Foreigners Buying Guide to Indonesian Property
Foreigners can 100% legally buy property in Indonesia.
Indonesian law restricts Freehold (Hak Milik) title exclusively to Indonesian citizens. Foreign buyers must use legally recognised structures such as Hak Pakai for residential use or PT PMA companies holding Hak Guna Bangunan (HGB) for investment and development. Choosing the correct structure from the outset determines whether a property is secure, bankable, and legally enforceable.
This guide explains all lawful pathways available, identifies ownership structures to avoid, and shows why buying a PT PMA that already contains property is often the most streamlined and cost-effective approach for serious investors.
Can Foreigners Buy Property in Indonesia?
Yes. Foreigners can acquire long-term property rights in Indonesia using legal structures recognised under Indonesian law. The governing framework is the Basic Agrarian Law (Undang-Undang Pokok Agraria No. 5 of 1960), which limits land rights based on citizenship and legal entity status. All land rights must be registered with the National Land Agency (BPN), and only registered rights are legally enforceable.
Foreign buyers who follow these rules can hold property securely for decades. Those who do not risk losing their entire investment. Our legal and ownership series of articles covers the majority of considerations and provides clear answers on corporate structures, land titles and legal matters.
The Legal Ways Foreigners Can Buy Property in Indonesia
There are four commonly discussed approaches.
- Hak Pakai (Right to Use) – legal personal residential ownership
- PT PMA with Hak Guna Bangunan (HGB) – legal corporate ownership for investment
- Nominee ownership – a legally grey area and at times unenforceable
- Buying an existing PT PMA with property incorporated and held — is not a separate legal structure, but a more cost effective and efficient way of using the PT PMA pathway.
Hak Pakai (Right to Use): Legal Personal Ownership
What Is Hak Pakai?
Hak Pakai is a registered land right allowing use or occupation of land owned by the state or a private party. It is recognised under Indonesian law as a valid land right that can be held by foreign individuals with valid residency status.
Hak Pakai for foreigners is governed by Government Regulation No. 103 of 2015 and Ministerial Regulation ATR/BPN No. 29 of 2016.
Who Hak Pakai Is For
Hak Pakai is suitable for:
- Individuals buying a residential home to live in
- Foreigners holding KITAS or KITAP residence permits
- Buyers seeking lifestyle use rather than commercial returns
Duration & Renewals
- 30 years initial term
- 20-year extension
- 30-year renewal
Total possible tenure: up to 80 years, granted in stages rather than all at once.
Strengths
- No company required
- Simple registration through BPN
- Fully legal title recorded on land certificate
Limitations
- Residential use only
- No commercial or rental activity
- Limited resale market compared to corporate ownership
Hak Pakai grants legally recognised use rights without creating ownership (Hak Milik).
PT PMA with HGB – The Standard Investment Structure
What Is a PT PMA?
A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a foreign-owned Indonesian limited liability company established under Law No. 25 of 2007 on Investment. A PT PMA company may legally acquire land rights such as Hak Guna Bangunan (HGB).
What Is HGB?
Hak Guna Bangunan (Right to Build) allows a PT PMA to build, use, lease, finance, and sell property on land it does not own outright. It is the strongest land title available to foreign investors.
HGB tenure has been clarified and extended under the Job Creation Law (UU Cipta Kerja).
Duration & Renewals
- 30 years initial
- 20-year extension
- 30-year renewal
Total potential tenure up to 80 years, subject to compliance and can be further extended and renewed. Our article on establishing a PT PMA company for land purchase explores the pros and cons and process to do this in more detail.
Compliance Requirements
- Ongoing compliance via OSS/BKPM reporting
- The PT PMA’s KBLI business classification must align with the land zoning and intended use, otherwise HGB issuance, extensions, or future resale may be restricted.
Benefits
- Full commercial and operational rights
- Clean exit via share transfer rather than land transfer
- Bankable title recognised by lenders
- Ideal for villas, resorts, hotels, and island developments
PT PMA with HGB provides the closest functional equivalent to foreign ownership of land in a commercial context.
Buying an Existing PT PMA with Land Assets (The Most Efficient Route)
How This Works
Rather than forming a new PT PMA and then buying land, investors can purchase shares in an existing PT PMA that already owns land under HGB. Legally, the land remains registered to the company. Ownership changes through share acquisition, not land title transfer. In practice, professional island, resort, and large-scale land transactions in Indonesia are executed this way. The purchase of an existing PT PMA company with property assets also has additional structural and taxation benefits, which we explore further in our article buying a PT PMA company with land titles.
