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Expat Exchange - Buying a Home in Indonesia
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Ubud on Bali Island, Indonesia


Buying a Home in Indonesia

By Joshua Wood, LPC

Universal Tax Professionals
Universal Tax Professionals

Summary: Seasoned expatriates recommend a cautious approach to newcomers eager to settle down—avoid the rush to purchase property upon arrival. Instead, consider the benefits of renting in Indonesia during your initial months. This strategy allows you the flexibility to explore various neighborhoods and truly decide if the local lifestyle aligns with your long-term expectations. Once you've acclimated and are certain that Indonesia is your future home, here are tips on how to buy a home in Indonesia.

Indonesia, with its vibrant culture, beautiful landscapes, and booming economy, is an attractive destination for expats. However, buying a home in this Southeast Asian country can be a complex process, with unique laws and regulations that foreign buyers need to navigate. This guide aims to provide a comprehensive overview of the key aspects of purchasing a property in Indonesia, from finding houses for sale to understanding the legal requirements and potential pitfalls.

How Do I Find Houses for Sale in Indonesia?

There are several ways to find houses for sale in Indonesia. Online property portals are a popular choice, offering a wide range of listings from across the country. Local newspapers and real estate agencies are also good sources of information. It's advisable to engage a reputable real estate agent who is familiar with the local market and can guide you through the process.

Are There Restrictions on Foreigners Owning Property in Indonesia?

Yes, there are restrictions on foreigners owning property in Indonesia. According to the Agrarian Law, foreigners are not allowed to own freehold land. However, they can acquire a 'Hak Pakai' (Right to Use) or a leasehold title. These titles allow foreigners to lease the land for an initial period of 25 years, extendable up to 80 years. It's important to consult with a legal expert to understand the implications of these restrictions.

Does Indonesia Have an MLS Type System?

Indonesia does not have a Multiple Listing Service (MLS) system like in the United States. Property listings are typically managed by individual real estate agencies. Therefore, it's crucial to work with a reliable and experienced agent who has access to a wide range of properties.

Do Brokers Have Licenses and How Do I Know if They Are Licensed?

Yes, real estate brokers in Indonesia are required to have a license issued by the Indonesian Ministry of Trade. You can verify a broker's license by asking to see their certification or checking with the local real estate association. It's important to only deal with licensed brokers to ensure a smooth and legal transaction.

What Documents Are Required When Buying a Home?

Several documents are required when buying a home in Indonesia. These include a valid passport, a tax registration number (NPWP), a Deed of Sale and Purchase (Akta Jual Beli), and a Certificate of Ownership (Sertifikat Hak Milik). The property must also have a Building Permit (IMB) and a Land and Building Tax Slip (PBB). It's crucial to ensure all documents are in order and legally valid.

Do I Need a Lawyer When Buying a Home in Indonesia?

Yes, it's highly recommended to engage a lawyer when buying a home in Indonesia. A lawyer can help you navigate the complex legal landscape, verify the validity of property documents, and ensure the transaction is conducted legally. Legal fees can vary, but you should budget for around 1% of the property's purchase price.

Do People Typically Buy a Property with All Cash or Take Out a Mortgage?

Both options are common in Indonesia. However, as a foreigner, obtaining a mortgage can be challenging due to strict lending criteria. Many expats choose to buy property outright with cash. If you do opt for a mortgage, it's important to shop around for the best rates and terms.

Are There Inspections That Take Place, and If So What Is That Process Like?

Yes, property inspections are a standard part of the buying process in Indonesia. A professional inspector will assess the property's condition and identify any potential issues. This can help you negotiate the price and avoid costly repairs in the future. The cost of an inspection can vary, but it's generally a worthwhile investment.

What Are Some of the Pitfalls to Avoid When Buying Property in Indonesia?

There are several pitfalls to avoid when buying property in Indonesia. These include not thoroughly researching the property market, not verifying the property's legal status, and not fully understanding the restrictions on foreign ownership. It's also important to be wary of unlicensed brokers and to ensure all transactions are conducted legally. Engaging a reputable real estate agent and a lawyer can help you avoid these pitfalls and ensure a successful purchase.

About the Author

Joshua Wood Joshua Wood, LPC joined Expat Exchange in 2000 and serves as one of its Co-Presidents. He is also one of the Founders of Digital Nomad Exchange. Prior to Expat Exchange, Joshua worked for NBC Cable (MSNBC and CNBC Primetime). Joshua has a BA from Syracuse and a Master's in Clinical and Counseling Psychology from Fairleigh Dickinson University. Mr. Wood is also a licensed counselor and psychotherapist.

Some of Joshua's articles include Pros and Cons of Living in Portugal, 10 Best Places to Live in Ireland and Pros and Cons of Living in Uruguay. Connect with Joshua on LinkedIn.


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Ubud on Bali Island, Indonesia

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