This article has been substantially reviewed and updated to reflect Indonesian property law as it stands in 2026, including changes introduced by Government Regulation No. 18 of 2021.
Expatriate business people — and individual expats looking to put down roots — have rightful concern regarding land use and ownership rights in Indonesia. Whether you are establishing a business or simply hoping to purchase a home or apartment, understanding the legal framework is essential before you sign anything.
The foundational legislation remains Act No. 5 of 1960, which established the umbrella framework for land rights in Indonesia. However, this law has been significantly amended and supplemented by subsequent regulations over the decades, most recently by Government Regulation No. 18 of 2021, which introduced important changes to the rules governing foreign property ownership. The law recognises several categories of land rights — mostly reserved for Indonesian citizens — including rights of ownership (hak milik), building rights on land (hak guna bangunan), cultivation rights on land (hak guna usaha) and rights of use (hak pakai).
For foreign nationals and foreign-owned companies, the picture is more restricted but by no means impossible to navigate. Below is a practical overview of the rights available and how they apply to expats and foreign investors.
Building Rights on Land (Hak Guna Bangunan)
Hak Guna Bangunan (HGB) is the right to build and possess a structure on land owned by another party, typically the state. Under current regulations, the initial duration of this right is up to 30 years, extendable for a further 20 years, with the possibility of additional renewal thereafter. This right can be transferred to other parties through sale or inheritance, and can also be used as collateral to secure a loan or mortgage.
Those eligible to hold HGB title include Indonesian citizens and legal entities established under Indonesian law and domiciled in Indonesia. This includes companies that are 100 percent foreign-owned, joint ventures, and 100 percent Indonesian-owned companies. In practice, the standard vehicle through which foreign investors hold HGB title is a PT PMA (Perusahaan Terbatas Penanaman Modal Asing), which is a foreign-owned limited liability company established under Indonesian law. Establishing a PT PMA is generally a prerequisite for a foreign investor wishing to use this pathway.
Foreign investors who want to establish a business presence in Indonesia can therefore hold their building or office under an HGB deed for the duration of the right, subject to the extension and renewal process.
Cultivation Right on Land (Hak Guna Usaha)
Hak Guna Usaha (HGU) is the right to cultivate state land for agriculture, plantation, animal husbandry or fishery enterprises. Under Government Regulation No. 18 of 2021, the initial duration is up to 35 years, extendable for a further 25 years, with additional renewal possible after that. HGU rights must be registered at the National Land Agency, now officially part of the Ministry of Agrarian Affairs and Spatial Planning (Kementerian ATR/BPN) — though the BPN name remains widely used in everyday practice. As with HGB, an HGU certificate can be used as collateral to secure financing.
Eligibility is the same as for HGB: Indonesian citizens and Indonesian-domiciled legal entities, including PT PMAs and joint ventures.
It is worth noting that HGU is rarely relevant to individual expats and is primarily of interest to agribusiness investors or those involved in plantation or aquaculture enterprises. If land cultivation is not your purpose, you can safely focus on the other rights described here.
Right of Use (Hak Pakai)
Hak Pakai is the right to use and harvest from land owned directly by the state, or from privately owned land by agreement with the owner. It may be applied to land used as a building site or for agricultural purposes, and any transfer of this right requires local government authorisation.
For individual foreign nationals, Hak Pakai has become the most important and legally recognised route to residential property ownership in Indonesia following the reforms introduced by Government Regulation No. 18 of 2021. Key points for expats to understand include the following.
To purchase property under Hak Pakai, a foreign national must hold a valid Indonesian stay permit — either a KITAS (Kartu Izin Tinggal Terbatas, or temporary stay permit) or a KITAP (Kartu Izin Tinggal Tetap, or permanent stay permit). Visitors on tourist visas or short-stay business visas are not eligible.
Minimum property value thresholds apply to foreign purchases and vary by province and by property type (landed house versus apartment or strata title unit). These thresholds are set by the Minister of Agrarian Affairs and are subject to periodic revision. Readers should verify the current applicable figures with a licensed property lawyer or notary (PPAT) before proceeding.
Under the 2021 regulation, Hak Pakai title for a foreign individual is granted for an initial period of 30 years, extendable for a further 20 years, and renewable for a further 30 years — giving a potential total of 80 years. This represents a significant improvement over the pre-2021 position and makes Hak Pakai a considerably more viable long-term option than it was for much of the past two decades.
