Late last year, President Joko Widodo's administration
issued a government regulation clarifying the rights of
foreigners to own properties in Indonesia.
The new regulation explicitly allows qualified foreigners to
own a qualified dwelling for residential purposes. The title
conferred to these foreigners is known as the Right-to-Use
title. This title is valid for a 30-year period, which may be
extended twice for a maximum validity period of 80 years.
The title may be bequeathed to another qualified
A qualified foreigner is defined as a non-Indonesian citizen
who is residing in Indonesia, holds a valid stay permit in
Indonesia, and their presence in Indonesia provides a benefit
or is done in the context of conducting business, working, or
investing in Indonesia.
A qualified dwelling includes a single residential house
built on Right-to-Use land or a single residential house with
the Right-to-Use title, built on land with the
Right-of-Ownership title. An apartment unit built on land with
the Right-to-Use title may also qualify.
If the foreigner ceases to qualify to hold properties in
Indonesia, they are required to transfer the title to a
qualified foreigner or an Indonesian party.
The new regulation also contains a curious provision stating
that foreigner may only hold title to 'new' properties. It is
unclear if this provision means that foreigners may only
purchase newly-built properties directly from developers. This
point may be clarified in subsequent amendments or future
Additionally, the regulation does not address the more
practical consideration of whether the Right-to-Use title
conferred in this context may be used as security for
financing. It is noteworthy that the Indonesian agrarian law
recognises a version of the Right-to-Use title, which generally
may not be used as a security. However, this version of
Right-to-Use has a different validity period from the
Right-to-Use introduced by the new regulation.
The new regulation has been effective since late December
Oene Marseille and Emir Nurmansyah