Last Updated on August 1, 2024 by Yasmina
If you’re considering property ownership in Bali or Lombok, understanding the various land titles and certificates is essential before investing in the islands. Indonesia’s land ownership system can be complex, especially for foreigners.
Here’s a comprehensive guide to the seven most important land titles and certificates you need to know.
Table of Contents
Types of Land Titles and Certificates in Indonesia
1. Hak Milik (Freehold Title)
Description: Hak Milik, or freehold title, is Indonesia’s most comprehensive and secure form of land ownership. It grants the holder absolute ownership rights over the land, including the right to sell, lease, or transfer the property without time limitations.
Eligibility:
- Only Indonesian citizens can hold Hak Milik. This restriction is designed to protect national ownership of land.
Why It Matters:
- Security and Permanence: As the highest form of land ownership, Hak Milik provides complete security and permanence, making it highly valued.
- Inheritance: Hak Milik can be passed down through generations, ensuring family ownership over the long term.
2. Hak Guna Bangunan (Right to Build)
Description: Hak Guna Bangunan (HGB) is a land title that grants the holder the right to build and own structures on land owned by the state or another entity. The initial term is up to 30 years, with the possibility of extensions for another 20-30 years, and further renewals are possible.
Eligibility:
- Available to Indonesian citizens, foreign individuals, and companies (including PMAs – foreign-owned companies).
Why It Matters:
- Flexibility for Foreigners: HGB is particularly attractive to foreign investors and businesses as it allows them to own buildings and use the land for an extended period.
- Commercial Use: Ideal for businesses and commercial projects, providing a secure legal basis for investment.
3. Hak Pakai (Right to Use)
Description: Hak Pakai grants the holder the right to use state-owned land or land owned by another entity for a specific purpose (residential, agricultural, etc.) for a period of up to 25 years, with the possibility of extension.
Eligibility:
- Can be held by Indonesian citizens, foreign individuals, and foreign entities.
Why It Matters:
- Accessible to Foreigners: Hak Pakai is a common choice for foreigners looking to use land for residential purposes.
- Versatility: Suitable for various uses, including residential, agricultural, and commercial, depending on zoning regulations.
4. Hak Guna Usaha (Right to Cultivate)
Description: Hak Guna Usaha (HGU) grants the right to cultivate state-owned land for agricultural, fishery, or livestock purposes. This title is valid for up to 35 years and can be extended for another 25 years.
Eligibility:
- Available to Indonesian citizens and Indonesian legal entities.
Why It Matters:
- Agricultural Investment: HGU is essential for investing in large-scale agricultural or farming ventures, providing long-term land use rights.
- Economic Contribution: Encourages investment in agriculture, which is a key sector in Indonesia’s economy.
5. Hak Sewa (Right to Lease)
Description: Hak Sewa allows the holder to lease land for a specific period. This title is commonly used for commercial and residential purposes and does not grant ownership rights over the land.
Eligibility:
- Available to Indonesian citizens, foreign individuals, and foreign entities.
Why It Matters:
- Flexibility: This option allows foreigners and businesses to use land without permanent ownership. It is often used for business leases and residential rentals.
- Short-Term Use: Ideal for short to mid-term investments and projects.
6. Strata Title
Description: Strata title is used to own individual units within a multi-story building (such as apartments). It grants ownership of a specific unit and shared ownership of common areas.
Eligibility:
- Can be held by Indonesian citizens and foreign individuals under certain conditions.
Why It Matters:
- Urban Living: This is ideal for investing in urban real estate, particularly high-rise apartments and condominiums.
- Shared Facilities: Owners benefit from shared facilities and common areas the building management maintains.
7. Sertifikat Hak Milik atas Satuan Rumah Susun (Certificate of Ownership of Strata Title Unit)
Description: This certificate provides proof of ownership for an individual unit within a multi-story building, similar to the Strata title.
Eligibility:
- Available to Indonesian citizens and foreign individuals.
Why It Matters:
- Legal Recognition: Provides legal recognition and protection for apartment owners, ensuring their rights to the specific unit and shared common areas.
- Investment Security: Offers security and clarity for investors in multi-unit residential properties.
Navigating Ownership for Foreigners
While foreigners cannot directly own land in Indonesia, there are legal structures and agreements that allow them to hold land and property rights indirectly. Here are some common methods:
- Hak Pakai: Foreigners can hold Hak Pakai and use the land for residential purposes.
- PMA (Penanaman Modal Asing): Setting up a foreign-owned company (PMA) allows foreigners to obtain land under Hak Guna Bangunan (HGB) for business activities.
- Lease Agreements: Foreigners can lease land through Hak Sewa for a specified period, providing flexibility without ownership.
FAQs on Ownership in Lombok
Can foreigners directly own land in Lombok?
No, foreigners cannot directly own land in Lombok or anywhere in Indonesia. They can, however, use structures like Hak Pakai or set up a PMA to obtain certain rights to use land.
What is the best way for foreigners to invest in property in Lombok?
The best way is often through Hak Pakai for residential use or setting up a PMA for business purposes, allowing them to hold Hak Guna Bangunan (HGB).
How long does it take to obtain a land title in Lombok?
The process can vary but typically takes several months, depending on the title type and the completeness of the required documentation.
Wrapping It Up
Understanding Indonesia’s different land titles and certificates is crucial for investing in Lombok. Knowing your options and the legal structures available allows you to make informed decisions and navigate the property market confidently. Whether you’re a local or a foreign investor, these land titles offer various ways to secure your investment in this beautiful part of Indonesia.
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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 just 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!
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