Property held under Hak Pakai must be actively used or occupied. It cannot be left vacant for extended periods or sub-let commercially without the appropriate permits in place.
Right of Lease of Building (Hak Sewa)
A person or Indonesian legal entity has the right to lease another party’s land or building. This right is available to Indonesian citizens, foreign nationals, and legal entities established under Indonesian law and domiciled in Indonesia, including representative offices of foreign companies. The terms of the lease are agreed between the lessor and the lessee.
For many individual expats, particularly those living in Bali and other popular destinations, long-term leasehold has in practice become the most straightforward route to securing a property for personal use. Lease agreements of 25 to 30 years with built-in renewal options are common, and unlike Hak Pakai, leasehold does not require the buyer to hold a KITAS or KITAP — though having valid residency documents is always advisable.
That said, leasehold arrangements carry their own risks and are only as secure as the underlying land title held by the Indonesian owner. Before signing any long-term lease, you should ensure the agreement is notarised and registered, that the landowner holds a clean and unencumbered title, and that the lease terms are clearly documented in both Indonesian and, where appropriate, English. Legal advice before signing is not optional — it is essential.
Hak Guna Bangunan vs. Hak Milik
It is worth clarifying the distinction between these two frequently confused terms. Hak Guna Bangunan is a time-limited right to use and build on land — it must be periodically extended and the underlying land remains owned by the state. Hak Milik, by contrast, is full freehold ownership of land and does not need to be extended or renewed.
The critical point for foreign nationals is this: Hak Milik is restricted exclusively to Indonesian citizens. It cannot be held by foreign nationals or by foreign-owned companies, either directly or indirectly through an Indonesian nominee. Any arrangement that attempts to use an Indonesian citizen as a nominee holder of Hak Milik on behalf of a foreigner is not legally recognised and carries serious legal risks for both parties — a point addressed further below.
Purchasing Properties: Strata Title, Convertible Lease or Indirect Purchase
As a general principle of Indonesian law, foreign nationals cannot own land outright. However, purchasing an apartment, condominium or office space is possible through a strata title arrangement, and the legal framework for doing so has improved considerably in recent years.
Government Regulation No. 18 of 2021 replaced the earlier regulations on foreign residential property ownership (including the frequently referenced 1996 regulation, No. 41/1996, and its 2015 successor) and established clearer rules for foreign nationals wishing to purchase strata title units. Foreign nationals holding a valid KITAS or KITAP can purchase an apartment or condominium under Hak Pakai, subject to the minimum value thresholds and other conditions described in the Right of Use section above. While practical implementation has not always kept pace with the legal framework — and experiences vary between developers, notaries and regions — the blanket situation of the early 2000s, where foreign strata title ownership was largely theoretical, has shifted.
In practice, many foreigners still proceed through convertible lease agreements or other structures, either because the property they want falls outside the Hak Pakai framework or because they prefer the flexibility of a leasehold arrangement. Both approaches are described below.
Convertible Lease Agreement
One route for a foreigner to proceed with a property purchase, despite the legal constraints on outright ownership, is to sign a Convertible Lease Agreement. Under this arrangement, the foreigner purchases the apartment but the title is held in the name of the developer or property management company for the duration of the lease period.
The Convertible Lease Agreement typically states that if and when prevailing laws and regulations permit, the lessee will become the legal owner of the unit. Both the lessor and the lessee would then be obligated to sign a deed of sale and purchase, transferring the title to the foreign owner.
If you are considering purchasing a property through this type of agreement, investigate the developer and property management company thoroughly. Developer insolvency and project delays are not uncommon in Indonesia’s property market, and a convertible lease is only as secure as the company holding the title. Consult a reputable lawyer before signing, and ensure all legal implications are clearly documented.
Indirect Ownership
Another approach sometimes used in practice is purchasing a property in the name of an Indonesian citizen — commonly referred to as a nominee arrangement. This should be approached with extreme caution.
It is important to understand clearly that nominee arrangements for property ownership are legally prohibited under Indonesian law. The Indonesian nominee is, in the eyes of the law, the sole legal owner of the property. They can sell it, mortgage it, or bequeath it without your consent, and you would have no enforceable legal protection as the foreign buyer. Separate agreements between the foreigner and the nominee do not override Indonesian land law and have limited enforceability.
The practice continues informally, but the risks are substantial. Anyone considering this route should take detailed specialist legal advice before proceeding — and should understand that the risk cannot be fully engineered away, regardless of how carefully the agreements are drafted.
