What to know when leasing land

Leasehold or Hak Sewa

As a foreigner Indonesian law allows you to lease land in your own name which is common practice among investors and expats alike. An Indonesian citizen with the Freehold (Hak Milik) will offer the foreigner to lease their property for on average between 20-30years. When leasing a property it is best to seek the advice of a known property Agent or go directly to a Notaris to insure your legal standing. Now once you have the desired property here are some tips of what to clarify. 

1: Always use a Notaris that has a good recommendation from previous people doing a similar transaction.

2: Only pay deposits to the Notaris to secure the property never to the land owner unless documents have been signed.

3: Discuss with the owner your intentions for the property and ask their help with the lokal banjar regulations.

4: Check the Zoning, building regulations are tightening up fast in Bali and you must have the correct zoning to build accommodations especially. Building a rental property in a standard housing Zone is not allowed and getting the legit permits for this is impossible. Even worse getting a green belt property to build your house on is absolutely not allowed and you may find your house being torn down during development stage. Be aware..

5: Ensure you have the right to transfer the remaining of your lease to a third party.

6: Ensure you have the first option to extend at the value agreed (generally market value of extension date).

7: Always ask your notaris to check access to the land and if needed get it signed off before payments.

8: Make sure you've read and are happy with the lease terms before signing.

Leasehold is the right to use land owned by another private party for building purposes. The right cannot be registered at the land office and therefore does not exist in certificate form. Land leases are not public documents.

The law does not stipulate a period for such lease agreements although the average is between 20-30 years, and whether this can be transferred or not depends on the original agreement between the parties (lessor & lessee). This right may be held by a foreigner domiciled in Indonesian or a foreign legal entity having a representative office in Indonesia, the lease may not be mortgaged.

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