Indonesia has one of the strictest laws in Southeast Asia when it comes to real estate聽ownership by foreigners. Except for a few foreign-owned private limited companies that have聽invested in the country, foreign nationals are not allowed to purchase freehold property in聽Indonesia. They can only purchase land if they are married to an Indonesian, with a prenuptial聽agreement, provided that the land is in the name of an Indonesian national. In some cases聽and聽under strict conditions, an expatriate may be allowed to buy an apartment.
Many foreign professionals are entitled to accommodation as part of their expatriate package聽in Indonesia. However, the rental ends at the completion of their employment contract.聽However, if this does not apply to your situation, you can choose between several types of聽accommodation, depending on your budget, family situation and location in the archipelago.
Land ownership in Indonesia
As mentioned above, foreigners do not have access to freehold land ownership on Indonesian聽soil. However, since 2015, expatriates residing in Indonesia are allowed to rent land or a聽residence on a long-term basis, but under certain conditions. The government has changed the聽laws in this respect in order to further encourage foreign investment and promote national聽growth.
Under the new legislation, expatriates can purchase land or a house under the Right of Use聽category for a period not exceeding 30 years. After the expiration of the initial period, it is聽possible to renew the right of use contract twice, the first time for the same period of 30 years聽and the second time for 20 years. If you choose this option, you will be renting a property in聽Indonesia for a maximum of 80 years.
There are also other options for those who wish to acquire land in Indonesia. For example, you聽can choose to appoint a local representative to act as your partner in your land transactions.
This can be an interesting solution, as only Indonesian citizens can legally own property in聽Indonesia. However, such partnerships can quickly backfire on the expatriate. There are many聽cases where the Indonesian partner incurred debts that led to the seizure of the related聽property.
There is yet another option if you still want to become a property owner in the country. All you聽have to do is to set up a company in Indonesia. As a foreigner, you will need to form a company聽called PT PMA, which is, simply put, a limited liability company founded by foreign capital. This聽may seem like a daunting process at first, but it is a safer option compared to partnering with a聽local citizen. In this case, the concerned property will be placed under the company's聽ownership.
However, the types of land available to foreigners through the acquisition by a PT PMA聽company are limited to certain categories. It is therefore recommended that you find out under聽which category the local legislation places the desired land plot before you start your聽procedures.
Foreigners married in Indonesia to Indonesian citizens may also have access to property in聽Indonesia. It is important for you to know that, in any case, there are strict conditions attached聽to the purchase of real estate by a foreigner in this country. For example, you will first need to聽be a holder of a KITAS (a limited residence permit in Indonesia). Moreover, you will only be able聽to purchase individual houses or apartments, not land.
Furthermore, the Indonesian government has determined a minimum value for local properties聽that can be purchased by expatriates. This minimum amount varies according to regions and聽different geographical areas. In the vicinity of Jakarta, for example, the value of your purchased聽property cannot be less than 10 million IDR, while in Bali, the minimum is 3 billion.
See below the minimum prices in application in the different Indonesian regions (prices are in聽Indonesian rupiah):
- DKI Jakarta: 10 billion
- Banten: 5 billion
- West Java: 5 billion
- Central Java: 3 billion
- Yogyakarta: 3 billion
- East Java: 5 billion
- Bali: 3 billion
- NTB: 2 billion
- North Sumatra: 2 billion
- East Kalimantan : 2 billion
- South Sulawesi : 2 billion
- Other areas: 1 billion
How to find accommodation in Indonesia?
If you live in a developed area, such as Jakarta and Bali, you will find many modern, western-style apartments and houses available for rent. In fact, these areas have many single-family on聽rent. In addition to the luxurious options, note that rental agreements are usually valid for聽three years. You should also be aware that rents for furnished homes are usually double聽compared to unfurnished rentals.
Be aware that unfurnished rentals can come expensive, considering that you will need to聽purchase all the furniture, appliances, plants and decorative items, amongst others. Even if聽appliances and furniture prices are low in Indonesia, it is still an additional expense that may聽not be necessary since furnished rentals are very affordable. Furthermore, you will probably聽have to pay the full-term rental costs upon signing the contract. Otherwise, you can always聽choose to bring your own furniture with you when moving to Indonesia.
House or apartment?
Most expatriates living in Indonesia rent houses rather than apartments. Even the country's聽capital, Jakarta, has more houses than skyscrapers or apartment complexes, something rather聽unusual for a Southeast Asian capital. But, of course, if you absolutely want to live in an聽apartment, that won't be a problem. You should be able to quickly find what you are looking for聽and pay less.
