The different types of land rights within Indonesia, based on land law:
Ownership right is the strongest right and this can be transferred to another party by inheritance, by sale & purchase, or by other legally acceptable means. This land also can be mortgaged and used as security/debt collateral. This right can be personally owned by an individual, and or by a legal body/entity (i.e. limited company, foundation or other).
Right to use
This right is owned by the state; sometimes the government will offer this land to foreigners for agricultural, fishing or conservation reasons. This land cannot be used or rented for real estate, industrial, commercial or other extraordinary purposes. This land can be used for debt collateral.
Right to develop
State land or land bearing the right of ownership has the provision of the right to develop. This is where property may be built on land - which is not owned by the property developer - through a legal land lease agreement between the landlord/government and the property developer. The term of the right to develop is 30 years and can be extended. This right also allows the property to be mortgaged.
In addition to the above, a foreigner can own Indonesian land through investment, normally by direct foreign investment (PMA). This method is usually the best way of owning land in Indonesia.
In summary, a foreigner can obtain legal ownership of land in Indonesia by purchasing land and/or property based on the Indonesian regulations of 1996, or alternatively by foreign investment in Indonesia.
Q: How long will it take to close a land purchase transaction and what are the steps that need to be completed?
A: In general, once the above mentioned procedures have been followed, ensuring there is no handicap of land status or likely problem, the transaction can be completed as soon as the buyer is ready. The other parties involved in this transaction are the seller, and the notaris whose responsibility is to legalise the deed and collect the taxation payment for purchasing or renting the land. The transaction can be conducted within 1-3 weeks, after the lawyer’s investigations and searches have taken place to the full satisfaction of the lawyer.
Before you decide to sign on the dotted line for any property purchase, it is essential to consult with a reputable lawyer, who specializes in Indonesian property ownership by foreigners, to ensure that you understand the legal status of your ownership.