Can Foreigners Buy Property in Indonesia? PT PMA vs Leasehold vs Hak Pakai (2026)

Can foreigners buy property in Indonesia?

Foreigners cannot hold Indonesian freehold (Hak Milik), but three legal routes give control of property: a registered leasehold contract, the Hak Pakai (right-to-use) land title for resident individuals, and HGB title held through a PT PMA foreign-investment company. Trawaya sells its Gili Trawangan villas through the PT PMA route.

Indonesia's land system, built on the Basic Agrarian Law (UUPA Law 5/1960) and updated by PP 18/2021 under the 2021 Cipta Kerja reforms, is a hierarchy of named rights rather than a single concept of "ownership". Hak Milik (freehold) sits at the top and is citizens-only. Below it sit rights foreigners can lawfully hold or contract for: Hak Pakai (right to use), Hak Guna Bangunan or HGB (right to build, available to Indonesian companies including a foreign-owned PT PMA), and hak sewa (leasehold, a contractual right).

The practical question for an investor is therefore not "can I buy?" but "which right fits my budget, residence status and business plan?" The comparison table below sets the three routes side by side.

Why is freehold (Hak Milik) reserved for Indonesian citizens?

Article 21 of UUPA Law 5/1960, Indonesia's Basic Agrarian Law, reserves Hak Milik (freehold) for Indonesian citizens. Article 26(2) declares transactions intended to pass Hak Milik to a foreigner void by law. This is foundational land policy, unchanged since 1960 — no structure, agent or paperwork can route around it.

The rule is not a technicality that a clever contract can solve; it is the organising principle of Indonesian land law, rooted in the post-independence decision that Indonesian soil belongs to Indonesian citizens. Article 26(2) adds teeth: a transaction designed to move Hak Milik to a foreigner is void, and money paid under it is not recoverable through that transaction.

This is why any marketing that promises "freehold for foreigners" in Bali, Lombok or the Gili Islands should end the conversation. What is actually being sold in those cases is usually a nominee package — an Indonesian citizen holding title on paper — which Indonesian courts have refused to protect. Trawaya's guide to nominee structure risks covers the case law and failure modes in detail.

Leasehold vs Hak Pakai vs PT PMA: side-by-side comparison

Leasehold is contractual and cheapest, typically 25–30 years with negotiated renewals. Hak Pakai is a registered land right for foreign residents, running 30+20+30 years under PP 18/2021. A PT PMA holds HGB title on the same 30+20+30 cycle and can legally operate a rental business. The table compares all three.

None of the three is universally "best". A leasehold minimises entry cost but leaves you exposed at renewal if the option terms were vague. Hak Pakai gives a real registered right but ties you to residence status and to a personal dwelling. A PT PMA carries the most administration but is the only route built for running a commercial villa rental — which is why Trawaya uses it for Seraphina Isles Villa on Gili Trawangan.

How does Hak Pakai work for foreign individuals?

Hak Pakai (right to use) lets a foreign individual holding a KITAS or KITAP residence permit register a land right in their own name for a dwelling. Under PP 18/2021 it runs 30 years, extendable by 20 and renewable for 30. The property must meet minimum value thresholds set by ministerial regulation, which vary by province.

Hak Pakai is the closest a foreign individual gets to direct, registered property rights in Indonesia. The right appears on the land certificate in your name — not a company's, not a nominee's — and it can be granted over state land or over Hak Milik land by agreement with the owner.

The conditions matter. You must hold a valid residence permit (KITAS or KITAP), and the government sets minimum purchase values per province precisely to steer foreign buyers toward the upper end of the market — the thresholds change by regulation, so verify the current figure for West Nusa Tenggara (Lombok and the Gilis) or Bali with a notary before planning around this route. Hak Pakai is designed around a dwelling for your own use; operating it as a commercial rental raises licensing questions (see Trawaya's rental licensing guide) that the PT PMA route answers more cleanly.

How does leasehold actually work in practice?

