Expatriates and home ownership
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.