Understanding Land Rights in Indonesia: Hak Milik, Hak Sewa, Hak Pakai, and HGB
Buying land or property in Indonesia — especially in Lombok — requires a good understanding of the different types of land rights.
Unlike in many other countries where freehold ownership is available to foreigners, Indonesia imposes certain restrictions.
Here’s an overview of the main categories of land rights and what they mean for investors.
1. Hak Milik (Freehold Ownership): Reserved for Indonesian Citizens
Hak Milik is the strongest form of property ownership in Indonesia.
It grants the holder unlimited rights over the land, including the ability to transfer, sell, or inherit it.
However, this title is strictly reserved for Indonesian citizens and cannot be held directly by foreigners or foreign-owned companies.
2. Hak Sewa (Leasehold): A Practical Solution for Foreigners
Hak Sewa allows a foreigner to lease land or property for a fixed period, typically 25 to 30 years, with the possibility of renewal.
It is a contractual right that does not grant land ownership but does allow legal occupation.
This arrangement is commonly used for operating rental villas or hotels in Lombok.
3. Hak Pakai (Right of Use): A Limited but Secure Option for Foreigners
Hak Pakai is another legal option for foreigners wishing to occupy property in Indonesia.
It allows a foreign individual (holding a valid residence permit) to use real estate for up to 30 years, renewable for a total of up to 80 years.
It can be registered directly under the foreigner’s name and is often used for personal residences.
However, commercial use under Hak Pakai is restricted.
4. HGB (Hak Guna Bangunan – Right to Build): Ideal for Businesses
Hak Guna Bangunan allows a company (PT PMA – a foreign-owned limited liability company) to build and operate a property on land owned by the State or an Indonesian citizen.
It is valid for 30 years and renewable for up to 80 years.
HGB is the preferred option for foreign investors looking to develop and sell real estate projects in Lombok.
Which Option Should You Choose for Investing in Lombok?
For personal use: Hak Pakai is the best choice for a foreigner wishing to legally own a residence.
For rental investments: Hak Sewa is often used by investors managing short-term rental villas.
For structured real estate projects: HGB via a PT PMA company is essential for building and legally selling property.
Understanding these distinctions is key to avoiding mistakes and maximizing your investment potential in Lombok, all while staying compliant with Indonesian law.