Government Regulation no. 18 of 2021 - Right to own an appartment

jukung11

Well-Known Member
Cager
Joined
Oct 8, 2016
Messages
371
Here is the law:

Here is an article from Indonesian lawyers at Baker McKenzie (international law firm). You may need to open it incognito to pass the paywall.

I have seen a lot posted recently regarding changes of laws for visas and posted the changes of law for property ownership. Many on the forum seem to still be under the impression that foreigners don't have hak milik rights in Indonesia. The law change last year gave right of ownership over stacked units (Hak Milik Atas Satuan Rumah Susun, HMSRS). As of last year, a foreigner with a ITAP can buy/sell apartments without any experation dates involved in a hak pakai title. I am not sure I would trust construction/value of aparments longer than the renewable hak pakai time period of 70 years. It is still nice that there is not detriment to the title that it is easier to sell and get a mortgage.

Many articles compare this to opening of hak pakai rights for foreigners in 2015. This law revokes that law. There is a caveat....

However, foreigners may only acquire HMSRS title to apartments in special economic, free trade or free port, industrial, or other economic zones. ”Other economic zone” is defined as an urban or suburban zone, tourism zone, or a zone that is suitable for vertical housing development, and which has a positive economic impact for the public.

This seems like a large enough loophole that it will encompass most apartments.

There is some dissent. Here is a law review article from Universitas Udayana claiming the law is unconstitutional and contradicts the Agrarian Law against foreign ownership.

What are everyone's thoughts?
Will someone have standing to overturn the law?

Does the loophole open up enough apartment ownerships to foreigners?

My personal review of the Indonesian property market, with time-value of money and with risk and return factored in, it is more expensive to own than to rent in Indonesia. Does anyone find the property market more attractive with hak milik title?
 
With apartments I would definitely agree, better to rent. For a start even if you buy, you still have to pay monthly service charges that are usually quite high. Also they can change the rules for foreigners at any time.
 
Here is the law:

Here is an article from Indonesian lawyers at Baker McKenzie (international law firm). You may need to open it incognito to pass the paywall.

I have seen a lot posted recently regarding changes of laws for visas and posted the changes of law for property ownership. Many on the forum seem to still be under the impression that foreigners don't have hak milik rights in Indonesia. The law change last year gave right of ownership over stacked units (Hak Milik Atas Satuan Rumah Susun, HMSRS). As of last year, a foreigner with a ITAP can buy/sell apartments without any experation dates involved in a hak pakai title. I am not sure I would trust construction/value of aparments longer than the renewable hak pakai time period of 70 years. It is still nice that there is not detriment to the title that it is easier to sell and get a mortgage.

Many articles compare this to opening of hak pakai rights for foreigners in 2015. This law revokes that law. There is a caveat....



This seems like a large enough loophole that it will encompass most apartments.

There is some dissent. Here is a law review article from Universitas Udayana claiming the law is unconstitutional and contradicts the Agrarian Law against foreign ownership.

What are everyone's thoughts?
Will someone have standing to overturn the law?

Does the loophole open up enough apartment ownerships to foreigners?

My personal review of the Indonesian property market, with time-value of money and with risk and return factored in, it is more expensive to own than to rent in Indonesia. Does anyone find the property market more attractive with hak milik title?
Reading the opinon from Baker McKenzie foreigners will not have right anytime soon to get whatever Hak Milik type of certificate on apartment or land, as the regulations are inconsistent.
 
Reading the opinon from Baker McKenzie foreigners will not have right anytime soon to get whatever Hak Milik type of certificate on apartment or land, as the regulations are inconsistent.

That is the same as the abnrlaw article. It conflicts with general understanding that by granting foreigners hak milik rights, it conflicts with the agrarian law. Are you familiar with any court legal challenges? All other laws that I have watched get challenged in Indonesia (dual citizen and post-nup) had an aggrieved party that had the right to challenge the law as unconstitutional (locus standi). Since Indonesian law is patterned after Dutch, do they not have this? Who would be aggrieved? Wouldn't the law stand until challenged and overruled?
 
That is the same as the abnrlaw article. It conflicts with general understanding that by granting foreigners hak milik rights, it conflicts with the agrarian law. Are you familiar with any court legal challenges? All other laws that I have watched get challenged in Indonesia (dual citizen and post-nup) had an aggrieved party that had the right to challenge the law as unconstitutional (locus standi). Since Indonesian law is patterned after Dutch, do they not have this? Who would be aggrieved? Wouldn't the law stand until challenged and overruled?
Challenging Indonesian law by a foreigner has a near zero chance of success. Post-nup case was challenged by an Indonesian citizen (and won).
 
A foreigner can certainly challenge Indonesian laws or more so how they were interpeted and enforced in a court. Said foreigner better know Indonesian laws inside and out because any legal representative they hire probably will not.

I believe the only person in this forum is Atlantis who has been successful and I would bet he was more versed in the laws than who may have represented him or those he faced in court.

The unprepared will more than likely face a never ending hands out due to so many in line with kids that need new shoes. Then, still lose.
 
