Property Titles in Indonesia
The Indonesian culture and Government make use of a distinct variety of property titles that is used to distinct the ownership rights and the title of properties as well as their applications.
Indonesian Land Titles
Below is a list of Indonesian Land Titles that reflect the forms of legal land titles as regulated by the Indonesian government:
HakMilik — equivalent to Freehold title
HakGuna Usaha — Cultivation Rights Title
HakGunaBangunan — Building Rights Title
HakPakai — Right to Use Title
HakSewauntukBangunan — Right to Rent for Buildings
HakMembuka Tanah — Land Clearing Rights
MemungutHasilHutan — Forestry Rights
HakGuna-air, Pemeliharaan&PenangkapanIkan — Water Use and Fisheries Rights
HakGunaRuangAngkasa — Airspace Use Rights
Hak-hak Tanah untukKeperluanSuci&Sosial — Land Title for Social & Religious Purposes
For our foreign investors, the most common titles that are usually attached to the properties they have shown interest in and their investments and properties include:
Freehold Title (SHM or Sertifikat HakMilik)
This title grants absolute ownership of a land plot and represents the freehold title in Indonesia. This title is hereditary and can be held only by individuals of Indonesian decent. Foreigners are not allowed to access to this title (“SHM”) under their own name.
Rights to Build Title (HGB or Sertifikat HakGunaBangunan)
HGB title gives the right to build and own buildings on a plot of land. This right is transferable and is a form of freehold title that can be owned by Indonesian citizens and Foreign companies legally established under the Indonesian Law and in the Indonesian territory (including foreign owned companies PT PMA).
The HGB title is one of the most commonly used title for Foreign companies in order to own real estate in Indonesia
The Right to Build title is granted by the National Land Agency for an initial period of 30 years and it is extendable for a first period of 20 years and then again extendable for a second period of 30 years.
At the end of the 80 years a new HGB title may be granted with the same terms and on the same plot of land.
This land title is almost a leasehold title as it is can be renewed for infinity after it is expired.
The important point of this title is the capacity to sell the land as a freehold to an Indonesian citizen and the possibility to use this title to obtain a loan collateral while serving as a Freehold.
For Foreigners who are looking to own properties in Indonesia, we highly recommend this land title. The only obligation is to create a company PPAT PMA in Indonesia, but it is better solution than obtaining only the SHP (SerfikatHakPakai or Right of Use) title.
Right to Use Title (HP or Sertifikat HakPakai).
This title gives you the right to use a state-owned land or land owned by other Indonesian citizen for a specific purpose as agreed by both parties. This title can be held by Indonesian citizens, individual foreigners residing in Indonesia, representative offices of foreign institutions or foreign embassies.
The title can be granted for a maximum validity period of 30 years and is extendable for another 20 years and again and is extendable for another 30 years.
Generally, foreign individuals that are not registered under current Indonesian laws enjoy only the Right of Use title (HP or HakPakai).
Other property language abbreviations:
HM : HakMilik or Freehold Title
HGB : HakGunaBangunan or Right to Build
IMB : IjinMendirikanBangunan or Building Construction Permit
BPN : BadanPertanahan Negara or National Land Office
BKPM : BadanKoordinasiPenanaman Modal or Capital Investment Coordinating Board
PPN : PajakPertambahanNilai or Value Added Tax (VAT)
PMA : Penanaman Modal Asing or Foreign Investment Company also called PT PMA
AJB : AktaJualBeli or Sale and Purchase Deed
PPAT : PejabatPembuatAkta Tanah or Land Deed Official