Buying a property in Indonesia – 7 step guide to follow

As a prudent investor, one should not only invest in home country properties.  Investing in properties abroad can fetch high returns.  Besides these properties can be used during vacations.  Indonesia has always been the favorite choice of real estate investing community.  Read on to know the investor-friendly Indonesian rules on real estate:

  1. Indonesian law permits foreigners to develop the property. Besides, the property can be held by an Indonesian local on behalf of the investor.  However, this option has limited advantages.  Hence maintaining the property directly by the foreigner would be the best alternative.
  2. There are various types of rights for holding an Indonesian property like the following:
  3. Right to build: A foreigner can develop a property for 30 years.  This can be extended to a further period of 20 years.  Under this option, the property development project can be undertaken as a joint venture with foreign companies.
  4. Right to own: An Indonesian can hold the title, or the state can keep the title.  Mortgaging, sale and transfer rights vests with them.
  5. Right to use: For a specific period, the foreigner can use the property for a particular purpose.
  6. Right to operate: The land owned by the state can be run for a specific period.  The holder can transfer this property to a third party under option a or c.
  7. There is another option called convertible lease agreements. These lease agreements can be converted into a sale if future legal changes in the country permit such a move.

In specific regions, the state allows 100% ownership to foreigners for high-cost homes. Bali new homes are a good choice.


Due diligence verification of the seller needs to be done by the buyer.  The following documents need to be inspected by the buyer:

  1. Latest tax document
  2. Land certificate (original)
  3. Building permit(Original)
  4. Documents related to Electrical, water, and telephone connections
  5. If the buyer has an existing mortgage on the property, a confirmation letter is needed from the concerned bank.
  6. Identity proofs of the seller
  7. Incorporation certification of the company
  8. In case the seller is a company, the consent of shareholders for selling the property
  9. Buyer needs to possess the following:
  • ID proof
  • In case the buyer is a company, incorporation certificate is required.

The buyer needs to know the current tax rates for property transfer.  There are different tax rates for buying, selling and holding.

Buying process:

Once the buyer and seller mutually check their documents, the buyer has to check the land certificate with the registrar office.  A deposit needs to be paid for the same.  The next step is payment of taxes by the buyer and seller.   The buyer has to settle the final payment to the seller after registration.  When the signing of the land transaction deed is done, the transfer of ownership is done within the stipulated working days.  It is best to have a buying agent rather than individually undertaking all the above pains.