Hak Pakai, PT PMA, and Leasehold: The Three Ways Foreigners Hold Property in Indonesia (2026)

Indonesia bans foreigners from holding freehold land. The ban is not a regulation that can be amended by a ministry. It sits in Article 9 and Article 21 of Law No. 5 of 1960, the Undang-Undang Pokok Agraria (UUPA, or Basic Agrarian Law), and it rests on Article 33(3) of the 1945 Constitution, which assigns control of land and natural resources to the state for the benefit of the Indonesian people.

The Hak Milik title, freehold ownership, is reserved for Indonesian citizens. Foreigners caught holding Hak Milik land through a nominee arrangement risk having the underlying transaction annulled under Article 26(2) of the UUPA, with the land reverting to the state.

The Constitutional Court settled the point in Decision No. 21/PUU-V/2007, which treats nominee arrangements built to circumvent the ownership restriction as void. The land stays with the nominee, the side agreements are unenforceable, and the foreigner who paid for it has no claim to bring.

That leaves three legal structures for foreign buyers in 2026: Hak Pakai held in a foreigner's personal name, a PT PMA holding Hak Guna Bangunan, and a long-term leasehold over Hak Milik land. Each one suits a different kind of buyer.

Hak Pakai: The Personal-Name Option

Hak Pakai, the Right to Use, is the only land title that an individual foreigner can hold directly in their own name in Indonesia. Government Regulation No. 18 of 2021, which amended PP 103 of 2015, sets the current parameters.

A foreigner holding Hak Pakai must have a valid Indonesian stay permit, typically a KITAS (limited stay) or KITAP (permanent stay). The Second Home Visa, introduced in late 2022 and refined in subsequent years, also satisfies this requirement and has become the most common pathway for retirees and lifestyle buyers.

The initial Hak Pakai term is 30 years, extendable by 20 years, then renewable for another 30, for a total of 80 years. The land must already carry a Hak Milik or Hak Guna Bangunan title that is converted into Hak Pakai through a notary-witnessed deed registered with the local Land Office (Badan Pertanahan Nasional, BPN).

The minimum property value thresholds for foreign Hak Pakai purchases vary by province. Under Ministry of Agrarian Affairs Regulation No. 18 of 2021 and subsequent revisions, the floors include IDR 5 billion for landed houses in Jakarta, IDR 3 billion in Bali, and lower thresholds in other regions. These minimums exist to keep the foreign segment in the upper end of the market.

Hak Pakai works for foreigners who want a residence in their own name and who are happy living within the visa requirements. It does not work for foreigners running rental businesses. The title is for use, not for commercial exploitation as a hotel or short-stay rental.

The conditions attached to Hak Pakai

Hak Pakai is created by Articles 41 to 43 of the UUPA and detailed further in Government Regulation No. 40 of 1996. Three conditions catch foreign buyers out. The title is tied to the stay permit: if the permit lapses and is not replaced, the holder has one year to transfer the property or it reverts to the state. Foreign residential Hak Pakai is generally capped at 2,000 square meters of urban land. And the parcel cannot fall in a designated social housing category (rumah sederhana or rumah susun sederhana). Converting a Hak Milik parcel to Hak Pakai at the BPN typically takes three to six months, which belongs in any purchase timetable.

PT PMA: The Commercial Vehicle

A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a foreign-owned Indonesian limited liability company. It is the legal structure for foreigners who want to run a rental business, develop property, or hold land under a corporate title.

BKPM Regulation No. 5 of 2025 reduced the minimum paid-up capital for a PT PMA to IDR 2.5 billion, down from IDR 10 billion. The reduction was intended to attract more SME-scale foreign investment, particularly in Bali tourism. The total investment plan, separate from paid-up capital, must still meet IDR 10 billion in committed investment.

A PT PMA can hold Hak Guna Bangunan (HGB, the Right to Build) over land for an initial 30 years, extendable by 20 years, with renewal possible for an additional 30 years. HGB is the standard corporate land title for built structures. A PT PMA can also hold Hak Pakai or Hak Guna Usaha (HGU, Right to Cultivate) depending on use.

The PT PMA structure has fixed compliance overhead. Annual obligations include corporate tax filings, monthly VAT (PPN) returns if registered, a 22 percent corporate income tax rate, LKPM investment activity reports filed quarterly through the OSS-RBA system, and employment-related filings if staff are hired. Bookkeeping must follow Indonesian accounting standards.

