Background                                                                                                                                  

On 22 December 2015, the Government of the Republic of Indonesia, enacted Government Regulation No. 103 of 2015 regarding Ownership of Residential Property by Foreign Citizens Domiciled in Indonesia (“GR 103/2015”), which came into effect on 28 December 2015.

GR 103/2015 revokes and replaces Government Regulation No. 41 of 1996 (“GR 41/1996”) which regulated the same matter.

In essence, GR 103/2015 sets out a number of provisions and requirements to reinforce the legal framework for foreign citizens wishing to acquire residential properties in Indonesia, which was previously governed under GR 41/1996.

 Key Provisions                                                                                                                                

In this client update, we outline several key provisions under GR 103/2015, as follows:

  • Limitation on Foreign Citizens

GR 103/2015 requires foreign citizens to domicile in Indonesia and obtain relevant residential permits (i.e., diplomatic stay permit, service stay permit, stay-visit permit, temporary stay permit, or permanent stay permit) to be able to acquire residential properties in Indonesia. In addition, GR 103/2015 also stipulates that foreign citizens who are allowed to acquire residential properties in Indonesia are foreign citizens whose presences provide benefits to, carrying out business, working, or investing their money in Indonesia.

  • Limitation on Properties

Similar to GR 41/1996, GR 103/2015 also underlines that residential properties that can be acquired by foreign citizens are only dwelling houses or apartments built upon plots of land with the right-to-use title (Hak Pakai). To evidence the ownership, foreign citizens will be granted a right-to-use title certificate (Sertifikat Hak Pakai) for dwelling houses or a strata title proprietary certificate (Sertifikat Hak Milik atas Satuan Rumah Susun) for apartments.

Unlike GR 41/1996 that restricted foreign citizens from acquiring more than one residential property, there is no provision under GR 103/2015 limiting the quantity of residential property that can be acquired by foreign citizens.

  • Ownership Period

Generally under GR 103/2015, foreign citizens are allowed to take possession of the dwelling houses built upon plots of land with the right-to-use title for a maximum period of 30 years, which can be extended for another 20 years and renewed for a maximum period of 30 years upon the expiration of the extension period. As for the ownership of apartments, GR 103/2015 does not specify as to how long foreign citizens are allowed to own such properties.

  • Other provisions

GR 103/2015 also introduces a provision (Article 3) stating that an Indonesian citizen performing a mixed-marriage with a foreign citizen remains entitled to hold any of the rights on land that can generally be owned by Indonesian citizens, e.g., right to own, right to build, right to cultivate, etc. To that end, there must be a prenuptial agreement (Perjanjian Pra Nikah) between the spouses concerned to be made before a notary.

How does it affect you?                                                                        

  • Foreign citizens who have already acquired residential properties in Indonesia prior to the enactment of GR 103/2015 but have not yet obtained the relevant residential permits as required by the prevailing regulations, may be required by the relevant authority to secure those permits.
  • Upon the enactment of GR 103/2015, foreign citizens may be allowed to acquire more than one residential property in Indonesia, since the newly-enacted regulation does not restrict foreign citizens from doing so. However, how this works in practice would need to be further researched.
  • Since GR 103/2015 provides a longer ownership period over the dwelling houses comparing with what was governed under GR 41/1996, foreign citizens who have already acquired dwelling houses prior to the enactment of GR 103/2015 may request the relevant party to extend the ownership period over those properties.

 Going Forward                                                                                      

We still need to see any further measures taken by the Indonesian government on GR 103/2015, including but not limited to the socialization and/or issuance of implementing regulations specifically related to the above-mentioned provisions.