A Note on the PPAT
One practical aspect of Indonesian property transactions that many expats overlook is the role of the Pejabat Pembuat Akta Tanah, or PPAT — a licensed land deed official authorised by the Ministry of Agrarian Affairs to prepare and authenticate property deeds. For most formal property transactions in Indonesia, the involvement of a PPAT is a legal requirement, not a formality. The PPAT’s role is distinct from that of a lawyer: a lawyer advises you on your rights and risks, while the PPAT is the official who prepares and registers the deed itself.
Before proceeding with any property transaction, make sure you understand which PPAT has jurisdiction over the land in question, and ensure that the deed is properly registered with the relevant land office. Unregistered transactions can create serious problems down the line.
Recommendation
Before making any property purchase or signing any property agreement in Indonesia, foreign nationals should consult a lawyer with specific expertise in Indonesian property law. The legal framework has improved in recent years, but it remains complex, and the consequences of getting it wrong — financial, legal and practical — can be severe.
In addition to legal advice, engaging a licensed PPAT for all formal transactions is essential. If you are considering a long-term lease, a strata title purchase under Hak Pakai, or any form of indirect arrangement, the cost of proper professional advice is modest compared to the value of the asset you are acquiring.
For related guidance, see our pages on <a href=”https://expat.or.id”>visas and residency permits</a>, <a href=”https://expat.or.id”>setting up a business in Indonesia</a>, and <a href=”https://expat.or.id”>living and renting in Indonesia</a>.
Frequently Asked Questions
Can foreigners buy property in Indonesia?
Foreign nationals cannot hold freehold (Hak Milik) title in Indonesia, but they can purchase residential property under Hak Pakai (Right of Use) if they hold a valid KITAS or KITAP. Long-term leasehold arrangements are also widely used, particularly in Bali and other popular expat destinations.
What is Hak Pakai and can expats use it?
Hak Pakai is Indonesia’s Right of Use title, and since Government Regulation No. 18 of 2021 it has become the primary legal route for individual foreign nationals to hold residential property. An initial term of 30 years, extendable for 20 years and renewable for a further 30, is available to foreign nationals holding a valid KITAS or KITAP.
Do I need a KITAS to buy property in Indonesia?
Yes, if you wish to purchase property under the Hak Pakai framework, you must hold a valid KITAS (temporary stay permit) or KITAP (permanent stay permit). Tourists and short-stay visitors are not eligible to purchase under this route.
What is the difference between freehold and leasehold in Indonesia?
Freehold (Hak Milik) is permanent ownership of land and is available only to Indonesian citizens. Leasehold gives you the right to use a property for a defined period, typically 25 to 30 years with renewal options. Most foreign nationals who hold property in Indonesia do so under leasehold or Hak Pakai arrangements.
Is using a nominee to buy property in Indonesia legal?
No. Nominee arrangements, where an Indonesian citizen holds Hak Milik title on behalf of a foreign national, are not legally recognised under Indonesian law. The nominee is considered the sole legal owner, and the foreign buyer has no enforceable claim. This route carries serious legal risks and should only be considered, if at all, after taking detailed specialist legal advice.
What is a PPAT in Indonesia?
A PPAT (Pejabat Pembuat Akta Tanah) is a licensed land deed official authorised to prepare and authenticate property deeds in Indonesia. Their involvement is a legal requirement for most formal property transactions. The PPAT is distinct from a property lawyer and plays a specific official role in the transaction process.
Can foreigners buy apartments in Bali or Jakarta?
Yes, subject to conditions. Foreign nationals holding a KITAS or KITAP can purchase apartments in Bali, Jakarta and other areas under Hak Pakai, provided the property meets the minimum value thresholds set by the Ministry of Agrarian Affairs. These thresholds vary by province and property type. Long-term leasehold is also commonly used in Bali in particular.
What are the minimum property prices for foreigners in Indonesia?
Minimum value thresholds for foreign purchases under Hak Pakai are set by the Ministry of Agrarian Affairs and vary by province and property type. They are subject to periodic revision and should be verified with a licensed property lawyer or PPAT at the time of your purchase, as the figures change.
This article was reviewed and updated by the expat.or.id editorial team in May 2026. It is intended as a general guide only and does not constitute legal advice. Property law in Indonesia is subject to change; always consult a qualified Indonesian property lawyer before making any purchasing decision.
