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How to Buy / Lease villa in Indonesia
The land law in Indonesia is very different from the laws in the occidental countries. Nevertheless it is possible to invest in total security by respecting carefully the proceedings.
In order to do it correctly specific notaries from Bali will be necessary. About the certified land in opposition to the non-registered land to the national register (Badan Pertanahan Nasional). There are 5 categories of rights in virtue of the land law, 3 only concerning the foreigners:
1- Hak Milik (freehold)
This title can only be obtained by an Indonesian citizen.
2- Hak Pakai (right of use)
This arrangement is granted by the Indonesian administration to foreigners (under specific conditions) for an initial 30 years. There is possibility of extension for 20 years with additional 30 years that makes a total of 80 years.
3- Hak Guna Bangunan (building right)
Conditions close to Hak Pakai but only for the PMA (foreign investment limited liability company)
In reality the 3 main ways usually used by foreigners to purchase a land in Indonesia are the followings:
I - The loan of an Indonesian name (Nominee agreement also called "freehold") :
Due to the fact that only an Indonesian citizen can own a land (Hak Milik), the asset will be bought in front of a notary under his name; he will sign several documents giving you the full power of purchasing like for example :
There are more advanced agreements that can represent more than 10 different documents.
This method practiced for years by the majority of notaries may be contested in court. It has frequently been doubted by some notaries and politicians.
II - Hak Pakai (right of use)
This arrangement is increasingly used by the individuals who wish to acquire a property in Indonesia for a private use on their proper name. This certificate applies to only one property per individual or married couple.
III - Leasehold
It is a rental contract for 25 years maximum signed in front of notary and renewable. The term of extension is negotiated on a case-by-case basis and if necessary can be extended and paid from the beginning for an additional 25 years.
Each individual benefits from this right, whatever his nationality is.
This contract will give you the right to change, to build, to operate a business or to rent the place.
It will end at the expiration date and all the constructions present at that time will become then the property of the land owner if no extension had been signed (which is uncommon).
Optimum Bali's team will be pleased to answer to any of your questions.