Would you like to buy property in Lombok? If so, this post will help you to clarify ideas and some of the most important aspects of Real Estate in Lombok.
Property business is a business that never dies, everyone needs a place to stay, every-night and everywhere. In this post, we will explain to you some of the most important facts that make Lombok one of the most popular destinations in Indonesia right now and what you need to consider before buying a property in Lombok.
If you are interested in buying land in Lombok, check out this other post you might like.
All you need to know as a foreigner to buy a property in Lombok
Can Foreigners Own Property In Indonesia?
For many years Indonesia has decreed that land in Indonesia can only be owned by Indonesian citizens.
In the late 90s, new laws were enacted so that foreigners are permitted to purchase apartments and office space in Indonesia (but not the land on which it stands), if the building has a strata title status. The most important titles to be aware of are Freehold Title (Hak Milik), Building Use Title (UGB or Hak Guna Bangunan), and Right to Use Title (HP or Hak Pakai). Freehold Title (HM or Hak Milik).
Practices that allow to foreigners buy land in Lombok (or the rest of Indonesia).
Property Acquisition Through Foreign Company (PMA- (Penanaman Modal Asing)
PMA is a legal entity for foreigners in Indonesia “status of doing business in Indonesia” that allows foreigners to invest in the country. A PMA company has 30 years to operate after formation and can be extended additional 30 years + 30 years through additional investment. This can be 100% controlled by a foreigner.
The Right to Build (HGB) which is the safest way to acquire land, is available to PMA companies, the property will be under the name of the company, and as an asset of the company, it can 100% be controlled by a foreigner for 80 years which is the longest the Indonesian law allows.
If you do not have business purposes, then a PMA is not the preferred way to own property.
Leasehold (Hak Sewa)
- There are some registered and unregistered lands in Indonesia. The Basic Agrarian Law of 1960 governs certified land, which is registered at the local land office. Unregistered land, Adat land, is community-owned.
- An examination of the land certificate being bought is important.
- This process is faster (around 35 days to complete) and cheaper than the HGB and involves seven procedures and takes around 35 days to complete.
- A lease agreement can be signed for 25 years with the right to extend + 20 years.
Frequently asked questions when buying a property in Lombok
- How can I purchase a villa on Sale in Lombok? Please check the first part of this post.
- What means leasehold? By this method, an investor can lease a piece to Indonesian real estate for up to 25 years.
- Is a partner necessary for setting a Penanaman Modal Using?
A PMA is an Indonesian term for a company that is fully owned by a non-native investor and it’s 100% boring capital so there is no need of having a local partner.
What are the steps to set a PMA? To set up a PMA company you will be required to:
1. Submit a detailed business plan.
2. Minimum capital required is US$ 300,000 and should be deposit into the local bank account.
3. Operate in a business environment that adds value to Indonesia in terms of foreign skills, employment and environmental benefit.
4. The process takes approximately 1 to 2 months.
5. After this the foreign persona can apply for the necessary work permits as KITAS, also valid for 30 years and renewable.
6. The cost of creating a PMA can vary a lot between 1.000$ – 5.500$
7. After the company will have to report taxes and declare the property as a company asset.
5. What is a Pipil? A piece of land that over the years has passed from one generation to another without the benefit of registration. Before selling this property, its owners will need to obtain a certificate from the Indonesian Land Office; this process lasts around 4 months.
Evolution of Lombok property prices
However, this year of the global crisis has not prevented that increasingly more foreign buyers have spotted investment opportunities in Indonesia’s real estate market which is the cheapest real estate in Asia.
Moreover, within this positive balance, Lombok is among the 7 best retirement locations in Indonesia among other new tourist destinations such as Labuan Bajo, Raja Ampat, and Papua, and there signs that the market can recover in the second half of 2021.
The growth in Lombok property prices was concentrated, particularly along the South Coast of Lombok in the tourism magnet of Kuta Lombok and towards Selong Belanak.
Real estate prices have been spurred by a combination of factors that lead Lombok into one of Indonesia national tourism icons including:
- Increasing tourism numbers attracted by the Gili Islands, the beautiful white sand beaches, and the Rinjani Volcano among others.
- Government intensively improving infrastructure including new roads, services, and accessibility.
- Private investment into resorts and restaurants.
Lombok continues to offer opportunities for real estate investors looking for immediate high yielding opportunities, or for passive investors looking for capital appreciation and the evolution show us that the demand for Lombok real estate will increase if the government manage to make it easier for foreigners to buy, hold, and sell real estate in the country.
Are you decided to make a purchase and invest in Lombok? In that case, our last recommendation is for you to get in contact with us and our legal team will assist you through. Purchasing property in Lombok can be quite challenging and but with a knowledgeable agent at your side, you will enjoy the process of finding your dream house in Lombok come true.
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