Another "looking to buy" thread

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tel522

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Oct 30, 2015
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We are in the process of selling up in order to move back home after 9 years Bali. We have a Hak Milik property for sale in Ungasan which you may want to visit.

Check it out on:


Price is negotiable.

Admin, this should be on the property thread
 

JackStraw

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Mar 14, 2017
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We are in the process of selling up in order to move back home after 9 years Bali. We have a Hak Milik property for sale in Ungasan which you may want to visit.

Check it out on:


Price is negotiable.

It would be cheaper to buy land in Ungasan and build a brand new house just like this than pay 4 milyar for it.

The real estate market in Bali is so fucked
 

John M

Member
Sep 29, 2020
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Sanur, Bali
We are in the process of selling up in order to move back home after 9 years Bali. We have a Hak Milik property for sale in Ungasan which you may want to visit.

Check it out on:


Price is negotiable.
Correct me if I'm wrong but if the property is a Hak Milik title then it must be in the name of an Indonesian citizen and can only be sold to an Indonesian citizen as a Hak Milik title in order for you to dispose of it completely if that's your intention.
A foreigner can only buy Hak Pakai (use rights) over the Hak Milik title (for a maximum of 30 years for the first period with a possible extension and renewal) during which the Hak Milik would remain with the current owner who recovers control of the property at the end of the Hak Pakai period.
(Also be aware that your price is under the 5 milyar minimum house price for foreigners in Bali).
 
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Markit

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As a guide (not tested) it would be simple to change the "ownership" since theoretically the house could remain in the possession of its Indonesian owner with just an adjustment in the "nominee" agreement changing the named parties if someone were to want this.

AND the 5 billion lower limit is for non-landed properties i.e. flats if I understand the law even remotely. There is no concession for owning landed property as a foreigner outright - leasehold, sure.
 

RossM

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Jan 19, 2022
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As a guide (not tested) it would be simple to change the "ownership" since theoretically the house could remain in the possession of its Indonesian owner with just an adjustment in the "nominee" agreement changing the named parties if someone were to want this.

AND the 5 billion lower limit is for non-landed properties i.e. flats if I understand the law even remotely. There is no concession for owning landed property as a foreigner outright - leasehold, sure.

Not exactly on topic, but on 'owning' property in general terms, when I lived in Bali, and having a local nominee, before I owned a company that owned the land, I took a mortgage over the property for almost double my buying price.

That protected my interest, and would have done so, for some years, without upgrading the mortgage amount.
 

John M

Member
Sep 29, 2020
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Sanur, Bali
As a guide (not tested) it would be simple to change the "ownership" since theoretically the house could remain in the possession of its Indonesian owner with just an adjustment in the "nominee" agreement changing the named parties if someone were to want this.

AND the 5 billion lower limit is for non-landed properties i.e. flats if I understand the law even remotely. There is no concession for owning landed property as a foreigner outright - leasehold, sure.

I know that in the old days nominee arrangements were the only option but the laws have since changed and nowadays I would never get involved in a nominee agreement either to buy or to sell — my risk aversion is too strong.
Although there are still plenty of agencies that will set up a nominee agreement there is no question that in most cases it's illegal as noted in this conclusion of a Paradise Properties analytical article, but many more examples can be found online (most agencies will claim that it's OK however):
Binding Power of Nominee Agreements
It can be reasonably concluded there are serious questions about the validity of so called nominee arrangements between foreign parties and Indonesian parties for investment and land ownership purposes. The general nature of such arrangements is to circumvent applicable laws and regulations, and nominee practices are expressly prohibited under the Investment Law and Agrarian Law which deems them null and void. Buyer beware.

The IDR 5 billion lower limit is indeed applicable to landed houses because an individual foreigner is not allowed to buy empty land and can only buy land with a house already on it ( on a Right of Use basis — Hak Pakai — for a stated period of time).
Government Regulation No. 18 of 2021, in Article 71, specifically notes that foreign individuals can only buy 'A landed house on land' (a PMA can buy empty land with a Right to Build — Hak Guna Bangunan or HGB — but a foreign person can't and a PMA can't buy freehold) or, an apartment built on land plots with right of use or right of building.
A landed house is defined as 'a house that is on its own plot and one of the walls of the building is not built right on the plot boundary' (not semi-detached).
Article 72 of the regulation goes on to list the conditional limitations that apply to Article 71 of which are; minimum price, land area, the number of plots of land or apartment units and designation for residential purposes.
The actual applicable minimum prices are stated in the attachment to Agrarian and Spatial Ministry Regulation No. 29 of 2016 as being IDR 5 billion for houses and IDR 2 billion for apartments in Bali (as attached to my earlier post) and lists the above limitations as 'One plot of land per person/family, land area that is 2,000 square metres at most and doesn't mention anything about the limitations on apartment numbers; probably because apartment ownership is a more recent development than that regulation which hasn't been updated yet.
Personally if I had a spare IDR 5 billion I could think of safer ways to invest it than in Bali real estate — Las Vegas comes to mind :)
 
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Markit

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I always swear never to get involved in these land/property ownership discussions again because everyone knows they are right and will quote endless articles from knowledgeable sources to prove their particular points.

