[nono1973]

Meantime i just touch up a bit on the landlord-friendliness in Indonesia....mostly info about renting out my units in future,hehehe...and some key info.

Once again, due to the long lengthy compilation, i shall "hide" most parts of it away from uninterested party and for those who are with me may wish to click on the Spoiler button to view the full article.

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Tenancy laws are generally neutral

Rents: Can landlord and tenant freely agree rents in Indonesia?

Rents are freely negotiated in Indonesia.

Rents are usually quoted in US dollar terms but paid in rupiah. Rents are typically paid in advance for the duration of the lease agreement. However, with an oversupply of rental units, tenants are now able to negotiate smaller advance payments or monthly payments. Tenants are also able to fix the exchange rate to protect them from devaluation of rupiah.

Rents are typically adjusted after 3 years, but the increase it typically capped at a maximum of 20% about the previous year's rental.

Deposits
A refundable security deposit of about a month's rent is required for unpaid bills and repairs.

( Click to show/hide )

Even if the rent is paid in advance for the duration of the lease with a security deposit, tenants can ask for a withholding fee to ensure that repairs are done to their satisfaction. The withholding fee is about a month's rent.

What rights do landlords and tenants have in Indonesia, especially as to duration of contract, and eviction?
Lease periods typically vary from 1 to 3 years. The terms depend upon the bargaining skills of the tenant and the landlord. Tenants typically have an option to renew.

Since most apartment units are rented out to foreigners, eviction is not a common problem. Expatriates lease the units for the duration of their assignment and typically leave before the expiration of their lease agreement. For some extraordinary cases, a "diplomatic clause" is inserted to allow the lease to be terminated if the expatriate is transferred outside of Indonesia.

It is also typical for companies to lease apartment units for their employees. In such cases, subleasing is usually allowed with the approval of the landlord. Maintenance and minor repairs (typically under US$ 100) are shouldered by the tenant. Standard lease agreements provide that major repairs (above US$100) are the responsibility of the landlord. It is advisable for tenants to negotiate a withholding fee, usually equivalent to 1 month's rent or 10% of the total lease value to be utilized in the event that the major repair is not addressed to the satisfaction of the tenant. Other aspects of the contract such as notices to leave are by agreement of the parties.

How effective is the Indonesian legal system?
There are no reported serious cases of landlord and tenant disputes in the popular media.

Legislation
There are no specific provisions for landlord and tenant regulation. The general law covering land in Indonesia is Basic Agrarian Law (Law No.5 of 1960). The right of lease (Hak Sewa) is not registered with the National Land Agency. However in practice, some local land offices will allow notation of the lease to be made in the official land records and/or on the title certificate itself.

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Below are some information i find pretty important to note on....and its very detail too.

(dated Jan 2019)

Purchasing an Apartment or Office under Strata Title

Ownership of offices and apartments is possible through strata title deeds, but you need to be very cautious when dealing with the laws and regulations to ensure that your ownership of an apartment in a high rise building is secure.

The 1996 regulation (No. 41/1996) states that foreigners who reside in Indonesia, or visit the country regularly for business purposes, can purchase a home, apartment or condominium as long as it isn't a part of a government-subsidized housing development. However, foreigners can only hold land-use (hak pakai) deeds, and the development holds the "Hak Pakai" (right-to-build) deed. It's not possible for someone to have a land-use deed for a sub-unit of a right-to-build deed. The length of these titles varies as well. Therein lies some of the difficulties and unclear ownership issues.

This means that foreigners can effectively lease (not truly own) an apartment for up to 70 years, but not a free standing house. Within this 70-year period, foreigners must also periodically renew their right to use. The initial Hak Pakai period is for 25 years, then is renewed for an additional 25 years and finally a 20 year period.

Hak Guna Bangunan vs Hak Milik

Hak Guna Bangunan is only the right to use a building for a certain period of time and then has to be extended. The owner of HGB land is the Indonesian government. HGB is also translated as - Conditional Corporate Ownership.

Only with Hak Milik do you actually own the land or building. Hak Milik does not need to be extended.

Hak Pakai allows you the use of the facilities, but not the ownership. Hak Pakai is also translated as - Conditional Ownership.

