Leasehold (Long-Term Lease)

Overview:

Leasehold is the most common form of property ownership available to foreigners in Indonesia.

Terms:

The law does not restrict the duration of a lease, but in practice, leases are typically granted for 25–30 years with an option to renew.

Process:

A foreign buyer does not need to establish a local company or use intermediaries. The transaction is carried out through a local notary, who serves as the official guarantor of the deal.

Contract Renewal:

Lease renewal terms are usually outlined in the original agreement. The most common clause is “priority right to extend the lease at the market rate.”
If this clause is properly included, the landowner is legally obliged to extend the lease. Well-drafted agreements can therefore be renewed without complications.

Freehold (Perpetual Ownership)

Restrictions:

Foreign individuals cannot directly own land or real estate in Indonesia. To acquire property on a freehold basis, the buyer must establish a local company.

Popularity:

Freehold ownership is uncommon among foreigners due to the complexity and high cost of registration. It requires the owner’s physical presence and company formation.
For comparison, the price of land under a similar property on a leasehold basis is roughly three times lower.