Understanding Indonesian Property Terms for Foreigners
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Published on October 31, 2025 · 5 min read · by Alya Zulfikar

Understanding Indonesian Property Terms for Foreigners

Understanding Indonesian property terms for foreigners is essential for anyone planning to buy, lease, or invest in real estate in Indonesia.

The property market here operates under specific land and ownership regulations that may differ significantly from those in other countries.

Without clear knowledge of these terms, foreign investors might face confusion or legal complications when dealing with property transactions.

Indonesia offers various legal frameworks allowing foreigners to use or lease land, but not all forms of ownership are open to non-citizens.

Therefore, knowing the distinction between rights such as Hak Pakai, Hak Guna Bangunan, and Hak Milik becomes crucial.

This guide will help you understand the most important Indonesian property terms for foreigners, including ownership rights, legal documents, taxes, and transaction procedures.

Core Property Rights Terms

Understanding Indonesian Property Terms for Foreigners 1

1. Hak Pakai (Right to Use)

This is the most common title available for foreigners.

Hak Pakai allows the holder to use or occupy land or property for residential or commercial purposes.

The validity is generally 30 years, with possible extensions up to 80 years.

While it grants the right to use the property, it does not confer full ownership.

For foreign individuals or entities, Hak Pakai is the safest and most straightforward legal route to owning property in Indonesia.

2. Hak Guna Bangunan (Right to Build)

Known as HGB, this title allows the holder to construct and own a building on land owned by another party, such as the state or a local entity.

HGB rights are valid for 30 years and can be extended.

It is particularly relevant for foreign companies registered as PT PMA (foreign investment companies) that wish to develop commercial or residential projects.

3. Hak Milik (Freehold Ownership)

This is the highest form of ownership under Indonesian law, granting full, permanent ownership rights.

However, Hak Milik is restricted to Indonesian citizens.

Foreigners cannot legally hold Hak Milik, although they may collaborate with Indonesian partners under Hak Guna Bangunan or lease agreements.

4. Hak Sewa (Leasehold Right)

A more flexible and widely used option for foreigners is Hak Sewa.

This right allows the lease of property for a set period, typically 25 to 30 years, and may include renewal options.

It provides security for long-term occupancy without breaching ownership laws.

Many expatriates prefer Hak Sewa when purchasing villas, apartments, or offices.

Transaction and Documentation Terms

1. Sertifikat (Certificate)

A Sertifikat is the official document that certifies legal ownership or rights over land or property.

It is issued by Indonesia’s National Land Agency (Badan Pertanahan Nasional, or BPN).

Ensuring the certificate’s authenticity is vital during any property transaction.

2. PPJB (Perjanjian Pengikatan Jual Beli)

This preliminary sale agreement acts as a legally binding contract between buyer and seller before the final transfer of ownership.

It’s often used to reserve a property while awaiting the completion of payment or legal documentation.

3. AJB (Akta Jual Beli)

The Deed of Sale and Purchase marks the official transfer of ownership.

It must be prepared and signed before a notary or PPAT (Land Deed Official).

This document legally establishes the change in ownership rights.

4. Strata Title

This term applies mainly to apartments and condominiums.

A Strata Title allows individual ownership of a unit while sharing rights over common areas, such as lobbies, pools, and parking spaces.

It is one of the most practical forms of ownership for foreigners purchasing in multi-unit developments.

5. BPHTB (Bea Perolehan Hak atas Tanah dan Bangunan)

A property acquisition tax paid by the buyer when obtaining land or building rights.

Understanding this tax is essential when calculating total transaction costs.

6. PPh (Pajak Penghasilan)

The seller’s income tax on property sales.

Although this is paid by the seller, it affects the overall transaction process.

7. PPAT (Pejabat Pembuat Akta Tanah)

The Land Deed Official is an authorized notary responsible for legalizing property transactions.

Every sale, lease, or transfer involving land must pass through a PPAT to ensure legal validity.

Legal and Ownership Limitations

1. Nominee Agreement

A Nominee Agreement involves an Indonesian citizen holding property on behalf of a foreigner.

Although sometimes practiced informally, this arrangement is illegal and risky under Indonesian law.

The government does not recognize such ownership, and foreigners have no legal protection in disputes.

2. Pemilik (Owner)

Refers to the legitimate holder of property rights, depending on the applicable title such as Hak Pakai or HGB.

Understanding who the pemilik is can prevent future disputes.

3. Tanah (Land)

Refers to the physical land parcel that can be leased or held under various rights.

Legal documentation must specify the type of land right attached to the property.

4. Rumah (House)

Represents residential properties built on land with appropriate rights.

Foreigners can reside in a house under Hak Pakai or through a lease agreement.

5. Apartemen (Apartment)

Apartment units are often available to foreigners under Strata Title schemes.

This makes them one of the most accessible property types for foreign buyers.

One recommended property is The Elements in Kuningan, South Jakarta, developed by Sinar Mas Land, with units sized 127 m² (2+1) to 186 m² (3+1), priced from around IDR 4.6 billion to 7.26 billion.

The project features premium finishes such as imported marble, double-glass façade, and De Dietrich kitchen appliances.

Its location in the Rasuna Kuningan CBD area offers easy access to business centers, shopping malls, and embassies, making it an ideal choice for expatriates seeking luxury living in Jakarta