....and there, some extra info on Indonesia property ownership below.

“Foreign ownership of houses or apartments falls under the Right of Use category, locally known as Hak Pakai, which is weaker than the Right of Ownership category (freehold) or Hak Milik that can only be acquired by Indonesian citizens which is in accordance with the prevailing land law and regulations in Indonesia.”

Indonesia is regarded as one of Asia’s most promising emerging markets, in addition to its beautiful natural attractions and diverse culture. In this globalisation era, it is inevitable that foreigners want to come to this country, whether it’s for investment or tourism purposes.

Foreigners can choose to invest in various kinds of sectors in Indonesia. The property sector, for example, is a great investment opportunity for either commercial or personal purposes, as it is considered as one of the safest investment instruments and can be utilised for other purposes.

Previously, Indonesian law gave foreigners very limited access to own property. However, on December 28, 2015 the government set new requirements and procedures to allow foreigners to own property.

To support Indonesia’s domestic economic growth and attract private foreign investors to invest in the property sector, the Indonesian Government set forth Government Regulation No.103 of 2015 on Ownership of Dwelling of Residency House by Foreigner Domicile in Indonesia (Regulation 103).

In addition, to provide a technical guide for Reg 103, The Minister of Agrarian Affairs and Spatial Planning/Head of National Land Agency (Ministry of Land), issued Regulation No. 13 of 2016 on the Procedure for Granting, Releasing, or Transferring Land Rights over Residential Houses to Foreign Nationals in Indonesia (Regulation 13) on March 2016.

However, on September 29, 2016, the Ministry of Land revoked Regulation 13 and replaced it with Regulation No. 29 of 2016 on Procedure for Granting, Releasing, or Transferring Land Rights over Residential Houses to Foreign Nationals in Indonesia (Regulation 29), which is considered to be more “investor friendly”.

Regulation 13 was replaced because it did not receive a positive response from investors as expected. Some of the articles were considered hard to be implemented. For example, Regulation 13 did not allow foreigners to purchase second-hand properties.

By issuing Regulation 29, the Indonesian government allows foreigners who work or reside legally in Indonesia to own houses or apartments in the country for a period up to 80 years and the property can be part of a will during the ownership period.

However, foreign ownership of houses or apartments falls only under the Right of Use category, locally known as Hak Pakai, which is weaker than the Right of Ownership category (freehold) or Hak Milik that can only be acquired by Indonesian citizens in accordance with the prevailing law and regulation in Indonesia.

Other than that, there are several requirements and consequences for foreigners who own property in Indonesia, and it has been stipulated in Regulation 29 as follows:

• There is a set fixed minimum price for the property per region.
• The property can be purchased from second-hand sellers with certain criteria.
• Foreigners and their families are only allowed to have a maximum of one property.
• Limited to a maximum of 2000 Sqm land size (for houses).
• Property can be mortgaged in a bank or Indonesian financial institution.
• Must maintain their stay permit visa during their property ownership period.
• When leaving Indonesia, the foreigner must release or transfer the Right of Use to another person who meets all requirements to own property in Indonesia (this can be another foreigner or an Indonesian citizen) within one year after his or her departure from Indonesia.
• Foreigners can buy a house in Indonesia for an initial period of 30 years, which can be extended by another period of 20 years and then can be renewed for another 30 years.

At the end of 2017 the Indonesian government was rumoured to be proposing a new provision in a land bill that will allow foreigners to own properties under the Right to Build category or Hak Guna Bangunan. Right to Build allows the owner to build and own the building. It is far more advantageous for foreigners and also has a higher status than the Right of Use. However, there has not been any stated regulation yet regarding this matter.

Buying costs are very high in Indonesia

How high are realtors´ and lawyers´ fees in Indonesia? What about other property purchase costs?

How difficult is the property purchase process in Indonesia?

Individual foreigners can buy condominiums in Indonesia, though the formal law is slightly knotty. Foreigners can also buy control of landed property, though the legal difficulties are larger, and the degree of peace of mind attainable is correspondingly smaller.

