So, you’re looking to buy a property in Indonesia? Before the 90s, it was legally impossible to buy a property as a foreigner in Indonesia because the land was decreed to only be owned by Indonesian citizens. However, in the late 90s they enacted new laws so that foreigners were also able to purchase properties with certain rules still, which were then made even easier in 2010. To this day, there are still certain rules on buying properties but at least it's legal! In this article, we discuss the things you might need to know.
Foreigners can own apartments through 30-year lease agreements with 20-year extensions for landed houses, they can obtain them (but not own them) through leases. Keep in mind that the long-term leases that foreigners hold don’t come with the same protections or guarantees as Indonesian citizens, this makes it much harder for foreigners to get funding through bank mortgages.
The real estate transactions in Indonesia are pretty straightforward, but still somewhat tricky. The Agrarian Law states that a purchase and sale transaction is the evidence that proves the transfer of title from the seller to the buyer. The law imposed that these transactions must meet two criteria whilst being carried out. The first criteria is that the transaction must be carried out under the supervision of an officer who is authorised. The second criteria is that it must be paid in full so the transaction can’t be executed if there are any shortfalls in the payment.
Before proceeding with the purchase of a property in Indonesia you should do a couple of things. The first is a property title background check, and it is an absolute must. Transactions can’t be carried out without any formal background check of the legality of the previous title/ownership documents. The background check conducted will provide you with information about the current status of the property and its title. This check will also how if there is an outstanding mortgage on the property. If that is the case, make sure that the owner removes the mortgage from the title before continuing with the transaction. The background check will also reveal if the property is under any possible dispute or not.
Another thing that should be done is to collect the seller’s information. First, a copy of Kartu Tanda Penduduk (KTP) should be asked for. If the seller is married, then the spouses KTP should also be obtained. Spousal consent is statutorily required. The other documents that you should obtain is the family card (Kartu Keluarga/KK), the marriage certificate where applicable, original certificate of land ownership, the PBB tax payment which represents the payment of the current building & land tax, and finally the seller’s taxpayer number.
As the buyer of the property, you should also present some documents. These documents are a copy of your, and if you’re married your spouse’s KTP, family card, marriage certificate, and your taxpayer number.
The transaction must be written in the form of an agreement which is called a Sales and Purchase Agreement. Both the buyer and seller should sign this agreement, and then it should be lodged at the land registry office to complete the transfer of title. Keep in mind that the payment of the current year’s taxation must be settled before the title is transferred as a tax validation will be carried out before the title is transferred.