Company formation runs under Law No. 25 of 2007 on Investment and Law No. 40 of 2007 on Limited Liability Companies. A PT PMA needs at least two shareholders, one director, one commissioner, a registered office, and a NIB (Nomor Induk Berusaha) issued through OSS, with its business classification drawn from the Positive Investment List issued under Presidential Regulation No. 10 of 2021. Formation through an established agency is commonly quoted at USD 3,000 to 8,000, and annual accounting, tax filing, and LKPM reporting add USD 2,000 to 8,000 a year depending on scale.

For a villa investor running a rental operation in Bali, the PT PMA is no longer optional in 2026. Operating short-stay rentals through a personal Hak Pakai or through a nominee structure exposes the operator to enforcement under the 2022 Tourism Law amendments, which sharpened penalties for unlicensed accommodation operations.

Leasehold: The Simple Path

Long-term leasehold over Hak Milik land is the third common structure and the simplest by far. A leasehold is a private contractual agreement between the Indonesian landowner and the foreign lessee, registered as a notarial deed, often with the lease term written into the certificate of title as an annotation.

Lease terms of 25 to 30 years are standard. Many Bali leases are structured as 25 years with a contractual right to extend for an additional 25 years, though the extension right is only as strong as the contract drafting and the underlying counterparty.

A leasehold gives the foreign lessee the right to occupy and use the land for the lease term, including the right to build (if explicitly granted), to sublet (if explicitly granted), and to assign the lease (if explicitly granted). None of these rights are automatic. They must be in the lease deed.

The risk in leasehold is counterparty risk. The Indonesian landowner remains the registered owner. If the landowner sells the land, dies, divorces, or becomes the subject of an estate dispute, the lease can become entangled. Registering the lease with the BPN as an annotation on the title certificate (a process called "pencatatan sewa") provides notice protection and is the single most important step a leasehold buyer can take.

Two commercial points belong in the lease document itself. Unless the deed says otherwise, everything built during the term, the villa, the pool, the landscaping, belongs to the landowner at handover. And leasehold pricing reflects the weaker right: equivalent properties commonly trade 30 to 50 percent below the Hak Pakai price.

Leasehold suits foreigners who want simplicity, speed, and avoidance of corporate compliance. It does not suit foreigners who need certainty of long-term tenure beyond the lease term or who are operating a business that requires holding the land through a corporate vehicle.

The 2026 Apartment Rule

For strata-title apartments (Hak Milik Atas Satuan Rumah Susun, or Sarusun), the foreign ownership regime is different. Government Regulation No. 18 of 2021 confirmed that foreigners can own strata-title apartment units under Hak Pakai-equivalent title.

Apartment foreign ownership in Jakarta is capped at 20 percent of units per development since the 2023 regulatory revisions. Minimum purchase prices apply: IDR 3 billion for foreign-eligible apartments in Jakarta, lower in other provinces. Foreign apartment buyers do not need a KITAS for purchases above the minimum thresholds, which has materially widened the buyer pool for prime Jakarta apartment developments.

What This Means in Practice

The structure choice maps to the buyer's intent.

A foreigner buying a personal residence to live in: Hak Pakai in personal name, if eligible for the necessary stay permit and the property is above the provincial minimum threshold.

A foreigner buying a Bali villa to rent out: PT PMA holding HGB land title, with the villa registered as a tourism accommodation under the relevant local government license.

A foreigner buying for a short-term horizon or wanting minimum compliance: long-term leasehold, properly registered with the BPN.

A foreigner buying an apartment in Jakarta: direct foreign ownership through Sarusun strata title, subject to the IDR 3 billion minimum and the 20 percent per-project cap.

Mixing structures is common. A foreign buyer might hold a personal Hak Pakai residence and a separate PT PMA for a rental villa. The two are legally independent and serve different purposes.

Verifying Title Before Purchase

The Indonesian land registration system has been digitized through the BPN's Layanan Online portal, but the underlying title verification still rests on physical certificate inspection. A foreign buyer should request:

The original SHM (Sertifikat Hak Milik) or SHGB (Sertifikat Hak Guna Bangunan) certificate, not a photocopy.

A current zoning verification (ITR, Informasi Tata Ruang) from the local planning office confirming permitted use.

A current land tax payment receipt (PBB).

A title encumbrance check at the local BPN office.

A notary-conducted due diligence report including chain of title.

The notary handling the transaction must be a PPAT (Pejabat Pembuat Akta Tanah), a land deed official with specific BPN credentials. Not every notary qualifies. Verifying the notary's PPAT credentials with the local BPN is a routine step that gets skipped surprisingly often.

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