By country · Indonesia
Three Ways to Own Real Estate in Indonesia as a Foreigner
Written for foreign investors without Indonesian residency. If you already hold a KITAS or KITAP, some of what's excluded here (Hak Pakai, Strata Title) may actually apply to you.
This is informational, based on my best research and understanding of the rules as they stood on the date above. Not financial, legal, or tax advice. Indonesian property, licensing and tax rules change fast, sometimes faster than the official guidance keeps up with, and people on the ground regularly get conflicting answers from the authorities themselves. Treat every rate, threshold and licence name here as a starting point to verify, not a settled fact, and confirm anything specific to your situation with a licensed notary (PPAT) and a tax advisor before acting on it. If you spot something that has moved, tell me and I will correct it.
Freehold doesn't exist for foreigners here. Hak Milik, true freehold, is reserved for Indonesian citizens, no exceptions, doesn't matter how long you've lived here or how much you're putting in. That's just settled law, not a gray area worth arguing with.
So here's what you can actually do. Three routes. Each one solves a different problem, and each one has a real catch that usually doesn't make it into the pitch.
1. Lease the land directly (Hak Sewa)
A private contract with an Indonesian landowner, usually 25 to 30 years, room to negotiate an extension. No company. No minimum capital. No residency permit. This is how most individual foreign buyers actually get into a villa in Bali or Lombok, and honestly it's the one most people start with, for good reason.
Cost: the price of the lease itself, plus notary fees, roughly 0.5 to 1.5% of the transaction. No company setup, no ongoing corporate costs.
The catch: the "priority to extend" clause everyone leans on is a negotiated right, not a guarantee. If the price formula for renewal isn't written into the original contract, you're back at the table paying market rate for land you thought you'd already secured.
The fix: the contract is what protects you, not the concept. Pre-agreed extension pricing, clear sub-lease and resale rights, a proper PPAT notary behind it. Get the paperwork right and this route holds up fine.
Renting it out: harder than it looks, and this is where a lot of advice online is simply wrong. The Pondok Wisata homestay license people point to is reserved for Indonesian citizens, so as a foreigner you cannot hold one. The compliant route for renting out at all is a company (PT PMA) with the right accommodation license, which means the lease route on its own does not really give you a rental business. On tax, if you are not an Indonesian tax resident, rental income is generally subject to 20% withholding on the gross amount, not the 10% final rate that applies to tax residents, though a tax treaty with your country may reduce it. And since March 2026, Airbnb, Booking.com and Expedia require a verified business registration number (NIB) to keep a listing live. All of it pushes anyone serious about rental income toward a company.
2. Set up a company (PT PMA)
An Indonesian limited liability company with foreign shareholding. The company holds the land, usually under HGB, Right to Build, 30 years, extendable 20, renewable 30 more. Up to 80 years total.
Cost to set up: roughly $3,000 to $7,000 in notary and registration fees, plus capital. Two separate numbers get confused here constantly. The paid-up capital is IDR 2.5 billion, about $150,000, which has to sit in the company account (lowered from IDR 10 billion in October 2025). Separately, the total investment plan per business line per location must still exceed IDR 10 billion, roughly $600,000, excluding land and buildings. The paid-up money isn't lost, it's working capital you can spend on real business costs. But budget against the investment plan figure, not just the $150,000, or you will be planning with the wrong number.
Ongoing cost: roughly $3,000 to $8,000 a year for compliance, quarterly investment reports, audited financials, tax filings. Real, recurring, budget for it.
The tax catch: profit gets taxed twice before it's fully yours. 22% corporate tax first, then 20% withholding tax again when it leaves the country as a dividend to you.
The fix: if your home country has a tax treaty with Indonesia, that second 20% often drops, but not automatically and not by the number most people assume. It requires a Certificate of Domicile less than 12 months old and proof you're the real beneficial owner, not a pass-through. Get it filed right and the savings are real. Get it wrong and the full 20% applies retroactively, with penalties.
This is also the only route that lets you legally run a rental business at real scale, licensed, with your actual costs deductible against the income. The lease route above can't do that.
Lombok note: if you're looking at anything inside Mandalika, that's a designated Special Economic Zone, and land there typically runs through the zone operator on its own version of HGB or Hak Pakai, with extra tax and licensing perks attached. Same PT PMA logic applies, just worth knowing it's a slightly different animal from an ordinary HGB deal outside the zone. If you're trying to figure out which part of South Lombok you're even looking at, I've broken that down separately, Kuta, Selong Belanak, Mawi and the rest are not interchangeable.
3. Buy equity in the structure (Singapore SPV holding the PT PMA)
Worth naming this one accurately: you're not buying real estate here. You're buying shares in a Singapore holding company, which owns the Indonesian PT PMA, which owns the property. It's an equity stake, backed by property, but legally you're a shareholder, not an owner. That distinction matters for how it gets taxed at home and what rights you actually have if something goes sideways.
