Rights Over Land and Building For Foreigner In Indonesia

Globalization resulted in many changes in the order of social life and politics. Indonesia as one of the world’s communities must be able to take advantage of this momentum changes and make necessary adjustments.

The most noticeable change is related to the ease of conducting business transactions. Indonesia continues to strive for various ways to enhance foreign business transactions in the country, namely by:

1. Simplifying business licensing processes for both Indonesian citizens (“WNI“) and Foreign Citizens (“WNA“);
2. Streamlining and facilitating investment permits, including for Foreign Citizens (WNA);
3. Establishing various forms of collaboration with foreign parties to enhance productivity;
4. Enhancing international cooperation between countries.

This has proven effective as in 2022, according to data from the Ministry of Investment, the realization of Foreign Direct Investment in Indonesia increased by 44.2%, and for bilateral cooperation between Indonesia and other countries, it has reached 162 nations.

In order to welcome foreign entities that are increasingly eager to engage in business in Indonesia, the Government of the Republic of Indonesia (“Government“) has issued regulations that allow Foreign Citizens (WNA) to have Rights Over Land and Buildings in Indonesia, subject to applicable terms and conditions. This certainly provides many advantages for Foreign Citizens as with these Rights Over Land and Buildings, they can possess a residence, thereby facilitating the implementation of their business activities in Indonesia.

1. RIGHTS OVER LAND AND BUILDINGS FOR FOREIGN NATIONALS IN INDONESIA

The regulation issued by the Government stipulates that Foreign Citizens (WNA) are allowed to own landed houses or apartment units under the provisions of:

1. Landed House

The landed house also has general provisions that must be fulfilled for Foreign Nationals (WNA) who wish to own it, namely:

1. A house is categorized as a luxury house according to the prevailing regulations.
2. 1 parcel of land per individual/per family; and/or
3. The land area is at most 2,000 m2.
4. Apartment

The permitted types of apartments for Foreign Nationals (WNA) are those built on the     following land categories:

1. Right to Use (Hak Pakai) or Right to Build (Hak Guna Bangunan) over State Land
2. Right to Use (Hak Pakai) or Right to Build (Hak Guna Bangunan) over Right of Management Land
3. Right to Use (Hak Pakai) or Right to Build (Hak Guna Bangunan) over Ownership Land

Additionally, these apartments must be condominiums constructed within special economic zones, free trade zones and free ports, industrial areas, and other economic zones, and must have a minimum price requirement that needs to be fulfilled for each respective area, namely:

Considering the above-mentioned factors, it can be concluded that Foreign Citizens (WNA) who intend to apply for Rights Over Land and Buildings in Indonesia must first fulfill the prescribed criteria.

1. LEGAL DUE DILIGENCE OF LAND

In order to acquire land and buildings that cater to the needs of Foreign Citizens (WNA) and to minimize potential risks they might face in obtaining land and buildings that could pose issues in the future, prospective buyers are advised to conduct a thorough examination of the land and buildings they intend to acquire before engaging in any real estate transactions. One of the measures that can be taken to prevent undesirable risks is by conducting Legal Due Diligence.

Legal Due Diligence is an activity aimed at assessing potential legal risks associated with a transaction or legal action. This process covers a wide range of aspects, one of which is the Legal Due Diligence of Land.

Legal Due Diligence of Land is conducted to assess various aspects of the land that is the subject of the due diligence. These aspects include the validity of land ownership rights, ownership history and issuance of land rights, land zoning and permits, taxation status of the land, and ongoing litigation processes related to the land.

To conduct the Legal Due Diligence of Land, prospective land buyers need to engage an experienced legal consultant who specializes in conducting such assessments. This is essential to prevent the occurrence of misinformation for the prospective buyer. By doing so, the prospective buyer will obtain an objective overview of the land they intend to purchase based on the information provided in the Due Diligence Report.

Rangga Saputra Ponimin

Yohana Farih Margaretha

Ghazi Luthfi