Alert: Ownership of Homes or Residences by Foreigners in Indonesia

Indonesia issued Government Regulation No. 103 of 2015 regarding the Ownership of Homes or Residences by Foreigners Residing in Indonesia (GR 103/2015) in late December 2015. GR 103/2015 entered into force on December 28, 2015. The Government made the new ruling public earlier this week.

No major changes

GR 103/2015 does not introduce any radical changes, as foreigners residing in Indonesia could already own homes or apartment units in the country under Government Regulation No. 41 of 1996, which was revoked by GR 103/2015. There had been some speculation that the government, as part of the economic stimulus packages it has been introducing since last year, would make major changes to the rules on home ownership by foreigners, in order to stimulate the property market. Speculation included the possibility that foreigners domiciled abroad may be permitted to own homes/apartment units in Indonesia.

However, that is not the case under GR 103/2015, which requires foreigners to have a legal stay permit to own a home/residence in Indonesia. Significantly, foreigners must sell their homes to a qualifying person within a year after relinquishing their legal stay permit. This is an important consideration for any foreigner looking to acquire a home in Indonesia as a long-term investment.

Important points in the new regulation

GR 103/2015 addresses the previously ambiguous provision concerning qualification of foreigners who are eligible to own a home in Indonesia. GR 103/2015 stipulates that foreigners who hold a legal stay permit - diplomatic stay permit, official stay permit, residence stay permit, limited stay permit or permanent stay permit, who give benefit, conduct business, work or invest in Indonesia - may own homes/apartment units in Indonesia.

GR 103/2015 also introduces the following provisions that were not in the previous regulation:

• Homes owned by a foreigner in Indonesia may be passed by inheritance. If the heir is a foreigner, the heir must also have a legal stay permit in accordance with the prevailing laws and regulations.

• Indonesian citizens marrying foreigners do not lose the right to own title over land insofar as the title to the land is not part of the marital property. This must be evidenced by a notarized prenuptial agreement.

• GR 103/2015 allows foreign ownership of a landed house under right-of-use (hak pakai) not only on state land, as before, but also on freehold (hak milik) land owned by an Indonesian.

• Foreigners may buy and own a landed house under right of use (hak pakai) for an initial period of 30 years. This may be extended for an additional 20 years and further renewed for 30 years. If the right of use (hak pakai) is on freehold (hak milik) land, the consent of the owner of the freehold land will be required to extend.

GR 103/2015 provides that the grant, release or transfer of ownership of a home or residence by a foreigner will be further stipulated in regulations to be issued by the National Land Agency.

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