Mark
This is an interesting and informative article that highlights many of the reasons that trying to 'own' land in Indonesia via a local nominee arrangement is fraught with peril. Not trying to wind up anyone who currently has such an arrangement, rather just offering some perspective for those who might consider it in the future.[URL unfurl="true"]https://www.balidiscovery.com/bali-property-bear-bull-or-beggars-market/[/URL]
Markit
Interesting article and filled with the usual Jack Daniels wisdom. I've given my tuppence worth a number of time to most of his salient points and many of them did not exist years ago and the framework for buying and selling land here has changed immensely. I would only differ on one new point, that being the stipulation of Bali as a "Beggars" market characterizing house sales here with only a few vultures circling in wait for the market to hit rock bottom. This is not my experience of it - the sand and gravel trucks are rumbling toward the south with a fury like never before and the stories I'm hearing (anecdotal, of course) is that this pandemic and quarantine has namely scared the living shit out of the Javanese wealthy class who have always thought if conditions, such as the Moslem ideology or poverty gets too much they could always dust off to parts unknown. Apparently these people are buying into Bali like it's Black Friday at Walmart.
spicyayam
If you are looking for some kind of "safe" property investment, then I think we can say Indonesia is not the place. I am not disputing the article, but in practice I have seen more scams and dodgy land deals in the leasing space. When things go south, then trying to get money back from a bad lease is near impossible. There are many big developments going on around the country and being promoted to overseas buyers and the lease agreements they have drawn up are IMO practically useless. I know of ongoing cases where people have lost millions of dollars in property scams, but you won't hear about it in the news. I doubt many people would agree with me, but if I wanted to buy a nice little holiday house in Bali for friends and family to stay in, I would go for a nominee agreement. Give a job to your nominee to take care of the house and you should have many happy years with your property. Even if you have a dispute with the nominee, people can usually come to some kind of settlement.
tel522
I would never knowingly risk large amounts of money on a "nominee agreement" which of course is not legal .We are lucky having a great landlord whom does the heavy repairs , which he has done without complaint , I look after the minor things .We have been in the house for 10 years ,we have agreed on a further 10 years , paid yearly with a "force majeure" clause .The rent is very reasonable ,and a fixed cost ,with no shocks .But of course ,if things go south here ,who knows , we can move easily .
Mark
Another option for legal foreign residents (Kitas/Kitap) is Hak Pakai. This is essentially full control and rights over the property for up to 80 years, but max size is 20 are. The Indonesian state becomes the putative owner during the period of Hak Pakai, which can be converted back to Hak Milik (freehold) if the property is sold on to an Indonesian citizen. Besides the size limit of 20 are, the key downside is that the property acquisition tax of 5% is based on a minimum value of 5 milyar even if the property costs less. However, this option eliminates any party interfering with your right to use and control the property for the full period of the Hak Pakai, and also allows you to sell it as a Hak Milik property, so there is no depreciation as in the case of a lease. It is also 100% legal.
spicyayam
There are so many warnings like this given to using nominees, which I think is great, now that most people are aware of the obvious danger of using a nominee. What I don't see people talking about are the problems with the leases that people are entering into. People just seem to assume that since foreigners can get legally get a lease everything will be fine without doing due diligence. At least when a regular sale goes through, even using a nominee checks will be made with the title or certificate. Frequently what is happening with leases is that you can have multiple companies and people leasing, sub leasing and sub sub leasing a property. Unfortunately there is no way to legally check on the certificate if a property has been leased. Using Hak Pakai is the best solution as Mark suggests, but you need to be living in Indonesia to get it. The people who seem to get into trouble are people who are living overseas who want to buy a holiday house in Bali and or make an Airbnb business.