The law change last year gave right of ownership over stacked units (Hak Milik Atas Satuan Rumah Susun, HMSRS).
There is even not any certificate at all for apartment owners. My wife's relatives 'own' an apartment and all they got is a buying contract from the developer which states the ownership of a specific apartment. There is no hak milik certificate and they all have no idea about splitting land ownership into pieces for apartment owners, you can't get any loan at any bank.

For sure, they gonna pay SideCost, Sinking Fund, Water and Electricity. The best is, if you're late on payments, the building management (aka mafia) is gonna turn off your water in the appartment.

Electricity is pre-paid, if you don't pay, your sitting in the dark (with no water too...)
 
Why would the foreigner be the one challenging the law? That doesn't make any sense. The law explicitly gives the foreigner the right to purchase apartments with freehold title in any urban area. Why would the foreigner challenge the law as illegal?

Would the land and title department refuse to register the title in the foreigner’s name? If so, then there would be no sale of the apartment. Has anyone experienced that?

The right to purchase hak pakai titles has been around since 2015. Has anyone read or know of the land and title refusing to register ownership to a foreigner under the law that this new law replaced?
 
It looks like I was wrong, the Government has been very efficient the bylaw came out on November 1st, 2022 by BPN. Foreigners can buy land and apartments, new or already built, even with just a visa and can pledge for loans and inherit, in designated provinces.
 

Attachments

  • PeraturanKepemilikan Orang Asing sm.pdf
    156.1 KB · Views: 123
It looks like I was wrong, the Government has been very efficient the bylaw came out on November 1st, 2022 by BPN. Foreigners can buy land and apartments, new or already built, even with just a visa and can pledge for loans and inherit, in designated provinces.

Apartments are non-landed properties, to say “foreigners can buy land and apartments” is inaccurate or misleading. To avoid misunderstanding, the law should merely state “foreigners can buy apartments” without mentioning the land. Indeed, each individual unit will own a tiny portion of the land upon which the apartment was built. But when the apartment owner decides to sell his unit in the future, he doesn’t advertise it as “Dijual Tanah dan Apartemen”, never heard of that. If it’s a landed property like a bungalow which is directly attached to the land, then it can be advertised as “Dijual Tanah dan Bangunan”. Can the law be used by real estate agents to sell landed properties to foreigners? I hope no foreigners become victims.
 
Apartments are non-landed properties, to say “foreigners can buy land and apartments” is inaccurate or misleading. To avoid misunderstanding, the law should merely state “foreigners can buy apartments” without mentioning the land. Indeed, each individual unit will own a tiny portion of the land upon which the apartment was built. But when the apartment owner decides to sell his unit in the future, he doesn’t advertise it as “Dijual Tanah dan Apartemen”, never heard of that. If it’s a landed property like a bungalow which is directly attached to the land, then it can be advertised as “Dijual Tanah dan Bangunan”. Can the law be used by real estate agents to sell landed properties to foreigners? I hope no foreigners become victims.
The regulation specifically mentions that landed property (houses) are in consideration as well.
 
Did anybody notice this:

Pasal 144
(l) Hak milik atas satuan rumah susun dapat diberikan
kepada:
a. warga negara Indonesia;
b. badan hukum Indonesia;
c. warga negara asing yang mempunyai izin sesuai
dengan ketentuan peraturan perundangundangan;

d. badan hukum asing yang mempunyai perwakilan
di Indonesia; atau
e. perwakilan negara asing dan lembaga internasional
yang berada atau mempunyai perwakilan di
Indonesia.
(2) Hak milik atas satuan....
 
Did anybody notice this:

Pasal 144
(l) Hak milik atas satuan rumah susun dapat diberikan
kepada:
a. warga negara Indonesia;
b. badan hukum Indonesia;
c. warga negara asing yang mempunyai izin sesuai
dengan ketentuan peraturan perundangundangan;

d. badan hukum asing yang mempunyai perwakilan
di Indonesia; atau
e. perwakilan negara asing dan lembaga internasional
yang berada atau mempunyai perwakilan di
Indonesia.
(2) Hak milik atas satuan....
Article 144
(l) Ownership rights to apartment units can be granted
to:
a. Indonesian citizens;
b. Indonesian legal entity;
c. foreign nationals who have appropriate permits
with the provisions of laws and regulations;
d. a foreign legal entity that has a representative
in Indonesia; or
e. representatives of foreign countries and international organizations
who are or have representatives in
Indonesia.
(2) Property rights over the unit
 
This is just a semantic play. If it is only limited to non-landed property what happen to your apartments that you think you own it if the the building is scheduled to be destroyed. You might be offered a solution such as the victims of ATG Robo trading where they were offered their money to be exchanged with valueless Lego or shitcoin Cryptos.
How come "right to use or lease for indefinite period" to be compared with "hak milik" which is known as freehold in other countries.
When you own something you do not need to depend on how the other people will act with regard to the property you own.
"Freehold is the permanent and absolute ownership of property or land. If you own the freehold, it means that you own the building and the land it stands on."
I fully agree with other people opinion, if your option is limited to buy a non-landed property you might be better off by just renting / leasing.
 
