Many foreigners considering an Asian destination aspire to purchase an apartment or house in Indonesia. This country has long been one of the most popular tourist destinations in Southeast Asia. It’s not surprising that many people dream of owning real estate here. If you’re looking to buy a highly liquid residential property in a sunny country, there are several factors to consider. We’ll discuss them in this post.
Content:
- Rules for purchasing housing in Indonesia
- Form of ownership when purchasing housing by foreigners
- Stages of purchasing real estate
- Most popular locations in Indonesia for purchasing housing
- Buying highly liquid housing in Indonesia
Rules for purchasing housing in Indonesia
As per local legislation, to purchase real estate in Indonesia, a foreigner-only needs to provide a passport. They do not require a residence permit or need to make a special contribution to the local economy. Moreover, a foreigner can own one land plot with an area of no more than 0.5 hectares and the cost of housing must meet the minimum requirements established for each region.
The minimum prices for houses in different regions of the country are as follows:
- Jakarta, Banten, West Java, Central Java, East Java, Yogyakarta region and Bali: IDR 5 billion (USD 325,000).
- West Nusa Tenggara: IDR 3 billion (USD 195,000).
- North Sumatra, East Kalimantan, South Sulawesi, Riau Archipelago: IDR 2 billion (USD 130,000).
- For other regions or provinces, the minimum cost is IDR 1 billion (USD 65,000).
The minimum price for apartments is as follows:
- Jakarta: IDR 3 billion (USD 195,000).
- Banten, West Java, Central Java, East Java, Bali, Yogyakarta Special Region: IDR 2 billion (USD 130,000).
- Other regions or provinces - IDR 1 billion (USD 65,000).
The average cost of apartments and houses in the country varies depending on the location and type of property. In Indonesia's capital, Jakarta, the average price of a 2-bedroom apartment is around IDR 2 billion (approximately USD 140,000). In Bali, the average cost of a 2-bedroom villa is IDR 5 billion (about USD 350,000). In other regions of Indonesia, prices are generally lower than in Jakarta and Bali.
Form of ownership when purchasing housing by foreigners
Hak Pakai is a special type of property ownership in Indonesia, literally translated as "right of use". This title allows foreigners to lease real estate on land owned by the state or private individuals for an extended period. Hak Pakai is time-limited and can be provided to various customers. Its validity period is 30 years with the possibility of extension. Despite being a rental form, it grants the temporary owner all the rights of a property owner. They can rent out the property, resell it or transfer the usage rights.
Stages of purchasing real estate
When selecting a suitable property that can subsequently be used at your discretion - for short-term, long-term rent or resale - it’s crucial to consider its location, size and amenities. Depending on your budget and preferences, you can find a residence in the city centre, near busy tourist areas or conversely, in a quiet place. Basic buying steps:
- License verification. This step is worth doing before you start buying or negotiating the price. You need to request a title deed and building permit (PBG) from the seller. If they cannot provide these documents, it may indicate certain violations.
- Signing the Sales and Purchase Agreement (SPA) and making an advance payment. The SPA is a legal document that defines the obligations of both the buyer and the seller. An advance payment is required to sign the agreement - usually between 10% and 30% of the total purchase price. It’s important to ensure that the contract protects your interests and that you fully understand all its terms.
- Completing the transaction. This involves the transfer of ownership from the seller to the buyer, conducted in the presence of a notary. Before transferring the property, the buyer must pay tax (BPHTB).
If you are purchasing a resale home, it’s advisable to consider the following. Some sellers may offer an unofficial price to reduce taxes, but every property has a so-called NJOP (Nilai Jual Objek Pajak). The NJOP represents the average value received on a sale and determines the tax amount to be paid. This price is set by the authorities and serves as the basis for calculating the owner's tax liability.
It’s crucial to ensure that the amount requested by the seller aligns with or is close to the NJOP. If there’s a significant difference between the offered price and the NJOP, you may be subject to a claim or be required to pay additional taxes. If you discover a discrepancy, it’s advisable to consult with a lawyer or tax audit service to avoid unexpected financial problems.
The transfer of ownership occurs through an official deed executed by a notary public after all payment and tax obligations have been fulfilled. This transfer is registered with the National Land Agency (the BPN) and the buyer receives a Certificate of Title containing all the necessary information about the property. After completing the transaction, the buyer becomes the legal owner of the property and can dispose of it at their discretion.
Working with a trusted lawyer is recommended. To find one, you can contact the Indonesian Bar Association (PERADI). The cost of a specialist’s services depends on the transaction’s complexity, usually ranging from 1-2% of the purchase price.
Most popular locations in Indonesia for purchasing housing
The most popular cities for foreigners to purchase housing are Jakarta and Bali. The capital offers a variety of real estate options, including apartments and country houses. In addition, it serves as the country’s centre of business and economic activity. Bali attracts buyers with its beaches, culture and tourism industry.
Other promising areas deserve attention. For example, Bandung is famous for its comfortable climate and beautiful nature, making it an excellent destination for those looking for a slow-paced lifestyle. Another option is Surabaya, the second largest city in Indonesia and a growing business and economic centre.
Buying highly liquid housing in Indonesia
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