Fact is that the nominee agreement has been pronounced dead on a number of occasions but is still hale and hearty as far as I can see and there has never been a testing case in Indonesian law as to it's legality or not. I suspect that the powers that be are happy to let it go on as it is without rattling the cage too much for fear of scaring everyone off. There have actually been at least 2 similar cases where it has gone to court and been upheld in admittedly strange situations. Do a search here if you want more info - it has been fought over endlessly.
 
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Reosoh

New Member
May 25, 2012
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For all clarity, the Hak Milik certificate of my property is in the name of my wife, and does not have a nominee agreement. And this Hak Milik title can easily be changed to a Hak Pakai if so wanted, or if needed in case none of the married partners has the Indonesian nationality.

Enough has been written on several forums w.r.t. Indonesian Land titles, but I will summarize once again below.

In Indonesia there are 4 types of ownership possible:
Hak Milik (HM) (i.e. landownership)
Hak Pakai (HP) (i.e. Right to use property)
Hak Guna Bangunan (HGB) (i.e. Right to build)
Hak Sewa ((Leasehold)


Hak Milik certificate is only possible (i.e. legal) for Indonesians, or alternatively for a foreigner married to an Indonesian. In the latter case a pre-nub needs to be put in place before the marriage, thereby allowing the Indonesian to maintain the rights on owning land plus the house which sits on this. Nowadays also a post-nub can also be drafted by a notary for the same purpose. Without any type of “pre/ post-nub” the Indonesian party of a mixed marriage can NOT by law claim and hold the rights to own land.
In some cases people and even some notaries may recommend to use a local nominee. This is however BAD practice as well as illegal. Sometimes foreign nationals believe that they have found a local person that they can 100% trust and that it’s better or easier to buy land under that person’s name.
When using a Local Nominee Ownership structure a foreigner “owns” a land with a freehold certificate by registering the certificate under a Local Indonesian name and making a set of agreements to make sure that the local Indonesian nominee cannot sell or transfer the land.
While you might have all the trust and the local person can have the best intentions, it’s still an investment on shaky ground as you will have no legal rights as owner the property.
Human relations can take wrong turns, or something might happen with your trustee. Divorce, marriage, death – all these scenarios involve external parties who may not have the same intentions with your property as your potential trustee.
So, unless you are ready to accept that in the worst-case scenario you will lose your entire investment, don’t go for the trustee option. In fact, trusting an unreliable individual nominee is one of the top mistakes foreign investors make in Indonesia.
Bear in mind that using a nominee structure is illegal, and the nominee agreements as such are void. If the nominee agreement is detected by the government, the government can confiscate the land, and the foreigner may have tax as well as criminal liability.

