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Leasehold (long term lease)

Timeline:

Leasehold is the most popular method of transferring property rights for foreigners in Indonesia.

– Terms: The law does not limit the term of the lease, but the market usually offers leases for 25-30 years with an option to renew.

Process:

To conclude such a transaction, a foreigner does not need the assistance of local intermediaries or registration of a legal entity in the country. The transaction can be conducted through a local notary, who acts as a “guarantor” of the transaction.

Contract Renewal:

The issue of lease renewal often arises when drafting a lease. Usually the terms of extension are stipulated by the parties, but the wording “priority extension of the contract at market price” is common. If the agreement is properly drafted and contains a priority right of extension, the landowner will have no other option but to extend the lease. Properly drafted lease agreements can be extended without problems.

Freehold (perpetual ownership)

Limitations:

Foreigners cannot own land or real estate as individuals, so the buyer needs to open a company in Indonesia.

Popularity:

Freehold is not popular among foreigners because of the complexity of registration and high cost. Registration requires physical presence and opening a company. The cost of land under a similar object in leasehold will be three times lower.

Respect for property rights:

Indonesia shows exceptional respect for property rights, they are considered fundamental here.

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