President Joko “Jokowi” Widodo has signed a government regulation (PP) on ownership of houses by foreigners, providing just a little leeway for expatriates wishing to own property in Indonesia.
According to a statement from the Cabinet secretary made available on Tuesday, the President on Dec. 22 signed PP No. 103/2015 concerning housing ownership by foreigners who reside in Indonesia.
The new PP took effect on Dec. 28 and automatically revokes the earlier PP No. 41/1996, which regulates a similar issue.
The new PP is intended to provide more legal certainty for foreigners who own residences and stipulates several provisions not regulated in the 1996 PP, although they are included in the 1960 Basic Agrarian Law (UUPA) and the Indonesian Civil Code.
The new regulation stipulates that foreigners who hold stay permits are eligible to own housing under the “right of use”, either on state land or freehold land. The right of use, which has an 80-year total term, can be inherited by any of the holders’ heirs who also hold stay permits.
It also stipulates that Indonesians who marry foreign nationals will not lose their right to own freeholds as long as they have notarized prenuptial agreements in place; such agreements prevent mixture of spouses’ assets.
Indonesian women who marry foreigners need to have sufficient understanding of the 1974 Marriage Law, the 1958 Citizenship Law and the 1960 Agrarian Law to enable them to retain their right to own freehold property.
Article 35 of the 1974 Marriage Law states that a person cannot retain all assets obtained prior to marriage or assets inherited during marriage, unless the couple makes a prenuptial agreement. The definition of assets here covers land and property. Meanwhile, articles 29 and 36 of the Marriage Law require Indonesian who marry foreigners to make prenuptial agreements in order to buy and own property if they wish to do so after they marry.
Colliers Indonesia associate director and research Ferry Salanto admitted on Tuesday that the two government regulations were not greatly different, noting that foreigners were already allowed to own property through the right of use.
“The new regulation doesn’t have many surprises,” Ferry said over the phone.
He added that the 2015 PP was not “revolutionary” or in stark contrast to the previous one, as it still required foreigners to live and work in Indonesia.
“People expected a regulation that would allow foreigners to buy property without having to live in the country,” he said, “As is the case in Singapore.”
As part of its first economic policy package, the government announced in September that foreign ownership would be allowed for apartments worth at least Rp 10 billion (US$722,805) in the planned revision of the 1996 PP. Such a move would represent a degree of liberalization of the property market.
Ferry said that the new regulation would not have a significant implication as potential buyers were very limited.
“Just look at the Immigration Office data. How many expats want to buy property?” he asked.
Cushman and Wakefield assistant manager Risma Diniar voiced a similar view.
“The interest will be just the same,” she said over the phone on Tuesday. Foreigners would be unable to buy property as an investment as the regulation specifically required them to live and have interests in the country, she said.
Despite aiming to give legal certainty, the new PP, while allowing more facilities to foreigners, does not attempt to subvert prevailing agrarian principles, such as nationality. It remains the case that only Indonesians may own freeholds, with foreigners entitled only to right of use and leasehold only, according to the PP reading.
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