Welcome to our Frequently Asked Questions (FAQ) page. Here you will find answers to some of the most common questions that relate to buying and selling property or land in Indonesia. Questions such as: can foreigners buy property in Indonesia? How much tax will I pay when buying or selling land in Lombok? How much does it cost to build a villa in Lombok? And many more.
If you have a question that isn’t answered here, please contact us.
Can Foreigners Buy Property in Indonesia?
Yes, foreigners can buy property in Indonesia. There are two main ways:
1. Right to build (referred to as ‘HGB’) which is the safest way to acquire land. As a foreigner you can hold land through a 100% foreign owned company (referred to as a ‘PT PMA’ company). The company name would go on the land certificate, thus giving you as the shareholder of the company full control over the land.
2. Right to use certificate (referred to as ‘Hak Pakai’) for residential purposes. This title is available if the land you are acquiring already has a building on it and you plan to use it as your personal residence. Similar to HGB, this title can be acquired via your PT PMA.
For more details on this subject including pros and cons of the ownership options, check out our interview with legal consultants, Emerhub.
Should I Buy Land in Indonesia via a local nominee?
No. Buying land or property via a local nominee is extremely risky and should always be avoided. It’s also completely unnecessary as there are safe ways to acquire property in Indonesia (see point above). We hear of too many stories of people who have acquired property via a local nominee, i.e. the local person “owns” the land on paper and then enters into an agreement with the real owner (the foreigner) and the agreement goes bad.
Nominee agreements carry many risks and should you have a dispute, the legal system is unlikely to look favourably upon you as the foreigner trying to circumvent Indonesia’s freehold ownership laws. No matter how much you trust this person, don’t do it, it might all be fine the day you buy but when it comes to selling or renting your property it can become particularly difficult to transact.
What taxes do I pay when buying or selling property in Indonesia?
Selling or buying land or property in Indonesia incurs taxes for both the buyer and the seller. Buyer tax is calculated at 5% of the land value and seller tax is calculated at 2.5% of the land value. There are other potential fees such as notary fee (normally 1% of the transaction value borne by the buyer) and agent fee (normally 5% of the transaction value borne by the seller). Always seek legal and tax advice when buying or selling property to fully understand what taxes and fees will be owing.
What is a Notary and what is their role when buying or selling land in Indonesia?
A notary is a legal professional who has been officially appointed by the government to serve the public as an impartial witness to the signing of important legal documents in Indonesia. They hold a Notary license and are appointed by the Ministry of Law and Human Rights to notarise deeds.
When entering into agreements to buy or sell land a notary is required to prepare and officiate the documents. Importantly, notaries are impartial witnesses therefore they are not permitted to provide legal advice during a transaction. Their role is to prepare, witness, authenticate and register legal agreements in line with Indonesian Law.
What checks should I do when buying land or property in Indonesia?
As mentioned above the notary’s role is to officiate legal documents. When buying land or property, they are not obliged to undertake due diligence on your behalf aside from checking the current ownership of the property.
We recommend that you conduct due diligence prior to entering into binding agreements to buy land or property in Indonesia. By engaging with a legal consultant to undertake checks on the property you can uncover and resolve any potential issues before having made commitments to buy the land. They can also explain the process to you, answer any questions and provide translation services. Typical due diligence checks include checking whether there are any zoning restrictions, unpaid land taxes or access issues with the property.
For more on this subject, check out our top tips for buying land in Lombok.
How much does it cost to build a villa in Lombok?
That’s a difficult question to answer and depends on many factors such as the type of villa you would like to build, the materials you wish to use and the location (e.g. flat land versus hillside). For a ‘western style’ build, prices can range from about $500 USD per square meter to over $1000 USD per square meter. But again this really depends on your building specifications.
For tips on building a villa in Lombok read about our experience here.
Have another question? Contact us here.
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