Property Investment in Indonesia: Beginner’s Pocket Dictionary
By midst February 2021, with COVID being still a hot topic worldwide, at least 5 vaccines on the way and many other global changes, the property market in Indonesia, and more locally in Bali has not been a big variable. Keeping a steady pace on its pricing, the land in Bali remains a daily hunt for many investors and expats looking forward to settling on the island, to overcome the quotidian stress of their homeland situation.
People inquire every day through various social platforms or websites information related to the legal aspects of a property ownership, and despite the numerous answers and blogs, the question remains open.
For this purpose, we have come forward to create a Beginner’s pocket dictionary in local property terms, abbreviation and legal nomenclature that would help to understand better the steps to take.
Ownership Titles and Others:
|Freehold. Absolute ownership rights title over a plot of land with indefinite period. Can be acquired or owned only by an Indonesian private entity.
|Right to Use. Hak Pakai allows foreigners use of land and buildings on the land for residential purposes. Foreigners who are legal residents in Indonesia may be granted a Hak Pakai title subject to certain provisions. This title is obtained through a downgrading procedure from a Freehold (Hak Milik) title. Hak Pakai over Hak Milik can be granted for 30 years; this can be extended for 20 years and then renewed for a further 30 years. Allowing a total of 80 years. There are also restrictions on price, size and the number of titles held by a foreigner.
|Hak Guna Bangunan
|Right to Build. HGB allows a company (PT Lokal or PT PMA) legally registered in Indonesia the right to build on the land. This title is processed following a downgrading process from a Freehold (Hak Milik) Title HGB can be granted for 30 years; this can be extended for 20 years and then renewed for a further 30 years. Allowing a total of 80 years.
|Lease Rights. Indonesian individuals, Indonesian legal entities (Pt Lokal or Pt PMA) , foreign individuals and foreign legal entities residing in Indonesia may acquire lease rights. The period of lease is generally around 25 years and usually there is an option to extend the lease, which will be specified in the agreement. The lease rights can then be subleased partially or completely on to another party.
|Mortgage rights imposed over land and objects embedded to the land, as collateral, to pay off certain debts to other creditors.
|Tax Payment Certificate (Surat Tanda Pembayaran Pajak) before 1960 which is known by the people of Bali as proof of ownership of land rights.
|Private Letter through which a private entity acquires a plot(s) of land. This letter is signed by the owner as well as the owners of all the neighbouring lands, witnessed and approved by the regional government.
|National Land Agency (Badan Pertanahan Nasional). Government agency whose responsibility is to implement the Basic Agrarian Law in managing or administering land rights according to Law Number 5 of 1960 concerning Basic Agrarian Principles.
|Freehold Certificate (Sertipikat Hak Milik). SHM is a property ownership status in the form of a certificate where the SHM holder has full rights and ownership as the owner of the land or land and buildings on it.
|Right to Build Certificate (Sertipikat Hak Guna Bangunan).
|Mortgage Certificate (Sertipikat Hak Tanggungan).
|Right to Use Certificate (Sertipikat Hak Pakai)
|Sale and Purchase Deed (Akta Jual Beli).
|Binding Sale and Purchase Agreement Deed (Perjanjina Pengikatan Jual Beli)
|National Identity Card (Kartu Tanda Penduduk).
|Family Card (Kartu Keluarga). A family card is a civil registry used to track information of genealogy of one’s family.
|Building Permit (Izin Mendirikan Bangunan). A permit that is granted by the regional head (licensing and permit departments) to land/building owners to construct new, modify, expand, reduce, maintain, or demolish buildings in accordance with applicable administrative and technical requirements.
|Cottage (Pondok Wiasta), also known as Indonesian rental license, is a commercial license given to or under an Indonesian private entity name, to conduct business activity on his property and providing lodging services. By regulation, a Pondok Wisata/Cottage cannot have more than 5 rental rooms.
|Spatial and Zoning Information (Informasi Tata Ruang) which contains provisions of information regarding the zoning designation of the land to further apply to the usage planning of that land. For example: Agricultural zone – used to plant crops, tourism zone. – allowed to build commercial property etc. (Changes can apply based on the regulation updates).
|Land Aspect or Status, given by the Land Department, to determine the purpose of the land usage, very similar to the Zoning. The information regarding the Aspect can be seen in a Land certificate Measurement Letter and can be adjusted based on the Zoning (ITR).
|Land and Building Tax (Surat Pemberitahuan Pajak Terutang/Pajak Bumi dan Bangunan). Yearly Tax are levies on land and buildings on that land, that arise and vary based on the purpose and usage of that land and building, calculated based on a government set coefficient and set value.
This blog has informative purpose only. Monthly issues of the dictionary blog will contain additional information on Indonesian Agreement nomenclature and abbreviations.