Last edited:
This is just a semantic play. If it is only limited to non-landed property what happen to your apartments that you think you own it if the the building is scheduled to be destroyed. You might be offered a solution such as the victims of ATG Robo trading where they were offered their money to be exchanged with valueless Lego.
How come "right to use or lease for indefinite" to be compared with hak milik" known as freehold in other countries.
I fully agree with other people opinion, with this right you might be better off just renting / leasing.
To sell an apartment when a WNA is considering "to buy" or rent an apartment is of course very lucrative. Isn't that the game/play here for the agents to participate in selling apartments to WNA?
 
Last edited:
The price of an apartment when "buying" is much higher of course then renting. Isn't that the game/play here?
It could be if you could get a gem, a real bargain.
Need further research about how many years until the payback period, the breakeven point. this will definitely depend on whether you get a bargain. If your payback period is the same with your estimated period of time you need to rent an apartment (say 25 years) than that is a no brainer decision, buy is better.
Renting your apartment to someone else? You need to include the income tax to the equation. Another thing here is flexibility and risk you might change your plan in the future, you might not like the current location, etc.
Typically the price of a plot of land in residential area increase significantly with time. In apartment (unless very high quality built apartment that could stand for 100 years+) it is the opposite. The value might deteriorate with the apartment's condition and their surrounding.

We should look an independent research about this, not the research from from the properties developers,

Here is the story of individual on both side of the equation.
 
Last edited:
It could be if you could get a gem, a real bargain.
Need further research about how many years until the payback period, the breakeven point. this will definitely depend on whether you get a bargain. If your payback period is the same with your estimated period of time you need to rent an apartment (say 25 years) than that is a no brainer decision, buy is better.
Renting your apartment to someone else? You need to include the income tax to the equation. Another thing here is flexibility and risk you might change your plan in the future, you might not like the current location, etc.
Typically the price of a plot of land in residential area increase significantly with time. In apartment (unless very high quality built apartment that could stand for 100 years+) it is the opposite. The value might deteriorate with the apartment's condition and their surrounding.

We should look an independent research about this, not the research from from the properties developers,

Here is the story of individual on both side of the equation.
Interesting. Specially about renting an apartment. From what I learned here from neighbours: renting an apartment is cheaper than buying. Because there is still a gap between the rich people and middle class. The rich buy 1 or more apartments and rent out to ... (cannot to rich people, because they buy) .. middle class. Yet, middle class cannot afford to pay more than 5 -15 juta per month. So that keeps the rent low, because of the gap. So, that's also why renting an apartment is better than buying for now.
 
Last edited:
As a potential real estate owner, one of the biggest mistakes you can make is only to buy what you like. Esp. as foreigner you might walk into traps. Example: A house at the end of the cul-de-sac is rather popular in western countries since there’s no through traffic. Over here they call the house tusuk sate and most (esp. Chinese) don’t want that. Top floors of apartment buildings are popular and more expensive for the views and calm surrounding. People here are often afraid of extremely high levels though (calamities) and concerned about water leaks. The same applies to renovation (standards).

There are some factors that make it completely impossible to assess for Jakarta what the future will bring: We’re post pandemic and need to see if and how the economy recovers; there have not been the huge banjir the previous years (el niña?) as the ones from 10 years ago; we don’t know what the impact of the new capital city will be; there‘s the everlasting threat of the sea; there are huge projects being planned and built.

On the calculation: In fact it’s rather simple and straight forward. Since the building management costs and all the facilities and utilities are for the rentee, it’s not difficult to calculate and assess. Just take 10/12 of the rental income, assume 2 months will cover the unforeseen costs. And put that against the ‘all inclusive‘ purchase. Then you’ll see what the % of rental income is and compare that with the best deposito rate of a Seabank or so.
From a real life example: Suppose you have a small one bedroom for 1 billion, and you can rent it out for 33 million yearly. That will be 2,75% which is not interesting at all so better put your money elsewhere.

But but but: The market here is very volatile so an apartment building like the new Taman Anggrek which stood half empty for a year, suddenly becomes very popular and has a huge demand. The rental income skyrockets. And that‘s why I have to chuckle when I hear someone like Balifrog make statements about Asians losing face; it made a lot of sense not to accept the low rental price but to wait.
 
As a potential real estate owner, one of the biggest mistakes you can make is only to buy what you like.
If you are buying for investment, then yes. If you are buying for yourself & family to live in for the next few decades then I would say you should definitely buy what you like. Why would you buy something you don't like? Why would you buy something based on whether a Chinese person might like it or not?
 

Users who viewed this discussion (Total:0)

Follow Us

Latest Expat Indo Articles

Latest Tweets by Expat Indo

Latest Activity

New posts Latest threads

Online Now

Newest Members

Forum Statistics

Threads
5,965
Messages
97,415
Members
3,038
Latest member
nightclubs
Back
Top Bottom