Is it safe to buy land in Indonesia?

Yes, on two conditions: use a legal structure and check the land before you pay. Most bad experiences foreigners have come from a prohibited arrangement or a skipped check, rarely from a risk that could not have been foreseen.

Risk no. 1: the Indonesian nominee

This is the most common trap. An Indonesian buys the land in their own name with your money, and a private contract is supposed to guarantee that you are the real owner.

That contract is void. Indonesian land law prohibits any direct or indirect transfer of freehold ownership to a foreigner (Article 26 of the 1960 Basic Agrarian Law), and the Supreme Court has confirmed this on several occasions. The nominee remains the legal owner: they can sell or mortgage the land. Your only recourse is a claim for compensation against them.

Risk no. 2: a weak or disputed title

Not all land is certified with the National Land Agency (BPN). Some rests on customary or tax documents; other plots have several heirs who have not all given their consent. Land disputes also exist in South Lombok: in 2022, residents were still contesting compensation for plots in the Mandalika zone.

Risk no. 3: zoning that doesn’t fit your project

Land can be sold legally without being buildable for your purpose. The regency’s spatial plan (RTRW) sets what can be built there. On the coast, a strip of at least 100 metres from the high-tide line is protected (Presidential Regulation 51/2016). A “feet in the water” plot may therefore be partly unbuildable.

Risk no. 4: an unqualified intermediary

Anyone can call themselves an agent. Only a licensed land notary (PPAT) can draw up the transfer deed, and only registration with the BPN makes your right enforceable.

Our checks before any offer

1. Land certificate checked with the BPN: authenticity, holder, any mortgages or blocks.
2. Every rights holder identified, with their written consent.
3. Zoning and coastal strip checked.
4. Site visit and on-site survey of the plot.
5. Choice of legal structure: PT PMA, Hak Pakai or Hak Sewa.
6. Signing before a PPAT, then registration with the BPN.

Warning signs

• You are offered to put the land in an Indonesian’s name.
• The seller only shows a copy of the certificate, or none at all.
• The price is far below market and the seller is rushing you.
• You are asked for a large payment before any checks or before the deed.
• The intermediary refuses to go through a PPAT.

A well-prepared purchase in Indonesia is safe. If you have found a plot and want it checked, speak to an advisor on WhatsApp.

This article is for information only and is not a substitute for personalised legal advice.

Sources

• Hukumonline — Siapa yang berpeluang paling untung dari perjanjian nominee
• Cabinet Secretariat — Perpres 51/2016: coastal setback
• Detik — Menkopolhukam janji selesaikan sengketa lahan di Mandalika (June 2022)