An Indonesian leasehold is a contract with the Hak Milik landowner, prepared and notarised by a notary (notaris/PPAT), typically running 25–30 years with renewal options priced or negotiated up front. It grants use and rental-income rights for the term. The contract is the protection, so its drafting is everything.

A well-built leasehold names the exact land parcel and certificate number, is notarised, and ideally is registered so it survives a sale of the underlying land. The renewal clause deserves the most scrutiny: a lease with a pre-priced renewal option is a materially different asset from one where renewal means renegotiating with whoever owns the land in 25 years. What the asset is worth at year 20 — and how leaseholds resell — is covered in Trawaya's exit strategy guide.

Two practical notes. First, Indonesian law requires domestic transactions to be settled in IDR (the Currency Law) — prices may be quoted in euros or dollars, but settlement happens in rupiah. Second, lease payments to the landowner fall under Indonesia's final withholding tax on land and building rentals — 10% of gross rent (PPh Final, Art. 4(2)) — one of several taxes mapped in the Indonesian property tax guide.

When is a PT PMA the right structure?

A PT PMA is an Indonesian limited company with foreign shareholders, licensed through the OSS (Online Single Submission) system. It receives an NIB business number under specific KBLI business classifications and can hold HGB (right-to-build) title for 30 years, extendable 20 and renewable 30. It is the standard vehicle for a villa rental business.

Choose a PT PMA when the property is a business, not just a home: short-term rental operations, multiple units, or an asset you may sell as a going concern. The company — not you personally — holds the HGB title, employs staff, obtains the pondok wisata or equivalent rental licence, and invoices guests.

The obligations are real. OSS rules set an investment-plan threshold above IDR 10 billion per business line (verify the current requirement, as OSS practice evolves), the company files taxes at Indonesia's 22% corporate rate, and dividends to foreign shareholders carry 20% withholding unless a tax treaty reduces it. For a single modest villa these costs can outweigh the benefit — which is why smaller buyers often lease instead.

Trawaya's own Seraphina Isles Villa project on Jalan Kelapa, Gili Trawangan, uses the PT PMA structure: villas from €120,000, with the projected 11.2% net yield modelled on disclosed assumptions (€125 average nightly rate, 65% occupancy, 32% operating costs). Trawaya is a young company with one live project and one unit sold — ask to see the structure documents, not just the brochure.

What about apartments — the SHMSRS strata-title route?

Foreigners holding a residence permit can hold SHMSRS strata title over apartment units in buildings standing on eligible land, subject to the same ministry-set minimum values. It is the most direct form of unit ownership Indonesia offers foreigners — but it applies to apartments, so it barely features on the Gili Islands, where stock is villas and land.

SHMSRS (Sertifikat Hak Milik atas Satuan Rumah Susun) is a certificate over a strata unit rather than over land. For foreign buyers focused on Jakarta or urban Bali condominiums it is worth a dedicated conversation with a notary; for island villa investors in the Gili Islands or Lombok it is mostly a completeness note. Trawaya's glossary of Indonesian property terms collects the definitions of SHMSRS, HGB, Hak Pakai and the related land rights in one place.

Why not just use a nominee like everyone else?

Because it fails when tested. A nominee arrangement — an Indonesian citizen holding Hak Milik on paper while side agreements give a foreigner control — circumvents Article 21 of UUPA Law 5/1960, and Indonesian courts have declared such packages void. The registered nominee legally owns the asset. It is the one widely marketed route with no legal foundation.

The nominee pitch survives because it is cheap up front and problems only surface later — at a sale, a death, a divorce or a dispute, exactly when the foreigner needs the structure to hold. Every risk the three legal routes manage by design, the nominee route concentrates into one unenforceable relationship. The full analysis — what the packages contain, how courts have treated them, and what to do if you already bought through one — is in Trawaya's nominee structure guide.

Frequently asked questions

Sources

• UUPA Law 5/1960 (Basic Agrarian Law), Articles 21 & 26 — Indonesian government legal database
• PP 18/2021 on land rights (Hak Pakai, HGB durations and extension framework)
• OSS — Indonesia's Online Single Submission investment licensing system (PT PMA, NIB, KBLI)