Last Updated on February 20, 2025 by Nour Estates
Learn everything about Lombok leasehold property agreements, how they work, and why they are an excellent choice for foreign investors looking to enter the Indonesian real estate market.
Table of Contents
What is a Leasehold Property in Lombok?
In Indonesia, foreigners cannot directly own land. However, a leasehold agreement (Hak Sewa) allows you to lease land or property for an extended period, making it one of the most popular options for foreign investors in Lombok. This type of ownership is legally recognized and offers stability for long-term projects.
How Does Leasehold Work?
Key Features of a Leasehold Agreement:
- Lease Period: Typically 25 years, with options to renew for an additional 20-25 years. Some agreements allow for multiple extensions, depending on the contract.
- Legal Ownership: The land remains owned by an Indonesian citizen or entity, while the lessee (you) has full rights to use and develop the property during the lease period.
- Flexibility: You can lease land for personal use, commercial projects, or residential developments, depending on zoning regulations.
Renewing a Lease:
Extensions are often negotiated before the lease expires (usually 10-5 years before the expiration of the lease). Ensure the terms for renewal are clearly outlined in the initial agreement.
Why Choose Leasehold Property in Lombok?
Benefits for Foreign Investors:
- Legal Security: Leasehold agreements are protected under Indonesian law, providing peace of mind for foreigners.
- Cost-Effective: Leasehold properties are generally more affordable than freehold options (available only to locals).
- No Need for a PT PMA: Unlike freehold ownership via a foreign-owned company, leasehold agreements are simpler to establish.
- Flexibility for Development: Leasehold agreements allow for the construction of villas, resorts, or commercial buildings, depending on your investment goals.
Ideal For:
- Foreigners seeking vacation properties.
- Entrepreneurs investing in Lombok’s growing tourism sector.
- Buyers looking for affordable, long-term property solutions.
How to Secure a Leasehold Property
Step-by-Step Process:
- Find a Reputable Agent: Work with licensed agents or developers familiar with leasehold agreements in Lombok.
- Conduct Due Diligence: Verify the property’s land title and zoning regulations to ensure compliance with local laws.
- Negotiate Lease Terms: Discuss the lease period, renewal options, and rental fees upfront to avoid future disputes.
- Engage a Legal Expert: A local notary (PPAT) will draft and register the leasehold agreement to ensure its validity.
- Sign the Agreement: Finalize the deal by signing the contract in the presence of the notary.
Pro Tip: Always include a clause for renewal terms and ensure all details are clearly documented in the lease.
Costs Associated with Leasehold Properties
When budgeting for leasehold property, consider these additional costs:
- Annual Rent: Typically calculated per are (100 square meters) of land, depending on location.
- Notary Fees: Covers drafting and registering the leasehold agreement.
- Transfer Costs: If purchasing an existing leasehold, you’ll need to cover the transfer of rights.
- Taxes: Depending on the property type, you may incur rental income tax if leasing out the property.
Leasehold Property vs. Freehold Property
Key Differences:
- Ownership: Leasehold grants usage rights, while freehold (Hak Milik) provides full ownership but is restricted to Indonesian citizens.
- Cost: Leasehold is typically more affordable, making it accessible for foreign investors.
- Legal Process: Leasehold agreements are simpler for foreigners compared to setting up a PT PMA with an HGB.
Popular Areas for Leasehold Properties in Lombok
- Kuta Lombok
- Senggigi
- Are Guling
- Selong Belanak
- Gili Islands
Tips for Foreigners Investing in Leasehold Properties
- Choose the Right Location: Research areas with growth potential and high tourist demand.
- Understand the Agreement: Ensure the contract includes renewal clauses and covers potential legal disputes.
- Work with Trusted Professionals: From agents to legal advisors, rely on experienced professionals to guide your investment.
- Plan for Long-Term Use: Consider how you can maximize returns, whether through rentals, resale, or personal use.
FAQ: Lombok Leasehold Property
Can leasehold agreements be inherited?
Yes, leasehold agreements can be transferred to heirs, depending on the terms of the contract.
What happens when the lease expires?
Once the lease expires, the rights revert to the landowner unless a renewal has been negotiated.
Can leasehold properties be sold?
Yes, you can transfer your leasehold rights to another party, subject to the landowner’s approval.
About Nour Estates
We started Nour Estates with a simple idea: to make finding your dream land in Lombok as easy and enjoyable as a day at the beach. Our team is a mix of local folks and people from around the world who fell in love with Lombok like you. We’ve been in your shoes, faced the challenges of buying land here, and learned all the ins and outs. Now, we’re here to share that knowledge with you.
We are here to find you the perfect land to invest in. Contact us today, and let’s start this exciting journey together!
📧 Email: hello@nourestates.com
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