realtors around Indonesia and internationally, think that the land laws in Bali are different from the rest of Indonesia, that foreigners may own of freehold land! You may also possess freehold land with a secondary title on top of it, is the right of use (Hak Pakai) and right to build (Hak Guna Bangunan). Some agents also say that recently there has been "changes in the Indonesian land legislation" which allows the structure of the candidates to use for foreigners, and strongly rightly contradicted by Discovery newsletter.
Look at the if Susi Johnston sad for implementation, but the fundamental issue here is that a candidate agreement went wrong. His case may very well set the priority to Indonesian law on this issue. There are currently 140 cases . court or police reports involving structures of the candidates - about 7,000 or more properties in Bali are now held as part of this structure
any false Bali is quite part of Indonesia and its legal system, end of story. Try to go to a notary or lawyer in Jakarta and tell them you want to buy a freehold property in Pondok Indah using a nominee for a freehold. They might be able to set up a foreign owned company (PT PMA) for the right of use (Hak Pakai) or right to build (Hak Guna Bangunan) to own property as a shareholder of this company.
However, the truth is that the Indonesian agrarian law states :. "Any attempt by a foreigner or a foreign entity to secure the freehold in any form is void and the property owned by the Government"
The truth is that there is no need to bypass the law Indonesian, just the crazy perception out there in the property industry in Bali. There are basically three ownership structures of options available to foreigners under Indonesian law.
1. Hak Pakai or right of use. This is a place of residence for Indonesians and foreigners. It is classified as a place of residence and there are guidelines on the number of units and the size of the earth, and the qualifications to be "residential" in Indonesia, with some economic benefit to the Indonesian economy .
2. Hak Guna Bangunan or right to build. This is a commercial basis for villas or developments of the station. There is no discrimination between an Indonesian company and a foreign company on this land title, and a foreign company can be 100% foreign owned.
Both titles come with an option of extension / renewal after 25 and 30 years. This extension / renewal does not mean you buy the land again as it is your land, although there is a tax liability of 0.2% based on the tax appraised value of the land currently underway. In fact, Indonesian law now has special benefits for foreign and foreign investment, allowing an extension / automatic renewal when all that is needed at the end of the first period is to go to the Office Indonesian land, BPN, and that the new certificate issued for the second period.
Some people question the strength of these two land ownership structures. However, even towards the end of the mandate of title, ownership can freely sell to an Indonesian and get back freehold title. Specifically right to build, in a transaction of the property could also apply for a new term of 30 years for the new owner.
3. The third option for foreigners is a lease before the right of the land and / or property. 25-30 years is a normal hire period and it will not challenge the existing structure of foreign securities mentioned above available. Some legal advisors indicate you can do longer leases because there are no arguments against this under Indonesian law. Others would argue 2-3 and structure agreements of 30 years each in order not to circumvent the spirit of the securities mentioned above. If we do not do that, you might choose to specify an extension after 25-30 years would be at this time of market value, which is decided by the lessee and the lessor, as well as two three independent experts.
Solutions to the ongoing discussions around Indonesian land laws may need to extend the right of use (Hak Pakai) title in 70 years and the right to build (Hak Guna Bangunan) to 85 years in one go without having to formally renew / extend certificates. This has in fact already happened a few times, the first time in 2007, but the changes were rejected by the Constitutional Court. Whether it will pass this time or not remains to be seen.
Overall, existing laws and regulations, a safety perception, already enough for investors, and it is on market education on misperceptions around these titles and risks associated with the use of a nominee, as shown in several recent cases.
The main thing for any buyer or investor to consider is the purpose and how they want to use the property, as well as their final exit plan, if any. One can also consider using an offshore holding company to protect more as the owner account of land and property, and this structure can also be tax advantages to a potential output and sale of the property.
The central government and the provincial governments are very well aware of the issues and are constantly considering regulations to discipline this. The sooner the better, it is not complicated nor difficult. Without the right guidance, it is a jungle out there.