Right of Use (Hak Pakai)

A question often asked is how foreigners can buy property in Indonesia;
"Can I as a foreigner buy properties in Indonesia, under my own name?"
The good news is YES, and answer is Right of Use (Hak Pakai) property ownership status, as summarized below.

The full details of Hak Pakai can be found in Presidential Decree No. 41 of 1996, which is the preferred referral document of many public notaries and one which is the reputable Public Notary, Evi Susanty Panjaitan, SH, who adds the following comment:

"Hak Pakai is the right of use over state-owned land or property owned by public or private person/entity for a specific purpose, for (generally) a finite period, explained further below, and occasionally for an indefinite period.

Hak Pakai can be sold, exchanged or transferred, under the specific period, explained further below.

Hak Pakai may be held by an Indonesian individual or entity (PT. Local), foreign individual, or a foreign legal entity (PT. PMA) with a representative office in Indonesia, e.g., foreign Banks, embassies, etc
Hak Pakai is not necessarily restricted to apply only to foreigners domiciled in Indonesia.
The BPN/ Badan Pertanahan Negara (National Land Office) would only require the immigration (arrival) stamp proof on the foreign owner's passport."

For documentation purposes, while not domiciled in Indonesia, the foreign owner's address may be the address of the land/house to be purchased or another existing permanent residential address in Indonesia, excluding a hotels.

Properties under Hak Pakai status are mortgageable.

With the Hak Pakai a foreigner could be granted the right of use for a period of 90 years.

• Right of Use initially will be granted by the government for 25 years and extendable for another 20 years, which then is renewable for the same period of time (another 25+20 years).
• The fees involved (for the extension) will be 2% of the NJOP/ Nilai Jual Objek Pajak (Government's Land & Building Valuation), to be paid 2 years prior to the expiry date.

If a foreigner wishes to purchase vacant land a letter stating that the immediate construction of a building will be part of the investment has to accompany the Hak Pakai in order for it to comply with what constitutes to be legal documents.  Alternatively the land has to be leased out to under a long lease agreement should a building not be part of the land investment.

In short, while the said foreigner does not stay in Indonesia, the land property must be managed and/or be leased out for a long period of time.

What happens if a property with Hak Pakai status needs a villa rental permit (to be run as a rental villa)?

The only difference is the original NJOP/ Nilai Jual Objek Pajak (Government's Land & Building Valuation) will be adjusted to be close to the market transaction value.

Please be informed that, in Bali, the NJOP of a property is usually much less than the market transaction value. Nobody would be able to give a certain indication on how much less as the value really varies from one area to another.

NOTE: The above explanation is for information purposes only and PT. Bali TOP Property recommend that potential purchasers seek independent legal advice in Indonesia with regards to the proposed purchase. Subsequent to the purchase, legal advice should be taken in the home jurisdiction of the purchaser with regards to wills and succession planning for Indonesian property.