Freehold Title: An Overview of What You Need to Know

There are two common property ownerships you should know about as a foreigner – one is the leasehold title and secondly a freehold title. Many people know that Indonesian regulation and law allows foreigners to purchase leasehold title, but not freehold title/rights. It’s not surprising because people always relate freehold rights to Hak Milik.

Yes, you can refer to Hak Milik as synonymous with freehold rights. However, the freehold rights are not only Hak Milik. There are other titles that are included in the freehold title category that foreigners are still eligible to obtain though a valid company structure.

What’s the Definition of Freehold Property?

Let’s have a look at the definition of freehold property so that you have a better understanding of it. Freehold property we can define as any property that is “free from hold” from external claims apart from the rightful title owner.

The holder of a freehold title for the property has full authority to use the property for any purpose, as long as the owner still obeys the local restrictions applied in the area, they reside in.

The selling process of freehold property needs less paperwork and the state’s approval isn’t required. But freehold property is more costly than leasehold properties.

Property titles that are categorized as freehold titles such as Hak Milik, Hak Guna Bangunan, and Hak Pakai. As a reminder, foreigners can’t own property in Indonesia through Hak Milik.

However, foreigners are still able to have these titles through: 

•    Hak Guna Bangunan (HGB) – available for PT. PMA only.
•    Hak Pakai (HP) – available for non-Indonesian individuals and PT. PMA.

You can learn briefly about 7 property rights in Indonesia here!

The Pros and Cons of Freehold Title

Here are the pros and cons of this title for foreigners:

1. Pros of Freehold Title Ownerships 

•    Need less paperwork or documents 

•    Easier to sell his title 

•    If the title holder has freehold land, it’s simpler to get a bank loan and renewal

•    Freehold land has more promising capital growth and runs at a steady incline each year 

2. Cons of Freehold Title Ownerships

•    This title is more costly than a leasehold title.

•    Down payments will naturally be more due to the significant price difference from lease to freehold title ownership.

If you’re a non-Indonesian individual who wants to have an HP title or PT. PMA who have decided to buy this title through HP or HGB in Indonesia, asking for help from a lawyer or notary about the regulation applied is recommended and necessary to make sure that you follow the structures and rules.

The Choice is Yours!

There are many reasons why people want to have a freehold title in Indonesia. As a non-Indonesian citizen, you can have property titles through HP. For PT. PMA companies, can have property titles through HP or HGB.

To find out more on the ownership laws, how to obtain these titles and the structures involved, contact BVR Legal to assist.

There are a few requirements needed to be able to purchase under a few of these titles and here at BVR Legal we able to run you through a smooth understanding of how this could be possible for you.