Indonesia’s PP 18/2021 and foreign apartment rights explained

Denpasar — Indonesia’s evolving land and apartment regulations allow foreign nationals to acquire rights over apartment units, but the legal framework distinguishes clearly between ownership of a flat unit and ownership of the land beneath the building.

For buyers looking at projects in Bali, this distinction affects what is being purchased, how long the right lasts and what conditions apply to the buyer’s immigration status.

What a foreign buyer is actually acquiring

Academic commentary explains that Indonesian apartment buildings are divided into individually usable or ownable units, together with shared parts, shared objects and land connected to the building, so a flat unit right cannot be treated as equivalent to freehold ownership of the entire plot.

Earlier regulations on foreign ownership focused on residential property built on land with a Right to Use, or Hak Pakai such as individual houses and apartments constructed on Hak Pakai over state land or over freehold title, with foreigners receiving a Right to Use certificate for houses and a strata-title certificate for apartments according to practitioner summaries of Government Regulation No. 103 of 2015.

Those rules did not allow foreign individuals to hold freehold land, or Hak Milik, and foreign participation was channelled through rights such as Hak Pakai or Building Use Right, Hak Guna Bangunan.

Foreign buyers therefore need to clarify in each transaction whether they are being granted strata-title ownership of a flat unit, a time-limited Right to Use, a leasehold or another contractual interest, and how that interest depends on the underlying land right.

How the Job Creation Law and PP 18/2021 changed the framework

Law No. 11 of 2020 on Job Creation introduced a provision allowing foreigners to hold ownership rights over flat units, which academic authors have argued raises questions over consistency with existing restrictions on foreign land rights and the nationality principle in Indonesia’s Basic Agrarian Law.

Government Regulation No. 18 of 2021 on Management Rights, Land Rights, Flat Units and Land Registration subsequently became the main implementing regulation.

The official text of PP 18/2021 states that Hak Milik over apartment units, or Hak Milik atas Satuan Rumah Susun, may be granted to Indonesian citizens, Indonesian legal entities, foreigners holding licences in line with legislation, foreign legal entities with representatives in Indonesia, and foreign state or international representatives in Indonesia, and also to central and regional government institutions.

At the same time, academic analysis has highlighted that PP 18/2021 limits the types of land on which flats for foreigners can be built, focusing on units constructed on land held under rights such as Right to Use or Building Use Right, and interpreting the regulation as providing a legal basis for foreigners to hold use rights over apartment units rather than unrestricted ownership.

Different commentators therefore reach different conclusions on whether the current framework gives foreign buyers full flat-unit ownership or only a form of usage right tied to specific land titles and conditions.

Key practical questions for buyers

For a proposed purchase, foreign buyers should clarify several points before signing a contract.

• What land right supports the building: Right to Use (Hak Pakai), Building Use Right (Hak Guna Bangunan) or another title?
• What type of certificate or registration will be issued for the individual unit, and does it record ownership of a flat unit or a different right?
• How long does the right last, how is it extended and renewed, and how is it affected by expiry of the underlying land title?
• Does the buyer hold the residence and immigration documents required under the current post-2021 framework?

Earlier practitioner commentary on PP 103/2015 described a typical Right to Use period for houses of 30 years, extendable for 20 years and renewable for another 30 years, and noted that apartment-unit ownership periods were not expressly set out but would be dependent on the validity of the underlying Right to Use.

Those explanations were written under the pre-PP 18/2021 regime and should not be treated as definitive statements of the current rules without checking them against the newer regulation and any implementing ministerial regulations.

What buyers should verify in Bali

In Bali projects marketed to foreign buyers, marketing materials often describe units as “owned” without fully explaining the legal status of the land, the type of right granted, its duration or the buyer’s eligibility.

A prudent buyer should request the unit’s draft or existing certificate, the land title underlying the building and the project’s approved legal structure, and ensure that the sale and purchase agreement specifies whether the buyer receives flat-unit ownership, a use right, a lease or another interest.

Given the technical nature of Indonesian land and apartment law and the differing academic interpretations of the Job Creation Law and PP 18/2021, foreign buyers are generally advised to obtain independent advice from a licensed Indonesian notary or land law specialist and confirm key details with the local land office before committing to a transaction.

Sources

• Peraturan Pemerintah Nomor 18 Tahun 2021 (official text, Indonesian language)
• Unofficial English translation of Government Regulation No. 18 of 2021
• New government regulation on ownership of residential property by foreign citizens domiciled in Indonesia
• Foreigners to Hold Property in Indonesia
• Arrangement of Flats Ownership Rights by Foreigners
• Legal Protection of Ownership of Flats Units Against Foreign Citizens
• Land and Apartments for Foreigners in Indonesia: Critical Study of the Enactment of PP 18 of 2021
• Foreign Ownership Rights to Apartment Units in Indonesia Based on PP No. 18 of 2021
• Indonesia Law Review