Buying a villa

Mike

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I was wondering if anyone could provide information on buying a property in Indonesia and owning it as a company.

I understand a PMA needs to be set up. Also, how to make it legal to rent out to tourists.
 

snpark

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I wouldn't recommend it personally for a multitude of financial reasons
 

R Cameron

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You need to look at the latest Negative Investment List and see what is available for foreigners in tourism/hospitality/hotels. Whatever is permitted there is the only legal way to do it.
 

snpark

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What exactly do you have in mind? A villa in Bali ? Be careful. The AirBnB scheme is not what it used to be. Now you have to register, declare income, pay taxes etc. Plus the cost of a pma. And assuming you can even rent your villa for 75% of the month and all the hidden costs.
Better to keep your money cash safe somewhere on deposit or pick another country
 

Jamu

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There is actually a fair amount of info online on this subject. One resource that comes to mind is the Laws and Regulations in Indonesia facebook page, which has a number of knowledgeable people who participate (and unfortunately some with much less knowledge). It's not a bad place to start. I don't know the ins and outs of a company owning property in Indonesia, though I have heard it is done but can be expensive to set up. I do know that in order to rent out a property legally for short term rentals, the property needs to have a pondok wisata license. Depending on location there can also be local requirements, eg, in Bali registration with the banjar (village) is often required and can involve paying a fee - in our banjar it is 2% of the annual rental income. Lots of people 'overlook' the requirements but the authorities are increasing their enforcement efforts.
 

dafluff

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I was wondering if anyone could provide information on buying a property in Indonesia and owning it as a company.

I understand a PMA needs to be set up. Also, how to make it legal to rent out to tourists.
This is far too general a question. Is there anything more specific you have in mind?

It sounds to me that you want to buy a property for personal use and set up a company in order to own it as a WNA.

If this is your intention, then it's a no go, because a PMA can not be set up for the sole purpose of owning a property.
 

Matthew_28

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Actually that's very common practice in Indonesia. I have reference of lawyer who used to handle PMA. maybe you could ask him.
 

jukung11

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I was wondering if anyone could provide information on buying a property in Indonesia and owning it as a company.

I understand a PMA needs to be set up. Also, how to make it legal to rent out to tourists.

It may be a bit pedantic, but foreigners can't own property in Indonesia (hak milik) even with a foreign owned company (PT PMA). They can secure a long term renewable lease over a property in which ownership of the property reverts back to the state at the time of completion (hak pakai). Under the new Indonesian regulations, foreigners no longer need to create a PT PMA to get a hak pakai in Indonesia. As long as they are a legal Indonesian residents, they can get a hak pakai for an apartment or house as long as it is registered as hak pakai at the time of sale and the purchase price is over a minimum amount. For bali it is 3 billion IDR for a house and 2 billion IDR for an apartment.

To rent out a property in Indonesia, you will need a PT PMA. Under the 2016 Negative investment list, hotels and rentals have a maximum foreign ownership of 67%.

https://www.indonesia-investments.com/upload/documents/Negative-Investment-List-May-2016-Indonesia-Investments.pdf

A common problem is many people want to invest in Indonesia property, but don't meet the capital requirements. A PT PMA requires a 10 billion idr capital investment.

Currently the minimum requirement stands at IDR 10 billion or the equivalent value in US dollars.

Because hak pakai is not considered ownership, many banks will not lend against one. The few banks that do lend typically require 50% down payment. Also, there is a lack of resale markets for hak pakai, so the banks need protect from the usual loss if there is a need to sell.

Edited for hak pakai.
 
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jstar

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Close by where I currently live there are some big Hak Pakai developments. Nice houses and 'sold out' to locals within days. And their value increased from 1.8 billion to 4.2 billion over 4 years so you definitely can't say there isn't a demand for these.
 

snpark

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Value according to who
It's worth what you get when you sell it
I wouldn't trust a corrupt valuation here
Probably the bank remortgaged it for a "fee"
Money laundering
 

jukung11

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@jukung11 do you mean 'hak pakai' in your last paragraph?
Thank you. I have edited it.

