PA Estates

An Indonesian person always owns freehold (HakMilik) title. A person, in law, is either a physical person or a company (which has a legal personality).

Leasehold (HakSewa)

Leasehold is executed by notarial deed and is not registered against the title.  Leasehold cannot appreciate as an asset and will depreciate in time. Ownership of all buildings and/or improvements revert in full to the HakMilik owner at lease end. You must ensure the deed covers renewal and rent increases.

Control over the Freehold (HakMilik)

Option A: Interest in the HakMilik by way of a Nominee Agreement plus the granting of a HakPakai (Right to Use) Certificate, which is issued by the Land Office and registered against the HakMilik. This means two taxes have to be paid so most opt for Option B.

Option B: Interest in the HakMilik with HakPakai tenure by way of a Nominee Agreement plus security over the HakMilik by granting a leasehold interest in the title, with security against the HakMilik being limited to the registration of a mortgage.

Corporate tenure (HakGunaBangunan [HGB])

Independent title to land available to Indonesian companies only  through the grant of the HGB (Right to Build) title, which is issued and registered by the Land Office for a maximum (but renewable) term of 80 years.  The title may be mortgaged and the HGB owner can realize appreciation of the asset.  HGB is the more expensive option and on top there are always ongoing reporting and compliance obligations for the company.