Can Foreigners Own Property in Indonesia? The 2026 Legal Guide

Foreigners cannot own freehold land in Indonesia. That right is reserved for Indonesian citizens under Article 21 of Law No. 5 of 1960 (the Basic Agrarian Law, Undang-Undang Pokok Agraria). What foreigners can hold is a set of secondary land rights: Hak Pakai (Right to Use), HGB (Right to Build), Hak Sewa (Right to Lease), and through a PT PMA (a foreign-investment company), Hak Guna Bangunan on land owned by the company. Each comes with different durations, conditions, and exit profiles. The legal framework is more complex than most foreign buyers realize, and it is where the majority of investment problems start.

Here's how the law actually works in 2026.

The Basic Constitutional Rule

Article 33 of the 1945 Indonesian Constitution declares that land, water, and natural resources are controlled by the state for the welfare of the people. The Basic Agrarian Law of 1960 implements this principle by creating a hierarchy of land rights, with the strongest right (Hak Milik, Right of Ownership, freehold) reserved exclusively for Indonesian citizens.

Article 21 paragraph 1 of the Basic Agrarian Law: "Only Indonesian citizens can have Hak Milik." Article 26 paragraph 2 voids any transfer of Hak Milik to a foreign person, and the land reverts to the state.

This is the rule that drives every legitimate foreign property structure in Indonesia, and the rule that every nominee scheme tries to circumvent.

Hak Pakai: The Direct Foreign Title

Hak Pakai (Right to Use) is the title most commonly held directly by foreign individuals. Government Regulation No. 18 of 2021 (which replaced Government Regulation No. 103 of 2015) governs the current Hak Pakai rules for foreigners.

Duration: initial 30 years, extendable by 20 years, renewable for another 30 years. Total: 80 years.

Eligibility: the foreign holder must have a valid Indonesian stay permit (KITAS, KITAP, or the Second Home Visa). Without a valid stay permit, the Hak Pakai cannot be renewed and may not be transferable.

Property types: Hak Pakai is most commonly used for landed houses (with a maximum land area of 2,000 square meters), apartment units, and certain villas. Some Hak Pakai certificates are issued for state-owned land (with different conditions) and some for land originally held under HGB or Hak Milik that gets converted.

Minimum value: Government Regulation 18/2021 sets minimum property values for foreign Hak Pakai ownership that vary by region. In Jakarta the threshold is IDR 5 billion for a house, in Bali IDR 5 billion, in West Java IDR 5 billion, in Riau IDR 2 billion (figures subject to ministerial adjustment).

The advantage of Hak Pakai is that the foreigner holds the title directly, in their own name, registered with the National Land Agency (Badan Pertanahan Nasional, BPN). The disadvantage is the residency requirement and the time-limited nature of the right.

Leasehold (Hak Sewa)

The most common structure for villas in Bali. The foreign buyer enters a long-term lease agreement with the Indonesian freehold owner, typically for 25 or 30 years, often with an option to extend for another similar term.

Hak Sewa is governed by Articles 44 and 45 of the Basic Agrarian Law. The lease can be registered as an encumbrance against the land title at BPN, which is the critical step that protects the foreign tenant against the freeholder selling the land out from under them. Many "lease" agreements in Bali are private contracts that are not registered, which substantially weakens the foreigner's position.

Duration: there is no statutory maximum, but in practice leases over 30 years require renegotiation or a complex extension structure. The full 99-year leases sometimes advertised are usually structured as 30+30+30+9 with renewal options, which are enforceable only if the freeholder cooperates at each renewal point.

Tax implication: lease payments are typically made upfront in a lump sum, which is treated as ordinary income to the freeholder and subject to a 10 percent withholding tax. Annual installments are also possible but less common.

PT PMA (Foreign Investment Company)

A PT PMA (Perseroan Terbatas Penanaman Modal Asing, Limited Liability Company with Foreign Investment) is an Indonesian corporation that can be majority or fully foreign-owned and that can hold land under HGB or Hak Pakai.

This is the structure used for commercial property, hotels, larger residential developments, and many Bali villa investments where the buyer wants long-term control over the land.

Setup requirements: minimum paid-up capital of IDR 10 billion (approximately USD 630,000 in 2026), with a minimum issued capital of IDR 2.5 billion that must be actually paid in. Registration with the Investment Coordinating Board (BKPM), now operating under the Ministry of Investment, plus a Tax Identification Number (NPWP), a Single Business Number (NIB), and the appropriate business classification (KBLI code) for real estate.

Land rights available to a PT PMA: HGB (Right to Build) for 30 years, extendable by 20, renewable for another 30 (80 years total). Hak Pakai for the same duration. The PT PMA cannot hold Hak Milik.

The PT PMA structure offers more flexibility than direct Hak Pakai (no residency requirement for individual shareholders, the company can hold larger landholdings, the structure facilitates resale), but it carries ongoing compliance costs: annual financial statements, annual tax filings, KBLI compliance, and BKPM reporting. Operating a PT PMA purely as a property holding vehicle without genuine business activity has come under increased scrutiny from Indonesian tax authorities.

Strata Title for Apartments

For high-rise apartments (rusun susun or kondominium), the relevant law is Law No. 20 of 2011 on Strata Title (Rumah Susun). A foreigner can own an apartment unit under a Strata Title issued with Hak Pakai over the land beneath.

