Many people from many nations are now choosing to live their dreams as they invest here in Bali. It offers a great climate surrounded by warm and friendly people. The incredible sunrises and magnificent sunsets charm many people here every day. It is also surrounded by incredible surf and ocean activities as people enjoy the melting pot of international cultures. Building a life can be achieved and not only achieved people have prospered and lived happily her for many years. However it is necessary to become accustomed to Indonesian law and practices, the different cultural approaches from your own nation. Once you learn to slowly grasp how life here works you will no doubt find that investing here was a great choice as well.
Types of Land Title;
All Land and spaces ownership and use in Indonesia derives from the Indonesian real estate law that is called the “Basic Agrarian Law” (Law N. 5/1960, entered into force on September 24, 1960 also referred to as UUPA (Undang-undang Pokok Agraria, The Basic Agrarian Law Act). From our experience we can offer you some basic information for a general overview of property and land purchases here in Indonesia.
Below are some of the titles presently available for land ownership in Indonesia. Please note that some of these titles can not be held by a foreigner and must be held by an Indonesian citizen.
- Hak Milik – Freehold title, this is the highest form of ownership in Indonesian
- Hak Pakai -A Title that can be held by a PMA company or a foriegn kitas holder allowing a 25 year title with rights of use and also ability to extend the title. Limited to private residences and maximum 2500 sqm in size
- Hak Guna Bangunan -This is a title allowing the Right to Build
- Hak Sewa untuk Bangunan – This is a Rental Title allowing the Right to Rent for Buildings
- Hak Membuka Tanah – Title allowing Land Clearing Rights
- Memungut Hasil Hutan -Title allowing only Forestry Rights
- Hak Guna-air, Pemeliharaan & Penangkapan Ikan – Water Use and Fisheries Rights
- Hak Guna Ruang Angkasa -Airspace Use Rights
- Hak-hak Tanah untuk Keperluan Suci & Sosial — Land Title for Social & Religious Purposes
The law regarding freehold land ownership is very clear in Indonesia. The only land that can be owned freehold by a foreigner is land for National Embassies allocated to a country by the government for the building of its embassy and ambassadors. Under no circumstances can a foreigner own freehold land in Indonesia with a freehold Hak Milik title.
Whilst this is very clear in Indonesian law the Indonesian Government often speaks of foreign investment in Indonesia which is often very confusing and contradictory because it has has yet to create a simple and clear process for foreign investors to follow regarding investing here. This is what we know;
Nominee Agreements Beware;
Previously people were often discouraged against a rental or lease agreement as it was a depreciating title over time. It was guaranteed fact that the rental or leasehold property would devalue over time as the lease gets closer to expiry as each day passes.
Until now many investors have purchased land with nominee agreements, which is basically purchasing the land or property in partnership with an Indonesian national and using their name on the Hak Milik Title. There are usually a series of extra surrounding contracts including a mortgage agreement, a rental agreement, a rights to build and use agreement and a power of attorney agreement. These extra agreements have been drafted and suggested by Indonesian lawyers and Notaries over the last 15 years to be the safest way for a foreigner to invest in Indonesia as long as their relationship with their nominee remained conflict free.
So Why Nominee Agreements?
These are civil agreements agreed in writing between 2 individuals in a Notary. However in a court of law they have proven difficult to uphold if there are problems that arise with the nominee or title holder who is an Indonesian national. This is because they are seen by judges as against the spirit of the Indonesian law which clearly states that foreigners cannot own land freehold here. Regardless of this fact many people have prospered under nominee agreements and have felt that the nominee process was suitable for them and as a result has been very popular until now.
Please understand that It was also the most popular process suggested by Indonesian Lawyers and Notaries as the best possible legal route to take if choosing to invest here.
HOWEVER PLEASE NOTE the situation is changing fast.
The nominee structure is basically a leasehold agreement with an attempt ( yes an attempt based on the relationship and cooperation of your nominee) to have some control over the Freehold title. However this is presently under serious scrutiny by the Indonesian Government who has issued a statement in March 2015 suggesting that all land and property purchased through this process ass actually fraudulently obtained and criminally liable. It was stated by the land and spaces Minister that nominee agreements in Indonesian law are an illegal attempt to sidestep the spirit of Indonesian law which clearly states that only Indonesian citizens can own and control land through a Hak Pakai Title. As a result he stated in a press release tha the government has a legal claim on the title if this process has been used, regardless of the fact the Title is in the name of an Indonesian citizen.
Until now regarding many land and property purchases using nominee agreements there was only a problem if there was a dispute between the foreigner and the nominee.
The nominee agreement has been the most popular legal process offered to foreigners by Indonesian Lawyers and Notaries in the past. However this year during March 2015 it was highlighted by the Government that all nominee agreements in their attempt to sidestep Indonesian Land ownership laws are all blatantly illegal. The Government has also stated that all titles held under nominee agreements will be under scrutiny by the New Government as they are trying to clarify and clear the pathway for further international investment in Indonesia. They stated that it was illegal to the extent that the land titles purchased with this method even though they are in an Indonesian Nationals name will automatically revert to Government ownership. So for now the Nominee legal structure whilst presently under legal scrutiny and with its validity in Indonesian law being questioned is strongly discouraged.
PT NAGISA BALI will advise against this legal structure for any current land or building purchases.
So please check your desired property title status and your own legal status to be able buy or lease land in Indonesia before continuing further.
We ask you first to please consult your lawyer regarding your national legal and investment status and the requirements with regards to you or your representatives purchasing land and property here in Indonesia.
At PT Nagisa Bali, we offer properties for sale based on the assumption that you are in a position legally and financially to purchase what we have on offer. We will do our best to guide you through the process and also have recommendations for some of the most experienced notaries and lawyers on the island who are in a better position to inform you based on your own status.
Further Information to consider;
Mixed Nationality Marriage;
Many factors affect your legal status in Bali regarding property. If you are in a mixed marriage to an Indonesian National, this also has many legal implications regarding ownership status. Death of a partner and transfer of titles here is not necessarily common sense or logical and we urge you to seek legal advice for your own individual circumstances with regards to any property you own or plan on owning if unfortunately this was to happen to one of you.
Mixed Nationality Marriage- Children;
Children of mixed marriages are often dual citizenship yet it must be remebered that only Indonesian citizens can own land with a freehold Hak Milik title. If your childern are approaching 18 years of age and choose to hold the passport of a foreigner parent. Then in the event of a parents death then the land title would revert to the state if there is no Indonesian citizenship as an heir.
Quite simply it is not a simple process to own land and property here if you are a foreigner however a certain level of control and legal autonomy of a property can be achieved depending on your national status and land title requests. However whilst your lawyer will offer you the best advice we will ensure that we can offer you a selection of the best properties on the Island to choose from.
Live your Dreams in Bali
Live your dreams in a tropical and stable, warm climate surrounded by warm and friendly people. Enjoy the endless sunrises and sunsets with easy access to great restaurants, shops boutiques and nightlife with incredible surf and sea activities all within close distance. Enjoy the vibrancy and energy created by the synergy of merging international cultures.