Buying a condo in Indonesia is not that simple if you are a foreigner. Even today you are not allowed to purchase the land directly, but you can buy a house or Indonesia via the strata title, yet you will just own the condo and not the land on which it stands. The legal aspects are changing all the time, however you could go opt for the Strata title so you can purchase a condo in Indonesia.
Purchasing the condo under strata title
If you reside in Indonesia or if you visit the country often, you are allowed to purchase a condo, apartment or house as long as it’s not in a housing development subsidized by the government. The challenge here is that you can only acquire land use deeds, and the development will retain the right to build deed. You can’t have a land-use deed for a sub-unit of a right to build deed. As a result, the length of a title will vary quite a bit, and you can encounter some ownership issues.
You will be able to lease the condo for up to 70 years, but you won’t be able to own a free standing house. And you need to renew the lease agreement periodically. Renewals are done at a notary public and you will initially renew after the first 25 years, then after 25 more years and finally after 20 years.
Does the convertible lease agreement system work?
This is the best approach when you want to acquire any of the condos for sale in Indonesia and it certainly works for most foreigners. You could go for a convertible lease agreement, in this case you agree with the condo property management office to acquire the apartment. The agreement will tell that a foreigner is purchasing that condo, but the title is held in the name of the property management firm of the developer.
As a result, this situation is not that ideal because it comes with legal ambiguities and obviously that can bring in various problems. The Strata Title approach might seem a bit problematic, but at the same time it’s simpler. At least you will have the property in your name and you will have to deal with a renewal every 20-25 years.
Also, there’s a limit of 2000 square meters when you want to buy a condo or a house. That’s a substantial space anyway, but you will not be able to get past that, so it can be a problem. In case you want to sell the condo, you will need to release or transfer the right of use to another person that meets the requirements. So even selling the property can be a bit confusing.
Despite that, getting a condo in Indonesia is a very good idea. Lots of foreigners are coming to retire here, and the property market is growing quite a bit, especially in the large cities. If anything, this is one of the best times to purchase a condo in Indonesia, and you can obtain a great return on investment in the long run if you do it right!