of The Republic Of Indonesia


What documents are normally required to purchase property? 

  • Government Regulation Number 40 Year 1996 Regarding Cultivation Rights, Building Rights and Usage Rights for Land;  
  • Government Regulation Number 103 Year 2015 Regarding Ownership of Residential House of Foreigner Who Resides in Indonesia; 
  • Ministerial of Agrarian Affairs Regulation No. 29 Year 2016 regarding The Procedure of Entitlement, Releasing or Transfer of Ownership of Residential House for Foreigner Resides in Indonesia 
  • Government Regulation Number 34 Year 2016 Regarding Income Tax for Any Income Generates from Any Transfer of Rights of the Land or Property; 
  • Agrarian Affairs Regulation No. 9 Year 1965 Regarding Implementation of Conversion Of Tenure Rights on State Land and Provisions Regarding Discretion 
  • Law No. 21 Year 1997 Regarding Fees for Acquisition of Land and Building Rights 
  • Law Number 5 Year 1960 Regarding General Rules of Agrarian Law. 


This Quick Guide is provided for general information purposes only and should not be considered as legal advice for your specific situation. Should you require legal advice, contact an attorney. 

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