Buying real estate in Indonesia is available not only to citizens but also to investors having a residence permit in the country. It should be borne in mind that Indonesian laws allow overseas residents to acquire property exclusively with long-term ownership rights. There are several options to obtain the right to use housing.
Content:
- Buying real estate in Indonesia: pros and cons
- Peculiarities of buying real estate in Indonesia by foreigners
- Stages of real estate registration procedure in Indonesia
- Costs of buying and selling real estate in Indonesia
- Real estate taxes in Indonesia
- We will help you become a real estate owner in Indonesia!
The island nation offers something to suit any taste, from small flats in a busy city to luxury oceanfront villas.
Buying real estate in Indonesia: pros and cons
Today, the country of a thousand islands is a popular destination for investors purchasing homes to resell or rent out. Tourist regions, especially Bali, are sought-after locations by freelancers, digital nomads, and business people, who are not tied to a specific workplace and want to enjoy a warm climate and the proximity of the ocean all year round.
The Indonesian economy shows stable growth, and inflation rate here is lower than in major European countries. Nowadays, there is a construction boom in the state. While the local property market is emerging, it is still possible to find a property at the construction stage, which, after commissioning, will increase in price by 30–60% and in some cases even 100%. Such profits are a rarity in today’s housing market.
Indonesian authorities are heavily investing in infrastructure. Among other things, the island of Bali is rapidly being built up with modern residential complexes. It is also planned to create another airport, a racetrack, parks, and many other facilities. All this stimulates the influx of tourists and expats into the country, which leads to an increase in demand for housing.
Among the disadvantages of investing in local housing is that foreigners cannot enjoy freehold ownership. However, there are different ways expats and investors can own an apartment or house. Let’s take a closer look at how to buy a home in Indonesia if you do not have the citizenship of the country.
Peculiarities of buying real estate in Indonesia by foreigners
Only citizens are allowed to have private land ownership (Hak Milik) in the islands. Foreign homebuyers acquire the right of long-term use (Hak Pakai). Moreover, during the period of use, you can resell, bequeath, or rent out the property. The specific period of use is not legally established and usually ranges from 20 to 40 years. The buyer is also entitled to subsequently extend the lease period by paying an additional fee, which is written into the contract. The extension period can be up to 50 years.
If you plan to build a private house or residential complex to rent out, you can get the right to build (Hak Guna Bangunan, HGB). To do this, you need to set up a company in your name and apply for an HGB as this entity. The foreign owner can extend the document several times for 30, 20, and 30 years. An overseas national who registers as a legal entity must have a valid residence permit.
In the Indonesian housing market, it is common to sell a long-term leasehold title (Hak Sewa) for 25 years, which is extendable for the same period. A right to lease is cheaper than a right to use.
When it comes to ownership of apartments in Indonesia, the same rules apply here.
How to conduct a remote purchase of real estate
The procedure for buying real estate in Indonesia can be carried out without the physical presence of the buyer. This is usually done through an intermediary, such as an estate agent or lawyer. To do this, you need to get a power of attorney for an intermediary and notarise it.
If you want to acquire a rental flat, a remote transaction is a very convenient option. You do not have to go to Bali to receive income, since you can also rent out housing through an intermediary company, which will take care of finding tenants and completing all the necessary paperwork. The contract can be concluded remotely using an electronic signature. Thus, the investor relieves themself of all organisational responsibilities and simply makes a profit.
If you are thinking about how to buy real estate in Indonesia, there is an option to make a purchase in the name of an intermediary having Indonesian citizenship. This method is occasionally used, but it carries certain risks. To play it safe, you must complete the following documents with a notary:
- an agreement under which you lend an Indonesian representative an amount equal to the purchase value;
- a power of attorney allowing you to make transactions with the property;
- an agreement entitling you to permanently use the residential unit.
All of the above documents allow you to protect yourself from losing money. However, even in this case, not you, but the intermediary will be the legal owner of the purchased unit. The method is best employed by those who plan to obtain citizenship in the future and transfer a title to themselves.
Stages of real estate registration procedure in Indonesia
As a rule, the process of buying and registration of real estate in Indonesia in 2024 if you are a foreign national consists of the following steps:
- notary due diligence of documents of the property being sold;
- the conclusion of a sale and purchase agreement or a sale and purchase binding agreement (if off-plan housing is bought in instalments);
- full payment or down payment in case of an instalment plan;
- obtaining a right of use certificate.
The developer cannot dispose of a land plot acquired by a foreigner without their consent during the entire period of validity of the certificate.
When acquiring a 25-year leasehold title, only a lease agreement is executed with a notary. Registration with government agencies is not required.
How to buy property in Indonesia for foreigners
One of the important stages of buying real estate in Indonesia is payment. Let’s look into this in more detail. As a rule, when purchasing a right to use apartments or villas in Indonesia, there are 3 main payment methods:
- transfer to a bank account;
- SWIFT transfer;
- cryptocurrency payment.
Most of the off-plan projects are sold in instalments, which does not involve overpaying interest to the bank. You simply gradually pay while the residential development is under construction. Developers offer different payment options. Most often, the down payment is about 30% of the total cost.
In the most popular residential projects from developers, you must pay a deposit upon booking a property you want, which is between $1,000 and $2,000. The fee is refundable if you decide to cancel your purchase.
Costs of buying and selling real estate in Indonesia
The procedure for buying real estate in Indonesia involves mandatory costs, including:
- transfer tax of 5% of the transaction value;
- 5% estate agent’s fee;
- 1% land tax;
- 2% registration fee;
- 5–1.5% legal fee;
- 1% notary fee.
Real estate taxes in Indonesia
There are a number of taxes in Indonesia for non-residents owning housing with the right of long-term use. The country has a 2.5% income tax. It is usually paid by the owner of the land. However, in some cases, they may ask to share it with the tenant.
The buyer of a leasehold title for 25 years has to pay a tax of 5% of the transaction amount. If you plan to acquire a house to rent and receive passive income, then the rate will be 11% of the amount earned.
If you have signed an agreement with the developer when purchasing an off-plan property, then no taxes are paid until the construction is completed. When concluding an agreement with the management company, which will find tenants itself, it pays all the necessary taxes. The owner, in turn, pays only for the company’s services.
We will help you become a real estate owner in Indonesia!
Our site contains listings of apartments and houses for sale in the most popular locations in the island nation. For your convenience, one catalogue showcases the most relevant offers from trusted developers, agencies, and individuals. Using an efficient site navigation system and search filters, you can easily select housing options you are interested in to view and then purchase. The site shows prices in different currencies. You can also choose the type of property you need by sorting listings by living space area or location. Sorting by cost allows you to choose an apartment or house among the available options in a specific price range.