Value according to who
It's worth what you get when you sell it
I wouldn't trust a corrupt valuation here
Probably the bank remortgaged it for a "fee"
Money laundering

It is evident in the down payment requirement. The banks have done the math on these. They know the resale risk. I am not referring to local buyers, but foreign buyers. I also wonder how much of the investment is Chinese like it is in most hot international real estate markets. Because real estate investments are one of the few exemptions to Chinese currency export controls, Chinese buyerss are heavily invested in foreign markets. The buyer and seller will usually be related parties and the inflated price is just to get the currency out of China.

 
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R Cameron

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They can secure a long term renewable lease over a property in which ownership of the property reverts back to the state at the time of completion (hak pakai).
I'm new to this. Does ownership revert to the state (ie government) or to the previous owner (whether state or private)?
 

jukung11

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I'm new to this. Does ownership revert to the state (ie government) or to the previous owner (whether state or private)?
I am not an Indonesian lawyer, so take this for what you paid for it. :D

My understanding is this is specific to foreign held hak pakai. They must be registered at the time of purchase for state ownership.


The only land that is covered under the definitions is Tanah Negara.

This is for houses, because apartments have a different ownership scheme.
My understanding from a guide I read in 2016 and a reading of No 29 2016 is Pasal 13, the owner relinquishes hak milik title to the state at the time of hak pakai. The deed book then registers the land as hak pakai.

a. mencoret kata-kata dan nomor Hak Milik atau Hak Guna Bangunan dalam Buku Tanah dan Sertifikat Hak Atas Tanah

b ... ini berdasarkan ketentuan Pasal 6 ayat (1) Peraturan Menteri Agraria dan Tata Ruang/Kepala Badan Pertanahan Nasional Nomor 29 Tahun 2016 tentang Tata Cara Pemberian, Pelepasan, dan Pengalihan Hak Atas Pemilikan Rumah Tempat Tinggal atau Hunian Oleh Orang Asing Yang Berkedudukan di Indonesia, dilepaskan menjadi Tanah Negara dan langsung diberikan dengan perubahan menjadi Hak Pakai Nomor

I am happy for any correction if I misinterpreted or recalled this.
 

scouser59

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Close by where I currently live there are some big Hak Pakai developments. Nice houses and 'sold out' to locals within days. And their value increased from 1.8 billion to 4.2 billion over 4 years so you definitely can't say there isn't a demand for these.
In bali the opposite is true ,property values have dropped through the floor over the last few years - minus 40% ++ or not sold ,to be left to rot and fall down ,as the quality of constuction is dire .

Iv heard it said there maybe 1 mllion plus empty properties in the jakarta area when the move to kalimantan is ongoing , this aint going to do anything for valuations Imho.:eek::eek::eek:
 

jstar

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I also wonder how much of the investment is Chinese like it is in most hot international real estate markets. Because real estate investments are one of the few exemptions to Chinese currency export controls, Chinese buyerss are heavily invested in foreign markets. The buyer and seller will usually be related parties and the inflated price is just to get the currency out of China.
In many of the new apartment super blocks there are many Chinese investment companies who work together with the developers to acquire those units. You understand that this is done in quite a 'creative' way.
 

jstar

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In bali the opposite is true ,property values have dropped through the floor over the last few years - minus 40% ++ or not sold ,to be left to rot and fall down ,as the quality of constuction is dire .

Iv heard it said there maybe 1 mllion plus empty properties in the jakarta area when the move to kalimantan is ongoing , this aint going to do anything for valuations Imho.:eek::eek::eek:
True, but in Jakarta the issue is the apartment market. (Which is not so huge in the rest of the country.) And very cheap developments just outside the 'city' in South Tangerang etc. don't help. The (real) house market for middle class incomes is still growing and doing rather well.

Now the prices are still crazy so a correction would not be strange. (Prices of 30-70 Juta per sqm are still normal in three of the five cities.)

A bit similar to Rio in Brazil; I don't think a move of the capital would have a huge impact on the accommodation or the situation in the DKI for that matter. (Will people really move or will we get the Brussels/Strasbourg weekend travel effect?)
 

scouser59

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The only reason I could imagine being in jakarta is "substantial" financial benefit ,to suffer the macet crime polution both air and noise .
The information re depopulation was from a couple of local substantial property investors, whom are in the process disolving there not inconsequential portfolios , to move their investments elsewhere in the archipeligo ,I might also add they are having some issuses unloading the said properties .
 

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