Why This Is Often the Best Approach
- Faster: avoids land re-registration and HGB conversion delays
- Cheaper: reduces taxes and notary fees linked to land transfer
- Cleaner: preserves uninterrupted HGB title history
- Lower risk: fewer procedural failure points
When structured correctly, this method offers the same legal protection as a new PT PMA, with fewer steps and a quicker turnaround to getting predevelopment work done.
HGB titles held by PT PMA entities are recognised by Indonesian banks and international lenders for secured financing, provided the company remains compliant with BKPM and land-use regulations.
Nominee Ownership – The Shortcut to Avoid
What Nominee Ownership Is
Nominee structures place land in an Indonesian citizen’s name while a foreigner provides the funds and relies on private agreements for control. Check out our buying property in Indonesia under nominee arrangement article for further details on how others have used this process, and what the pitfalls can be.
Why Nominee Structures Can Be Legally Unenforceable
Indonesian law reserves Hak Milik exclusively for citizens. Nominee arrangements directly contravene the Basic Agrarian Law and are unenforceable in court. Indonesian courts recognise only the registered land title holder – private nominee agreements, powers of attorney, or side letters provide no enforceable ownership rights on their own.
How Nominee Structures Can Collapse
Nominee arrangements can fail when:
- There is no permanent right of use agreement in place
- There is no irrevocable power of attorney agreement (POA)
- There is no registered mortgage on the property to the foreign investor
Which Property Structure Is Right for Foreign Buyers in Indonesia?
- Living in the property → Hak Pakai
- Renting, developing, or reselling → PT PMA with HGB
- Fastest, lowest-friction investment entry → Buy an existing PT PMA with land assets
- Any structure relying on nominees → Avoid
| Ownership Structure | Legal Status | Permitted Use | Resale Strength | Risk Profile |
| Hak Pakai (Right to Use) | Fully legal | Personal residential use only | Low to moderate | Low |
| PT PMA with Hak Guna Bangunan (HGB) | Fully legal | Commercial, rental, development, resale | High | Low |
| Existing PT PMA with Land Assets | Fully legal | Commercial, rental, development, resale | Very high | Lowest |
| Nominee Ownership | Illegal / unenforceable | None | None | Higher |
The choice of structure determines legal certainty, resale value, and long-term enforceability.
Who This Guide Is Not For
This guide is not intended for buyers seeking informal arrangements, short-term speculation without compliance, or ownership structures dependent on secrecy. Indonesian land law prioritises registered rights and transparency; investors unwilling to operate within that framework should not proceed.
Frequently Asked Questions
What is the safest way for foreigners to buy property in Indonesia?
The safest way is through legally recognised structures such as Hak Pakai for residential use or a PT PMA holding Hak Guna Bangunan for investment. Buying an existing PT PMA with land assets further reduces transaction risk, cost, and regulatory complexity.
Can foreigners own freehold land in Indonesia?
No. Freehold ownership (Hak Milik) is restricted to Indonesian citizens under the Basic Agrarian Law (No. 5 of 1960).
Is nominee ownership legal in Indonesia?
No. Courts recognise only the registered land title holder.
Is buying a PT PMA with land cheaper than starting from scratch?
Often yes. It avoids duplicate setup costs, duplicate land transfer taxes, and title conversion steps.
How long can foreign property rights last?
Lawful rights such as Hak Pakai and HGB can be maintained for up to 80 years and beyond through staged extensions.
What other Legal and ownership due diligence should I do?
You should thoroughly research what land title types and what land title statuses are in Indonesia to ensure you are buying a property aligned with your intended use, the correct recognised title, and the correct zoning. These aspects are covered in our land titles in Indonesia article series.
Legal & Government References
- Basic Agrarian Law (UU No. 5 of 1960) – Indonesian land ownership framework
https://wplibrary.co.id/sites/default/files/542_-UU%205-1960_ENG.PDF - Law No. 25 of 2007 on Investment (PT PMA)
https://www.bkpm.go.id/en/investment-guide - Government Regulation No. 103 of 2015 (Hak Pakai for Foreigners)
https://peraturan.bpk.go.id/Home/Details/55814 - Ministerial Regulation ATR/BPN No. 29 of 2016
https://peraturan.bpk.go.id/Home/Details/129640 - Job Creation Law (UU Cipta Kerja)
https://peraturan.bpk.go.id/Home/Details/168711 - National Land Agency (BPN)
https://www.atrbpn.go.id - Emerhub – Property Ownership Laws in Indonesia
https://emerhub.com/indonesia/laws-and-regulations-for-buying-property-in-indonesia