Freehold vs Leasehold: The Essential Differences Between SHM and HGB Ownership Status
JAKARTA, KOMPAS.com - The terms freehold and leasehold frequently appear in the property world. They often become topics of discussion regarding the ownership status of houses or apartments.
These two terms are indeed less familiar to the Indonesian public. As a result, some people still confuse the two.
In practice, both terms refer to different concepts of ownership.
Freehold is a foreign term for full ownership of property without a time limit. In Indonesia, this concept is equivalent to Hak Milik, evidenced by the Sertifikat Hak Milik (SHM).
This scheme is commonly compared with Hak Guna Bangunan (HGB), where ownership applies according to the period stated in the certificate.
Deputy General Chairman of the Central Board of the Indonesian Real Estate Association (Waketum DPP REI) Bambang Ekajaya stated that the fundamental difference between the two lies in the duration of ownership.
“Freehold is full ownership, whereas leasehold is only a lease right for a certain period,” said Bambang in response to Kompas.com on Wednesday (22/4/2026).
Under the HGB scheme, the validity period is generally 30 years, which can be extended for 20 years, and can be renewed again for another 30 years.
Each extension incurs fees, either to the state for pure HGB or to the holder of Hak Pakai, depending on the land’s status.
Although it has a time limit, the rights to property under the leasehold scheme still hold legal force during its validity period.
In fact, extensions can be carried out continuously as long as they meet the requirements and obtain approval from the authorised parties.
This shows that time-based ownership models are not new in property management in Indonesia.
Understanding the differences between freehold and leasehold is important, especially for those considering property purchases.
With this understanding, prospective buyers can be more meticulous in assessing legality aspects while aligning choices with long-term needs.