Apartments and residential complexes can only be found in major cities like Jakarta, Surabaya,聽Bandung, Medan, Semarang, Bekasi or Tangerang. However, you can find houses of all kinds for聽rent all over Indonesia, even in remote areas.
A one-bedroom apartment in downtown Jakarta should cost you around US$250 per month,聽while the same type of accommodation on the capital's outskirts will come up to around聽US$140 per month. A three-bedroom furnished, luxurious apartment ideally located in the city聽center would normally cost more than US$500 per month or can go even higher in some cases.聽It's also worth noting that housing in Jakarta is generally much more expensive than in other聽major Indonesian cities, especially if you choose to live downtown.
As far as house rental prices are concerned, it all depends on factors such as the location of the聽residence, its layout, its size, the availability of amenities and facilities such as swimming pools,聽sports fields, gyms, etc. Many expatriates choose to reside in gated communities, a type of聽accommodation that has greatly increased in Indonesia in recent years. These communities are聽usually promoted by conglomerates made up of Chinese and Indonesian real estate developers.聽They are mostly located on the outskirts of major cities, mainly around Jakarta.
Good to know:
Although many houses have air conditioning, only the more modern houses, such as those in聽high-end residential areas, tend to have hot water tanks.
Western-style apartments and houses may be slightly harder to find in more remote areas of聽Indonesia and outside the main cities. It is, however, possible to find houses in villages and聽smaller towns, although most of them have been occupied by Indonesian families for several聽generations. If you choose this option and manage to find a suitable home in a small town or聽village, be aware that you will probably be far from essential amenities such as hospitals, good聽schools, pharmacies, shopping centers, etc.
As a single person on a budget, a kost can come out very handy for you. It is usually an informal聽guesthouse, comprising between 5 and 30 small rooms rented individually along with a shared聽kitchen and bathroom. The kost is similar to a guesthouse or residential hotel, and some are聽unisex. This type of accommodation is particularly prized by foreign students or young single聽professionals. Some have their own private bathroom, and the duration of rental contracts is聽more flexible.
It is also possible to rent a room in a local's home and negotiate for meals and laundry so that聽these costs are included in the rent. This type of homestay rental is usually informal, and聽arrangements are made through friends or with an Indonesian family.
Alternatively, you can rent a hotel room or a penginapan (lodge) on a long-term basis. The price聽can be negotiated depending on the length of your stay.
Rental agreements in Indonesia
Indonesia is one of the few Asian countries where it is common for landlords to require tenants聽to pay rent in advance for the entire term of the lease, which is typically a one- or two-year聽contract. However, the amount (including potential payments) and duration can often be聽negotiated through a rental agency. Furthermore, given the exponential increase in available聽living space in Indonesia over the last few years, the bargaining power of tenants has increased聽tenfold. As a result, you should have no trouble negotiating payment of your rental in聽installments or even paying your rent monthly. Be aware, however, that the latter option is聽quite rare across Indonesia.
In Indonesia, rental is normally quoted in US dollars. However, keep in mind that all rentals聽must be paid in Indonesian rupiahs. The price of accommodation quoted in US dollars is usually聽exaggerated. As for the payment method, you should be able to negotiate the cost of your rent聽with the landlord. Be careful when converting dollars to Indonesian rupiahs, as they may be聽trying to make money at your expense.
Unfortunately, construction codes are not always enforced on residential properties in聽Indonesia. In fact, some landlords rent out properties that do not meet safety standards. Given聽the costs and risks involved, before signing anything, tenants are advised to be very careful聽when considering a long-term rental commitment. It is important to commission a thorough聽check of the property, including examining the furniture, structure, electrical system, plumbing,聽air conditioning and waterproofing. You can hire a specialized company to do this audit. Once聽again, make sure you get their credentials right before proceeding.
Make sure that your future home is equipped with a circuit breaker provided by the authorities.聽While such a device is inexpensive, many landlords will choose not to install it. In that case, it is聽strongly advised to avoid renting the unit, as this could mean that the electricity might be聽coming from an illegal source.
Before you sign the lease, you should outline any problems or hazards you have discovered聽based on the audit report. A formal written list will give you more bargaining power with the聽landlord to request that defective or missing items be repaired or installed.
Finally, be sure to read your contract carefully and sign it in the presence of a notary, especially聽if it contains specific terms.
Useful links:
We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
