Real Estate in Indonesia

For many years Indonesia has decreed that land in Indonesia can only be owned by Indonesian citizens. Thus, if you want to buy a house (as a foreigner), this would have been legally impossible.

In the late 90s, new laws were enacted so that foreigners are now permitted to purchase apartments and office space in Indonesia if the building has a strata title status. This enables the foreigner to own the apartment or office space but not the land on which it stands.

One way for foreigners to go ahead an purchase property despite these legal ambiguities is to sign a Convertible Lease Agreement with the apartment property management office to purchase an apartment. Basically what this agreement entails is that the foreigner may purchase the apartment, but the title is still held in the name of the developer or property management firm. This lease agreement is for a definite period.

Be wary of real estate firms who offer ‘legal services’. Their primary objective in offering those services may be to sell you something quickly and cut corners.

A popular method for foreigners buying property in Indonesia is to enter into a legal contract with an Indonesian citizen (‘nominee’ as they are referred to), whereby he/she holds a freehold title to the property but signs over practical control to the foreigner through power of attorney to sell the land and a loan agreement with the property pledged and secured as collateral.