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Property lease extension process to be simplified
Report from the Jakarta Globe:
The government has backpedaled on a proposal to allow foreigners to own property in Indonesia for 90 years and will now only simplify the extension process and not change the maximum length of title from the current 70-year tenure.
The changes are contained in a new regulation which will be presented to President Susilo Bambang Yudhoyono for approval before the end of May, the Ministry of Public Housing’s Jamil Ansari said on Wednesday. The regulation is expected to take effect within two months of the president approving it, he said.
“The draft review of the regulation is almost finished and we expect it will be ready by the end of May,” Jamil said.
Currently, foreigners can hold property for 25 years. After the term expires, they may renew their property rights with the National Land Agency (BPN) for an additional 25 years and then extend it once more for 20 years, making for a total of 70 years.
Under the new regulation, foreigners will be able to renew for the additional 25- and 20-year terms at the same time, effectively meaning they will be able to renew for 45 years.
“Many foreigners find that the extension process for their property is really unpractical. Therefore, we decided to simplify it,” Jamil said.
Teguh Satria, chairman of the Indonesian Real Estate Developers Association (REI), said it would make more sense for foreigners to be able to own property outright so they did not have to go through time-consuming extensions.
Not allowing foreigners to own property meant Indonesia’s property sector was less competitive compared to Singapore and Malaysia, Teguh said.
He said there were around 83,000 foreigners living in Indonesia. If 10,000 of those foreigners bought a $250,000 apartment it would translate into $2.5 billion of foreign investment, Teguh said.
Give a man a fish and he will eat for a day. Teach a man to fish and he will sit in a boat drinking beer all day.
Lease extension
They say you can renew your lease AFTER THE TERM EXPIRES. Really??? Is that right? Because my lawyer wants me to sign a lease agreement of 25 years and a lease extension agreement of 25 years at once but with a different dates (distanced by 15 days on the paper).Originally Posted by spicyayam
So my question is : Is mylease extension agreement legal? I'm wondering because 1) according to the text above, you can renew only once the term expires (but maybe you can extend?), and 2) because they say extension should be 20 years max, not 25....
I must admit it's a bit confusing for me. What's the difference between renewing and extending?
I was also wondering if you could have just one lease agreement in which you put a clause saying the lease is automatically extended (or renewed I don't know :-) at a pre-definite rate. Would that be legal?
Thanks for your help.
Leeloo
Are you using a lawyer or notary for this?
If you want to be sure about this, it might be an idea to get another notary to look over the contracts.
Give a man a fish and he will eat for a day. Teach a man to fish and he will sit in a boat drinking beer all day.
Hi all,
I have just moved to Bali a few weeks ago and I am looking at some land to build on.
The problem I have is that when I ask how the lease of land/property operates I did speak to a developer but he did not know - I smelt a rat!
Is there any expats who lives in the Padma region who could perhaps sit down and explain me the process in good english!
I'll buy the lunch LOL.
Thanks,
Anzac
Last edited by ANZAC; 17-06-2010 at 08:57 AM.
Buying /Leasing in Bali
I to find it hard to get a straight answer i want to buy a property but because I am Australian I am not legally allowed to own property only if local is on title then they can sell at any time.
So I look at lease for 25 years most of the time its the same price as if I had purchased the property but after 25yrs i have to give it back. ??? Unless i renew the lease and then that costs me the same again in value ????????? is this correct.
You make it sound like you have to re-buy it at 25 years. That's not what happens. At the beginning you pay a purchase price so that the land can then be owned by your nominee. You also sign some contracts for the 25 year lease arrangement with your nominee. It includes a provision for you to pay a rent - usually a small "peppercorn" rent. After 25 years you, or whoever you have sold it to, has the option to re-new the lease.
In a past thread Gilbert translated the set of lease agreements he was using have a look: "Namegiver" need to be onsite?
You make it sound like you have to re-buy it at 25 years. That's not what happens. At the beginning you pay a purchase price so that the land can then be owned by your nominee. You also sign some contracts for the 25 year lease arrangement with your nominee. It includes a provision for you to pay a rent - usually a small "peppercorn" rent. After 25 years you, or whoever you have sold it to, has the option to re-new the lease.
Sorry Ron,i think you are mixing up two things,buying and leasing.Leasing is legal for foreiners,so you do not need a nominee.Only if you buy-no extension needed- you need a nominee.Indeed you have to pay again as the lease expires.The price of lease land should be considerably lower than for buy-land anyhow.Good leasecontracts state the reference to be used to establish the price of the extension,such as the price of rice or gold.
Ok so looking at a lease as it seems the safest way to go. Most of them have been the same price to buy or lease. I understand this will be hard work till I find the right person to deal with, plus properties are hard to find at the moment.
As I mentioned being the same price to buy or lease it pushes you into trying to buy as your not paying for a new lease at the end of the term.
Example i pay $250,000 for a lease in 25 years i have to pay the same again or more to extend for the same period. Yet if I buy its mine forever till I sell or get ripped of by the nominee ????
I am not sure where you have been looking,but generally speaking the leasehold prices are considerably lower than buyingprices,rightly so.In the present booming market real estate agents might tend to ask idiotic prices for leasehold while minimizing the information on the effects of leasehold.If the price of rice (example as one of the references you can put in your contract)goes up,so will the price for the renewal of your lease.I agree it is not really inviting to invest that way.In fact the value of your property goes down each year instead of up,wich is usual in real estate.As I mentioned being the same price to buy or lease it pushes you into trying to buy as your not paying for a new lease at the end of the term.
Example i pay $250,000 for a lease in 25 years i have to pay the same again or more to extend for the same period. Yet if I buy its mine forever till I sell or get ripped of by the nominee ????
yet the leasehold is the only construction that is really advised as safe by all kind of knowledgebale people.(i use a nominee myself,like living dangerously.)One advice to all who would like to invest in indonesia:do not invest more then you could afford to loose,for whatever reason.You will sleep bet.ter
Leasehold construction
Check the site of this notary in Sanur,Perfect english.:The problem I have is that when I ask how the lease of land/property operates I did speak to a developer but he did not know - I smelt a rat!
Is there any expats who lives in the Padma region who could perhaps sit down and explain me the process in good english
.:: Rainy Hendriany - Bali property investment legal specialist. Foreign investment specialist ::.
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