Buying or leasing property as a foreign in Indonesia

Buying or leasing property as a foreign in Indonesia

Buying or leasing property is one of the most common ways for Indonesians to protect and increase the value of their assets. Not everyone knows how to do it safely or not lose money.

Register a company (PT PMA) to buy property

The safest way to purchase property is to register a foreign-owned company (PT PMA). Your PT PMA can buy property (except land) with the Right to Use title. When you sell the property to a local investor, then they can change the title to Right to Own.

Get a residence permit (KITAS) to lease property

You need to apply for a residence permit (KITAS). To lease, you’ll need to sign a Lease Agreement in front of a public notary.

If you don’t have a KITAS and a person to sponsor it, then using the employer of record service is the easiest way to get it.

Avoid buying property under a local person’s name

Some foreign nationals still believe that the only way they can proceed with a property deal in Indonesia is when it’s under a local person’s name. While the local person can have the best intentions, it’s still an investment based on blind trust.

Hence, no matter how well you know the local person, this is one of the surest ways to lose money in Indonesia. If the local person owns the property, they are under no legal pressure to give you control over it. Property transactions are big enough to justify the expense of setting up a company.

Six steps to buying property in Indonesia correctly

In short, here is what you need to be wary of when considering to enter into a property deal in Indonesia:

1. Use professional registered real estate agents

Property ownership structures can be complicated, especially if it was inherited. In most cases dealing with amateurs, such as helpful friends, will complicate the process.

2. Check the property licences

There are two crucially important documents from the viewpoint of buying property in Indonesia:

• The Certificate of the Property
• The Building Licence/ IMB

If you are having difficulties receiving these two documents from the seller, you should not proceed with the transaction.

3. Conduct due diligence

Conducting due diligence comes right after you have everything settled with the property licences. Don’t break under the pressure of the seller, even if they claim to have a line of buyers besides you. It’s better to lose a good deal than to rush into a bad one. In our blog, we’ve highlighted the key questions you should ask when it comes to land due diligence.

4. Sales purchase agreement

Sales purchase agreement (SPA) obligates a seller to sell, a buyer to buy and sets the terms. Sign it in front of a public notary authorised for the area (PPAT).

5. Final payment

Final transfer and the signing of the Deed Of Sell and Buy should be made simultaneously in front of the public notary.

Note that both parties need to pay an additional tax:

• Seller pays 2.5 % of the transaction value
• Buyer pays 5 % of the transaction value

6. Change of ownership

Once you complete the previous steps, the public notary will transfer the ownership to you

And if you think its will be long stepp our team can assist yo to do all the process or if you need consultation first you can contact us on whats app +62 813 3173 3073