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Expats to be allowed to Own Property in Indonesia




BALI – Expats living in Indonesia could soon get property ownership rights after the government announced it wants to open up the residential real estate market to foreigners. It is revising Regulation No. 41/1996 on residential property ownership that would enable foreigners to fully own property in Indonesia but there will still be restrictions on owning land.

The revision is set to lead to a new regulation that gives foreigners the right to apply to buy a building ownership certificate but to be able to do so they are likely to have to comply with tough requirements. A number of proposals are being discussed including only letting foreigners who own a business in Indonesia have the right to buy property and should they want to sell their property, they would only be allowed to sell it to the government.

A draft bill is being prepared and it will need approval from the House of Representatives and the Coordinating Economic Ministry. The Government expects the new laws to boost economic growth by attracting highly skilled and well funded immigrants from around the world but some fear it could see a rise in property prices, especially in Jakarta.

Currently the law is very similar to that in Thailand whereby foreigners can only own property if it is bought in the name of a local national, typically a spouse or close friend. The new ruling is also likely to apply to specific buildings and initially only available in Jakarta, Bali and Batam with a further caveat that foreign ownership of any qualifying building will be capped at 40%.

Ferry Salanto, Colliers International associate research director, said the growing demand from expats to rent upscale apartments was a clear sign for the government to allow foreigners to own homes in Indonesia. ‘I think expats would contribute more to the state income through taxes if they were allowed to actually own the apartments,’ he said. There is no indication at this stage if foreigners will be able to get a mortgage or have to pay cash for property. Bank rules would have to change to allow expats access to lending for real estate.

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