Government Regulation 18/2021 simplified the foreign apartment ownership rules significantly. Foreigners no longer need a KITAS or KITAP specifically to buy an apartment, but a stay permit is still required to register the Hak Pakai at BPN.

The 80-year total duration (30+20+30) also applies to strata title units under Hak Pakai.

What Doesn't Work: The Nominee Arrangement

The most common illegal structure used in Bali (and increasingly elsewhere) is the nominee arrangement: the foreigner pays for the land, the title is issued in the name of an Indonesian "nominee," and the parties sign a set of side agreements (a Power of Attorney, a Statement of Loan, a Statement of Trust) designed to give the foreigner economic control.

Article 26 paragraph 2 of the Basic Agrarian Law makes any transfer of Hak Milik to a foreigner, directly or indirectly, void and causes the land to revert to the state. Article 1320 of the Indonesian Civil Code requires lawful cause for contract validity, and a contract designed to circumvent agrarian law fails this test.

The Indonesian Nominee Crisis Working Group (K3NI) estimated that approximately 10,500 land plots worth USD 10.4 billion, plus 7,500 villas and 3,000 foreign property investments, are held through illegal nominee structures, primarily in Bali. The Indonesian government has been drafting enhanced enforcement regulations targeting these arrangements.

The legal risk is total: the nominee can sell, mortgage, or refuse to honor the agreement, and the side agreements are unenforceable. The Indonesian state can also reclaim the land. Foreigners involved face deportation. Inheritance complications add another layer: when the nominee dies, the property passes to the nominee's heirs by Indonesian law, and the side agreement does not bind those heirs.

The Second Home Visa

Indonesia launched the Second Home Visa (Visa Rumah Kedua) in late 2022 and refined the rules through 2024-2025. Current 2026 requirements:

Minimum financial commitment: IDR 2 billion (approximately USD 126,000) in an Indonesian state bank account, OR ownership of property in Indonesia valued at minimum IDR 5 billion (some sources cite USD 1 million for premium residences).

Duration: 5 or 10 years. The 5-year visa can be extended once.

What it provides: the visa satisfies the stay-permit requirement for direct Hak Pakai ownership, meaning a Second Home Visa holder can register Hak Pakai property in their own name without needing a KITAS for employment or family reasons.

Tax residency implications: holding a Second Home Visa does not automatically make you an Indonesian tax resident, but spending more than 183 days in Indonesia in a 12-month period does, which then subjects worldwide income to Indonesian taxation.

Taxes on Property in Indonesia

Acquisition tax (Bea Perolehan Hak atas Tanah dan Bangunan, BPHTB): 5 percent of the transaction value above a regional exemption threshold (typically IDR 60-80 million).

Sales tax (Pajak Penghasilan, PPh Final): 2.5 percent of the gross transaction value, paid by the seller.

Annual land and building tax (Pajak Bumi dan Bangunan, PBB): typically 0.1 to 0.3 percent of the official assessed value (NJOP), paid annually.

VAT (PPN): 11 percent on new construction sold by developers, included in the developer's pricing. Increasing to 12 percent in some cases under the latest tax law amendments.

Luxury sales tax (PPnBM): 20 percent on luxury landed houses above certain price thresholds and on luxury apartments.

Rental income tax: 10 percent withholding on gross rental income for individual landlords; corporate rates apply to PT PMA holdings.

Verification Checklist Before You Buy

Pull the Sertifikat Tanah from the National Land Agency (BPN) for the specific land plot. Verify the certificate type (Hak Milik, HGB, Hak Pakai), the registered owner, the plot boundaries, and any registered encumbrances.

Verify the land use designation matches the property use (residential vs. commercial vs. tourism).

Verify the Building Approval Permit (Persetujuan Bangunan Gedung, PBG, formerly IMB). The permit should describe the actual structure on the land.

Use a registered PPAT (Pejabat Pembuat Akta Tanah, Land Deed Official) to execute the transaction. Verify the PPAT's credentials with the Ministry of Law and Human Rights. Do not use a PPAT recommended only by the seller.

For PT PMA structures, verify the company's NIB, KBLI code, paid-up capital, and current BKPM filings.

For leasehold structures, register the lease at BPN as an encumbrance against the title. Unregistered private lease agreements are dramatically weaker than registered leases.

For developer projects, verify the developer's track record on prior projects. Bektu compiles developer delivery data across multiple countries including Indonesia, which is useful as a cross-check against marketing claims.

Bottom Line

Indonesia's framework for foreign property ownership is functional but narrow. Hak Pakai works for individuals who have a valid stay permit and accept the time-limited nature of the right. PT PMA works for investors willing to take on the compliance overhead in exchange for more flexibility and longer effective control. Leasehold works for buyers who accept lease termination risk and register the lease properly. Nominee structures don't work, regardless of how confidently the agent or notary presents them.

The legal complexity is the cost of access, not a reason to give up. Buyers who use Indonesian counsel familiar with foreign-investor structures, verify titles at BPN, and use registered PPATs typically have legitimate, enforceable property rights. Buyers who let the seller or agent control the documentation pipeline are the ones who end up in disputes.