Cost: harder to pin down, because it depends on the deal. The Singapore company has its own real running costs, company secretary, registered filings, annual returns. The Indonesian PT PMA underneath still has its own $3,000 to $8,000 a year in compliance too. As an investor you usually don't see these line items directly, the developer or platform running the structure builds them in somewhere, an admin fee, a spread on your return, something. Worth asking exactly where that cost shows up before you commit.
The catch: this only works cleanly if the Singapore company is real, actual operations, actual decisions being made there, not a mailbox and a share certificate. Indonesian tax authorities are actively testing this now. There's a documented case where a similar structure lost its treaty benefit entirely because the holding company had no real substance behind it. Full 20% applied, no discount.
The fix: ask directly whether the SPV has real substance. If it does, this is the cleanest experience available to a foreign investor, no local paperwork, no local bank account, exposure without the operational load. If it doesn't, it's a shortcut that can quietly cost you the exact benefit you signed up for.
Side by side
(Hak Sewa)
(PT PMA)
Which one fits
Depends on three things. How much you're putting in, whether you want to actively run a rental business or just hold something, and how much local involvement you actually want. One villa for personal use with occasional rental, the lease route is enough. A small portfolio with real rental income, the company route earns its cost. Passive exposure with zero interest in touching Indonesian paperwork, the equity route, as long as you've confirmed the substance question.
None of this replaces a proper notary and a tax advisor once you're close to an actual decision. Every one of these gets more specific fast once your nationality and your tax residency come into play.
Why only three, when other structures exist
You'll also hear about Hak Pakai (a registered personal right to use) and Strata Title (apartment ownership). Both are real and legal. Both also require you to already hold Indonesian residency, a KITAS or KITAP, to access them. If you're reading this from outside Indonesia without residency, which describes almost everyone this is written for, neither is actually on the table yet, so they're left out here on purpose, not by oversight.
You'll also hear about paying an Indonesian friend or contact to hold the title in their name, a nominee arrangement. This is illegal under Indonesian law and unenforceable in Indonesian courts. If the arrangement goes wrong, the title is legally theirs, not yours, regardless of what you agreed privately. Not one of the three, and not a shortcut worth considering.
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Can foreigners buy land in Bali or Lombok directly?
Not freehold. You can hold a leasehold contract (Hak Sewa), a registered right to use (Hak Pakai, if you hold residency), or set up a company that holds the land on your behalf (PT PMA). All three are covered above.
What's the difference between Hak Sewa and Hak Pakai?
Hak Sewa is a private lease contract with a landowner, no residency needed, not registered at the national land office. Hak Pakai is a registered right to use, but only available if you hold a KITAS or KITAP residency permit.
Do I need a PT PMA just to buy one villa?
No. If you're buying for personal use or occasional rental, a well-drafted Hak Sewa lease is usually enough. A PT PMA earns its cost when you're running rental income at real scale or holding multiple properties.
How much does it actually cost to set up a PT PMA in Indonesia?
Roughly $3,000 to $7,000 to incorporate, plus $3,000 to $8,000 a year in ongoing compliance. On capital there are two figures, and they get mixed up constantly: paid-up capital of IDR 2.5 billion (about $150,000) that sits in the company account, and a separate total investment plan per business line per location that must exceed IDR 10 billion (about $600,000), excluding land and buildings.
Can I rent out a property I only have a lease on?
Not straightforwardly. The Pondok Wisata homestay license is reserved for Indonesian citizens, so as a foreigner you cannot hold one yourself, and renting out compliantly generally means a company (PT PMA) with the right accommodation license. On tax, non-residents are generally subject to 20% withholding on gross rental income, not the 10% final rate that applies to Indonesian tax residents, though a treaty may reduce it. Since March 2026 the major booking platforms also require a verified business registration number (NIB) to keep a listing live.
Does buying property in Indonesia give me residency?
Not directly, none of these three ownership routes include a residency permit on their own. Indonesia does run separate visa programs (like the Second Home Visa) tied to asset or income thresholds, but that's a different process from the ownership question above and worth checking independently.
What happens when my lease runs out?
Depends entirely on what the original contract says. If the extension price and terms were agreed upfront, renewal is usually straightforward. If they weren't, you're negotiating from scratch at whatever the landowner wants at that time.
Is investing through a Singapore SPV safe?
It can be, but only if the Singapore company has real substance behind it, actual operations, not just a share certificate. Ask directly before investing.
What about Hak Pakai or buying an apartment under Strata Title?
Both are real, legal structures, but both require you to already hold Indonesian residency (a KITAS or KITAP). If you don't have residency yet, they're simply not accessible, which is why they're not one of the three routes here.
Can I just have an Indonesian friend hold the title for me?
No. Nominee arrangements are illegal in Indonesia and unenforceable in court. If it goes wrong, the title is legally theirs, not yours, no matter what was agreed privately.
Already know which of these three fits your situation and want to talk specifics? Book a call.
What's actually stopping people from looking into this properly? The paperwork, the trust, or just not knowing where to start?