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Land Titles in Indonesia

Primary land titles:

All primary land titles are certified and registered with the National Land Agency (BPN) forms of land
title are regulated by the basic agrarian act No 5 Year 1960

1. Hak Milik (Free hold right)


Hak milik is the most complete form of ownership in Indonesia. The holder can use the land for
any purpose. The only ones who may hold this title are inividuals of Indonesian nationality and
special bodies stipulated by the government (government banks, cooperatives and religious social
bodies). Consequently, neither limited liability companies (PT) nor foreign individuals may obtain
land with HM title.

The title has no limit and may be sold, gifted, exchanged, and bequeathed, and may be made the
subject of a security interest in the form of a mortgage (hak tanggungan).
The holder of a hak milik may also grant inferior titles over the land to third parties, while retaining
reversionary rights.

2. Hak Guna Bangunan (Right to build)


The holder of HGB is entitles to construct and own buildings or other structures on the land in the
state-owned land, freehold, and in the ‘right to manage’ land (HPL).

This is the most common title for residential, commercial and industrial properties. Indonesian
citizen, Indonesian legal entities, including foreign and domestic capital investment can own this
land title.

The right is granted for an initial 30 years and may be extended to 20 years. HGB can be sold,
gifted, exchanged, bequeathed by an Indonesian, and/or or encumbered by a mortgage.

3. Hak Pakai (Right of Use)


This is the right to use and/or harvest from land directly owned by the state, or private land by
the agreement with the owner of the land.
Hak Pakai entitles the holder to use the subject land for specific purpose.
Foreign individuals, representative offices, Indonesian citizens and legal entities are entitled to
Hak Pakai titles for an indefinite period as long as the premises continue to be used for the agreed
purpose. Hak Pakai for commercial use can be granted for up to 25 years and extended for another
20 years. It is granted by the owner of of Hak Milik title might be sold, gifted, exchanged, and/or
bequeathed unless the deed of conveyance specifies otherwise. The most prevalent commercial
use of Hak Pakai is in connection with modern condominium and other strata title projects aimed
at attracting foreigners.
4. Hak Pengelolaan/HPL (Right of Management)
HPL right is given to state companies, provincial, regional governments with respect to the
planning and development of the state land. This right is usually given for land to be used for
individual and business purposes such as industrial estate, low-cost housing projects and port
facilities. The holder has the power to grant HGB and Hak Pakai rights and duration is usually tied
to the length of time the holder uses the land for the intended purpose. This land may be sold and
transferred but may encumbered by a mortgage.

Secondary Land Titles

The holder of a primary title contractually grants secondary land titles, including hak sewa (right
of lease), hak usaha bagi hasil (right share cropping), hak gadai (right of pledge), and hak
menumpang (right of lodging). The most relevant secondary land title is hak sewa.

Hak sewa (right of lease) grants the holder the right to build or to use buildings on the duration
of the lease. The right cannot be encumbered by an Indonesian mortgage nor can it be registered
with the national land agency. It can’t be sold or transferred without the consent of the lessor.

Strata Title
Strata title can be acquired in numerous office and residential properties in Jakarta.
The qualification of ownership of a strata title depend on the underlying land title, e.g. If the
underlying title is HGB, only persons who qualified to hold HGB titles may purchase a floor or
unit within the strata title building.

in HGB, HGU, Hak Pakai, the title holder is entitled to make use of the land for profit.
The secondary land titles are based on agreement whereby a primary title holder grants the
secondary title to third party.
Only Primary titles are appropriate to establish a business.

o Type of Land Rights Overview


1. Freehold (Hak Milik) This title grants absolute ownership of a plot of land.
It is hereditary and may be held only by individuals
(Indonesian citizens). Foreigners cannot be granted
SHM.
2. Rights to Build HGB gives the right to construct and own building on
(Building Right/Hak Guna a plot of land
Bangunan)
Entitled to construct and own building on others’
land (personal, state-owned). Companies including
foreigners can own this title and granted for 30 years
which can be extended into 20 years.

HGB can be sold, gifted, exchanged, bequeathed or


encumbered.
It is transferable and may be encumbered.

Can be granted by Foreigners

It can be bought, sold and bequeathed and


it is covered by the same planning and land use
provisions as would apply with freehold land plots.

Initial period of up to 30 years and is extendable for a


subsequent 20-year period.

3. Right to Use (Hak Pakai/HP) HP gives right to use state-owned land or land owned
by others for a specific purpose as agreed by both
parties such as for social activities, religious worship,
embassies and international organization.

The title can be held by Indonesian citizens, individual


foreigners residing in Indonesia, foreign embassies or
representative offices of foreign institutions.

Granted for a maximum validity period of 25 years


and is extendable for another 20-years

4. Right to Manage (Hak Gives right to operate state-owned land for a specific
Pengelolaan/HPL) purpose as approved by the authorities.

It is given exclusively to government institutions or


state-owned companies for an unspecified period.

Developers can usually cooperate with the authority


to obtain a SHGB over SHPL for a certain set of
periods.

Some example of area under this arrangement is the


Kemayoran Area in Jakarta.
5. Rights to exploit This title gives right to cultivate or exploit state-
(Hak Guna Usaha/HGU) owned land for agricultural, fishery or other
purposes.

The validity period is 35 years and is extendable for


another 25 years with an option for renewal.

This land title is usually used for plantation, including


palm plantation.

6. Right of Strata Title Ownership on title issued to the owners of residential, commercial
Multi-story Building Units or retail units in multi-story buildings such as
(Sertifikat Hak Milik Rumah Susun) condominiums, strata-title offices and trade centers.
The title’s validity period depends on the expiry date
of the land right of the plot on which the building is
located.

7. Tanah Wakaf (Endowment) Kind of property rights, both individuals and groups
that have been represented / handed over for public
/ social purposes.

It can be a personal or groups’ land.

Must not be traded, since it has no longer economic


value unless being used for the public interest.
8. Right of lease Grants the holder to build or to use buildings on
someone else’ land for a fixed period of time. This
right can not be sold or transferred without consent
of the lessor.