2.1 Does this mean that as a foreigner, who is not married to an Indonesian, you cannot buy a Hak Milik property? NO …. It is possible to change a Hak Milik property into a Hak Pakai property by using a notary. A Hak Pakai certificate has a validity of 30 years validity + 30 years extension + 20 years extension, for a total of 80 years. Estimated cost is relatively small and has been quoted as less than 2000 euro. But check with a few notaries. Consequently by a later reselling to an Indonesian party, the Hak Pakai can be reversed again to a Hak Milik.
Also a property offered with a Hak Pakai certificate can be sold from one foreigner to another foreigner. Hak Pakai is a primary title directly between you and the government and so is very safe. It would appear from the Agrarian Law that you cannot register Hak Pakai between you and an individual unless the individual surrenders control.
For opting for a Hak Pakai foreigners or expats need to legally reside in Indonesia with a KITAS or KITAP (stay permit). If you lose the KITAS or KITAP, you don’t have right to hold the land anymore;
Note that you can hold Hak Pakai only if the land already has a building on it and there are limitations for operating a property with a Right to Use (Hak Pakai) certificate as a business.
3.1 Hak Guna Bangunan (HGB). Another safe way for a foreign national to invest in property in Bali is to do it through a foreign-owned company (PT PMA) and acquire the ‘Right to Build’ (Hak Guna Bangunan) certificate.
A PT PMA is a foreign limited liability company in Indonesia. With a PT PMA, you will have the right to acquire the Right to Build (Hak Guna Bangunan/ HGB) and Right to Use (Hak Pakai/HP) certificates. The process of setting up a foreign company in Indonesia usually takes 2-10 weeks in Bali.
The pros of this title: 1) a foreigner can hold land through a 100% foreign owned company for 80 years which is the longest the Indonesian law allows; 2) the foreign-owned company name goes on the land certificate, thus the foreigner has a full control over the land. The cons of this title: 1) you must set up a company; 2) you must have commercial activities, and report taxes 3) there are fees for changing the title from freehold to HGB if you acquire the land from an Indonesian individual
4.1 Hak Sewa. This is a lease from the freeholder (the landlord) to use the property for any number of years, up to 25 years or more. Thereafter the land plus property falls back to the landlord. Whereafter potentially a new lease contract can be negotiated if the landlord agrees to this.
Leasehold is one of the most popular ways to acquire rights to the land. The process is easier, cheaper and faster compared to “Right to build” or “Right to use” titles as there is no need to change the land certificate.
However, leasehold is also the least safe – you will have only the rights to the land that you set out in the agreement on the land certificate. In some rare cases there have been several leases signed by the landowner, and there is a dispute who is actually entitled to use the land. There is no central notary system for lease agreements to check if any leases have been signed. Also the value of the property is negatively effected by a lease contract which is getting closer to its expiry date

Essentially both the Hak Pakai as well as the Hak Guna Bangunan licenses make you the owner of the property. Your family members can inherit them and you can sell the property. If the buyer is an Indonesian citizen they are also able to convert the certificate to a Hak Milik (right to own).
If you wish to hold the property after the 80 years (which would potentially be in the 22nd century by then), you can acquire a new certificate once the old one expires.
Note that you can hold Hak Pakai only if the land already has a building on it and there are limitations for operating a property with a Right to Use (Hak Pakai) certificate as a business.
 
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John M

Member
Sep 29, 2020
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Sanur, Bali
I always swear never to get involved in these land/property ownership discussions again because everyone knows they are right and will quote endless articles from knowledgeable sources to prove their particular points.

Fact is that the nominee agreement has been pronounced dead on a number of occasions but is still hale and hearty as far as I can see and there has never been a testing case in Indonesian law as to it's legality or not. I suspect that the powers that be are happy to let it go on as it is without rattling the cage too much for fear of scaring everyone off. There have actually been at least 2 similar cases where it has gone to court and been upheld in admittedly strange situations. Do a search here if you want more info - it has been fought over endlessly.
See Reosoh’s comment as it says it all - again.
 

John M

Member
Sep 29, 2020
70
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Sanur, Bali
For all clarity, the Hak Milik certificate of my property is in the name of my wife, and does not have a nominee agreement. And this Hak Milik title can easily be changed to a Hak Pakai if so wanted, or if needed in case none of the married partners has the Indonesian nationality.
That’s a very well written and accurate summary that every investor/dreamer who’s thinking of buying property in Bali should read.
I would just like to exercise my pedantic streak and point out, as far as foreigners are concerned, that there is also a Right to Cultivation (Hak Guna Usaha) which is available to Indonesian citizens and legal Indonesian entities but can only be taken over state land and Management Rights land (Hak Pengelolaan - it’s only available to government enterprises) for those gardening enthusiasts who might fancy some rice farming in their retirement.
With Hak Pakai, after the initial deed period expires, the first extension is for twenty years and, if the extension is agreed to, must be with the same terms and conditions as for the first period. After the twenty years extension finishes the next option is a 30 years ‘renewal’, it’s not an extension apparently, and is supposedly a new deed with the possibility of new terms and conditions.
It seems strange to be looking at decades in the future in a country that changes its laws like I change my socks but no doubt there are enough people with enough faith out there to keep the real estate wheels turning — fortunately my mature years preclude me from even considering such an option. :rolleyes:
 

JackStraw

Well-Known Member
Mar 14, 2017
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I always swear never to get involved in these land/property ownership discussions again because everyone knows they are right and will quote endless articles from knowledgeable sources to prove their particular points.

