Important land titles for property ownership in Indonesia
Indonesia offers various types of property ownership through different land titles and certificates. These range from freehold to leasehold ownership, with each title and certificate carrying specific rights and obligations that buyers need to be aware of.
Here are the most important land titles in Indonesia:
Hak Milik (HM) – Right to Own
Hak Milik is the most prestigious freehold land title in Indonesia, granting complete ownership rights over land. This title is exclusively available to Indonesian citizens, meaning that foreign nationals (WNAs) and foreign-owned companies (PT PMAs) cannot purchase or own property under the Hak Milik title. Properties with this type of land certificate can be sold, transferred, inherited, or mortgaged to any eligible individual. Additionally, Indonesian citizens have the ability to convert a Hak Guna Bangunan title into a Hak Milik title.
Hak Guna Bangunan (HGB) – Right to Build
In Indonesia, the Hak Guna Bangunan (HGB) regulation permits legal entities to own freehold property. Foreigners can acquire property by setting up a PT PMA or by converting a Hak Milik title to HGB if the recipient is a legal entity. Another option is leasing land and building on it, with the HGB title granting ownership of the building while the land remains with the legal owner.
The HGB title allows the holder to use the building for private or commercial purposes, including office setup, mortgage, and securitization. Some industries may require additional certificates for commercial activities. The HGB title can be sold, bought, and inherited, and shares similar land use rights as Hak Milik. Only Indonesian nationals can transfer an HGB title to a Hak Milik title.
The National Land Agency (PBB) issues HGB titles, which are valid for 30 years, extendable for 20 and 30 years. A new HGB title can be applied for after expiration.
Hak Pakai (HP) – Right to Use
Indonesians and foreign residents with KITAS, KITAP, or a Second Home Visa ITAS can buy property in Indonesia under the Hak Pakai title. This is a common method for foreigners to own property in the country. Each foreigner can hold only one Hak Pakai title, strictly for residential use, meaning the property cannot be rented out.
Hak Pakai grants the right to use a building for a set period, initially valid for 30 years, with possible extensions of 20 and 30 years. After 80 years, a new Hak Pakai certificate can be applied for.
Hak Sewa (HS) – Right to Lease
Hak Sewa (HS) is a land title that allows the owner to lease property to foreign nationals or Indonesian citizens. It is available to Indonesian citizens with Hak Milik land and foreign-owned companies with Hak Guna Bangunan buildings. Owners of a Hak Sewa title can rent out their property and earn income from tenants.
Hak Guna Usaha (HGU) – Right to Cultivate
Hak Guna Usaha (HGU) allows locals and legal entities, including foreign-owned ones, to cultivate or use land for agriculture. This title is valid for 25 years, extendable by another 35 years, and is issued by the National Land Agency under government supervision.
Hak Milik Atas Satuan Rumah Susun (HMSRS) – Right of Ownership on Multi-Story Building Units
Hak Milik Atas Satuan Rumah Susun (HMSRS), or Strata Title, grants ownership of a unit in a multi-story building, including the right to use shared facilities. The title applies only to the unit, not the land, which must be under a Hak Milik title. Foreigners with a valid residency permit (KITAS or KITAP) can obtain this title, but foreign ownership is capped at 49% of the total floor area.
Hak Pengelolaan (SHLP) – Right to Manage
Hak Pengelolaan (SHLP) is the most restrictive land certificate, where the government owns the land and grants the holder the right to manage it on its behalf.
Foreign Property Ownership in Indonesia
Foreigners can obtain Hak Guna Bangunan, Hak Pakai, Hak Sewa, Hak Guna Usaha, and Hak Milik Atas Satuan Rumah Susun. These titles are sometimes only accessible through a foreign-owned company (PT PMA), or individually with a valid residency permit (KITAS or KITAP).
Foreigners typically buy property through a PT PMA, which can hold various property titles, including freehold or leasehold. Many foreigners lease land through a PT PMA and construct buildings with Hak Guna Bangunan. Working with a local real estate agent is recommended for finding property.
All the above-mentioned information is not intended to replace advice from legal and tax professionals.