Expatriates and home ownership
By Frans Hendra Winarta
JAKARTA (JP): Can a foreigner own a house? Maybe. Last year, the government issued a regulation allowing foreigners to purchase houses and land here. But not every foreigner is subject to the new stipulation.
Government Regulation No. 41/1996 stipulates that expatriates who are permitted to own property are those who live in Indonesia and whose presence is beneficial to national development. They are those who maintain an economic interest in Indonesia by investing here.
The regulations applicable to expatriates are in accordance with Law No. 9 of 1992 on immigration. Permits are only issued to expatriates whose presence is beneficial to national welfare and does not endanger national security. Thus, the expatriates allowed to own a house for residential purposes are the holders of valid permanent stay permits (Kartu Ijin Tinggal Tetap or KITAP). Holders of limited stay permits (Kartu Ijin Tinggal Terbatas or KITTAS) might be able to buy a house after due consideration by the authorized agencies with regard to the expatriates' contribution to the government.
The number of houses that can be owned by an expatriate is also limited to one unit only, under the provision that the house is not classified as low-cost housing. They might buy a residential house or an apartment unit. An expatriate can purchase an apartment unit that is constructed on a plot with user rights on government land. Besides this, they can also live on a plot that they occupy based on a lease agreement with the title holder of the land, e.g. land with property rights or building rights.
The duration of ownership is valid for the expatriate's length of stay in Indonesia. If the expatriate moves or is no longer an Indonesian resident, he is given the chance to transfer or sell the house within one year. If this period is exceeded and the title of the house or land has not been transferred, the land or house will automatically become government property. As for a house or land whose ownership is based on a lease agreement, the house will automatically become the property of the title holder of the land. Moreover, the decree by the state minister of agrarian affairs/head of the National Land Agency No.7/1996 allows an expatriate to let the house during the time it is not used by him or her through an Indonesian company.
The government's regulation allowing expatriates to own property in Indonesia is an extraordinary legal breakthrough considering the limitations laid down in Agrarian Law No. 5 of 1960.
Article 21 paragraphs 1 and 2 of the law stipulate that only Indonesian citizens and Indonesian legal corporates have rights on property, and the government has the authority to decide which corporates can have property rights. It must be concluded from the above stipulations that expatriates are not allowed to own land with property rights.
By virtue of Government Regulation No. 41/1996, expatriates residing in Indonesia are allowed to own a house or a plot of land with user rights on government land for a maximum duration of 25 years. This is extendable by a maximum of 20 years with the possibility of renewal. House ownership with user rights originating from a plot of land with property rights has a duration of 25 years and is not extendable, but can be renewed based on mutual agreement as mentioned in the notary deed. Registration is compulsory for the issuance of the certificate.
By the issuance of the new regulation on ownership of property by expatriates, it is expected that the property market, especially of apartments and condominiums, will significantly improve on the whole, stimulate the growth of the Indonesian economy and boost the real estate market, which has been slack for some time.
The writer is a corporate lawyer based in Jakarta.