Fact is that the nominee agreement has been pronounced dead on a number of occasions but is still hale and hearty as far as I can see and there has never been a testing case in Indonesian law as to it's legality or not. I suspect that the powers that be are happy to let it go on as it is without rattling the cage too much for fear of scaring everyone off. There have actually been at least 2 similar cases where it has gone to court and been upheld in admittedly strange situations. Do a search here if you want more info - it has been fought over endlessly.

I don't often say this, but Markit is 100% right here and everyone should listen to him.
 
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Markit

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See Reosoh’s comment as it says it all - again.
Yeah, well not so much actually. Superficially it looks like a hellova homework but there are all sorts of holes that never get plugged. For instance if you wanna go the nominee route you just need to hang on to the land certificates somewhere safe - without those the land can't be sold out from under you and if your nominee tries anyway by, say notifying the police that they've been stolen, your name being a cosigner of the sale agreement and on the docs means that if the land office are directed to produce new documents from the copies they all hold of the originals you will be the first notified of that fact. Just one of the many "buts" and "whens".
Personally I think you should look at the buy price as a prepayment of your rent and boys and girls with the passage of time you've had your money's worth no matter what happens. And hey you might just come out the other end with a house and land on the paradise island of Bali to show for it.
 

John M

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Personally I think you should look at the buy price as a prepayment of your rent and boys and girls with the passage of time you've had your money's worth no matter what happens. And hey you might just come out the other end with a house and land on the paradise island of Bali to show for it.
You’re exactly right that a nominee agreement, legality aside, is nothing more than paying rent in advance but equally so is Hak Pakai which ultimately is simply a government protected lease/encumbrance for an agreed period of time that can be traded before expiry.
In the event of a court dispute with the Indonesian owner then the nominee agreement holder is taking a peashooter to a gunfight and a Hak Pakai holder is taking a knife because, just like all the examples in the ‘Driving in Bali’ thread, the starting premise is that the foreigner is a foreigner and has no right to be here.
Of course all forms of civil agreement, lease or ownership require the foreigner to be domiciled in Indonesia and it takes nothing more than a visit from the boys in brown, after the famous “anonymous tip off from a neighbour (owner)”, followed by a trumped up charge and deportation (or Kerobokan) then any agreement, lease or deed is null and void and all rights revert to the Hak Milik owner.
As I said before, in my opinion Las Vegas is a safer way of gambling.
 

Markit

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I have to admit that people have been telling me for years what a terrible idea buying under a nominee agreement is and they may be right.

BUT the funny thing is that ALL of those have been people that were too shit scared or insecure to try it.

I have yet to hear of a bonafide example where anyone has lost everything here on Bali from a rotten nominee agreement.

I'll wait....?

Plenty of examples of someone getting screwed over, even killed, by some lover. Lots of people getting screwed over with lease agreements where the owner throws them out for one reason or another or refuses to renew the agreement as agreed or for the agreed price, blocks off the access over his adjoining property/road. I could go on but you get the idea.

I'll wait...?
 

John M

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Personally I’m more inclined to think that if a foreigner chooses to adopt one of the several legal options available to him in order to secure (a relative term) property in Indonesia, rather than to enter into an indisputably illegal nominee arrangement with a stranger, in a language that they don’t understand, in a country where it’s common knowledge that both the legal system and the police force are the best that money can buy, then that is less an indication that they are shit scared or insecure and more an indication of their intelligence.

I would now really like to see one of the advocates of nominee agreements post the full text of theirs here so that everyone can see, and be enlightened by, the wording which provides such strong legal protection that it’s the only form of property acquisition in Indonesia where no foreigner has ever been ripped off.

PS: Better blank out the name of the notary because a Journal of Indonesian Notaries article in November 2018 stated that “A nominee agreement does not have legal force and a nominee agreement deed made based on it is null and void” and “The legal effect on a notary who deliberately issues a nominee deed is personal liability as a general official in charge of making the deed of nominee agreements, namely accountability in an administrative, civil, notary and even criminal code of conduct”.
I’d hate to get them into trouble; although I've never heard of a notary getting into trouble so it must never happen ;)
 
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Markit

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As usual the naysayers have a shed-load of throwaway statements but no proof (indisputably illegal nominee arrangement). Since (outside of France) things are not legislated "for" i.e. the following is legal, I'd like to hear which Indonesian law exactly stipulates that Nominee Agreements are illegal. And please don't quote some "knowledgeable" Notary, I've heard most of their rubbish already and it's a load of self-serving "logic" targeting new customers.

I repeat - I have yet to hear of a bonafide example where anyone has lost everything here on Bali from a rotten nominee agreement.

I'll still wait....?