Condominiums

The basis for foreign ownership of strata-title residential property, i.e. condominiums, is Government Regulation No 41 of June 1996. Regulation 41/1996 is however unclear, and no foreigner has actually received a strata title as a certificate of ownership. In practice, foreigners sign a Convertible Lease Agreement by which the title is held in the name of the developer, while a lease is held for a definite period. The Convertible Lease Agreement states that, if and when prevailing laws and regulations permit ownership of strata titles by foreigners, both the lessor and the lessee will be obligated to sign a deed of sale and purchase, transferring title to the foreign owner.

Land
Foreigners are not allowed to own freehold land. Nevertheless, they can acquire rights to the use of land but not ownership rights.

There are three options open to foreigners for buying in Indonesia:

1. Through an Indonesian representative

It is common practice to have an Indonesian representative acquire land for the foreign buyer. Ownership of land must be transferred from the previous owner to the Indonesian representative. For the foreign buyer´s security, three agreements must be entered into with the Indonesian representative.

• Loan Agreement - this states that the foreign buyer lent the purchase price to the Indonesian representative.
• Irrevocable Power of Attorney - this gives the foreign buyer full authority to sell, lease, mortgage, etc. the land.
• Permanent Right of Use Agreement - this gives the foreign buyer full rights to the use and occupancy of the land.

2. Through a Penanaman Model Asing (PMA) Company

PMA is a "status of doing business" in Indonesia. A PMA company has 30 years to operate after formation. It can be granted additional 30 years, and another 30 years, if it expands its project through additional investment. This can be 100% controlled by a foreigner.

The Right to Build (Hak Guna Bangunan - HGB) is available to PMA companies. The right to build or construct on land is valid for 30 years. This can be extended for an additional 20 years, and even for another 30 years after that.

To set up a PMA company you will be required to:

• Submit a detailed business plan.
• Operate in a business environment that adds value to Indonesia in terms of foreign skills, employment and environmental benefit.
• Make an appropriate cash deposit in an Indonesian based bank. (The amount varies and is calculated from the capital employed in the business).
• Show the property investment as an asset of the company.

The process takes approximately 3 to 4 months and once completed the company can apply for work permits for the foreign directors, 3 permits in the first year of operation. The cost of setting up is around US$5,000.

3. Through a Leasehold Title

This can be granted to qualified foreigners who are domiciled in Indonesia with a KITAS working visa. The lease runs for 25 years, and can be renewed for another 25 years.

It is important to hire the services of an Indonesian lawyer to assist with the transaction, especially with the monetary exchange. All land transactions must take place at the Indonesian Notary´s local office, Pejabat Pembuat Akta Tanah (PPAT), where the land is located.

While it may be natural to give a deposit, it is not advisable. There is no code of conduct for real estate firms in Indonesia; they do not have any legal obligation to protect the buyer´s interests and guarantee the title.

There are registered and unregistered lands in Indonesia. The Basic Agrarian Law of 1960 governs certified land, which is registered at the local land office. Unregistered land, Adat land, is community-owned. An examination of the land certificate being bought is important.

The whole process of registering property involves six procedures and takes around 22 days to complete.

Footnotes to Transaction Costs Table

Transfer Tax:
Transfer tax is levied on the sale of real property in Indonesia at a flat rate of 5%. The base is the transfer value of the property.

Sale and Purchase of Land Deed
The execution of the sale and purchase of Land Deed is made before Land Officials, namely a notary public appointed by the Head of the National Land Office (PPAT) or a local Head of a District (Camat PPAT). The cost is 1% of the property value.

Legal Fee:
Legal fees are negotiable. Processing fees for legal documents are at around 0.5% to 1.5% of the property value.

Registration Fee:
The registration fees are around 0.20% of the property value. Registration fees include administrative fees and stamp duty of IDR6,000 (US$0.41) per document.

Land and Building Transfer Duty (BPHTB)
The land and building transfer duty is levied at a flat rate of 5%, and is charged to the seller. The tax base is the transfer value of the property. There is a non-taxable amount which varies per region, and the non-taxable amount is IDR80 million (US$5,504) in Jakarta. This tax is different from the transfer tax.

Real Estate Agent´s Fee
Real estate agent´s fee is around 5% of the property value. The fee is paid by either the buyer or the seller, but not both.