Can a foreigner own land in Lombok?

In Indonesia, foreign ownership of land is subject to strict regulations. Foreigners cannot hold freehold (Hak Milik) ownership, only reserved for Indonesian citizens. However, there are alternatives through which foreigners can buy land in Lombok:u003cbru003eu003cbru003eu003cstrongu003eHak Pakai (Right to Use)u003c/strongu003e: This is the most common form of land title for foreigners, allowing them to use and build on the land. Hak Pakai can be held for an initial period of up to 30 years, extendable for another 20 years, and then renewable for another 30 years, making it a practical long-term solution.u003cbru003eu003cbru003eu003cstrongu003eHak Sewa (Leasehold)u003c/strongu003e: Lease agreements can be made directly with the landowner for periods typically ranging from 25 to 99 years. This arrangement does not give ownership rights but allows exclusive use of the land for a specified period.u003cbru003eu003cbru003eu003cstrongu003eInvesting through a PMA Companyu003c/strongu003e: Foreigners can also set up a foreign-owned company (PMA) in Indonesia, which can then hold property under Hak Guna Bangunan (Right to Build) for business purposes.

What is the importance of due diligence in Lombok?

Due diligence is crucial in Lombok for several reasons:u003cbru003eu003cbru003eu003cstrongu003eVerification of Land Statusu003c/strongu003e: Ensuring the land has a clear and legal title, free from disputes or encumbrances, is essential to avoid future legal complications.u003cbru003eu003cbru003eu003cstrongu003eUnderstanding Regulationsu003c/strongu003e: It's vital to comprehend local zoning laws, building regulations, and any restrictions that may affect the land's use or future development.u003cbru003eu003cbru003eu003cstrongu003eEnvironmental Considerationsu003c/strongu003e: Checking for environmental protections or limitations, especially in areas prone to natural disasters or with ecological significance, is crucial.u003cbru003eu003cbru003eu003cstrongu003eInfrastructure and Accessu003c/strongu003e: Investigating the availability of essential infrastructure, such as roads, water supply, and electricity, as well as legal access rights to the property, is necessary for development and valuation.u003cbru003eu003cbru003eDue diligence minimizes risks, protects investments, and ensures compliance with Indonesian laws and regulations.

How do Property Taxes Work for Landowners in Lombok?

In Indonesia, landowners are subject to several taxes, including but not limited to:u003cbru003eu003cbru003eu003cstrongu003eLand and Building Tax (Pajak Bumi dan Bangunan, PBB)u003c/strongu003e: This annual tax is levied on land and buildings and is calculated based on the government-assessed value of the property. The rate varies depending on the location and type of property but is generally around 0.5% of the assessed value per year.u003cbru003eu003cbru003eu003cstrongu003eAcquisition Duty of Rights on Land and Buildings (Bea Perolehan Hak atas Tanah dan Bangunan, BPHTB)u003c/strongu003e: This tax is applicable when land ownership rights are transferred and is usually paid by the buyer. The rate is 5% of the transaction value, although exemptions and reductions may apply in certain conditions.u003cbru003eu003cbru003eu003cstrongu003eIncome Tax on Land Sales (Pajak Penghasilan, PPh)u003c/strongu003e: Sellers are subject to income tax on the profit from land sales, with rates depending on the seller's status (individual, corporate, resident, non-resident) and the transaction details.u003cbru003eu003cbru003eUnderstanding these taxes, and possibly seeking advice from a local tax consultant, is vital for anyone looking to buy or sell land in Lombok.

The first steps to buying land in Lombok

Like any real estate investment, buying land in Lombok requires careful planning and understanding of the legal and procedural landscape. Whether you’re a local investor or a foreigner interested in Lombok’s property market, following the right steps can help ensure a smooth and successful purchase. Here’s a guide to the initial steps you should consider to acquire land in Lombok:

1. Research and Set Your Investment Goals

Understand Your Objectives: Are you looking for a residential plot, a commercial investment, or a piece of land for development? Your investment goals will significantly influence your property type and location.
Market Research: Familiarize yourself with the Lombok real estate market, focusing on areas that match your investment goals. Consider factors such as development potential, infrastructure, and future growth prospects.

2. Understand the Legal Framework for Foreign Ownership

Ownership Laws: Indonesia has specific laws regarding land ownership, especially for foreigners. Foreigners cannot own land outright (Hak Milik) but can obtain a right to use (Hak Pakai) or a long-term lease (Hak Sewa).
Professional Advice: Consider consulting with a legal expert or real estate advisor specializing in Indonesian property law to understand the implications of your investment and the best structure for your circumstances.

3. Choose the Right Location

Location Analysis: Analyze potential locations based on your goals. Consider the land’s proximity to tourist attractions, beaches, infrastructure, and the local community.
Visit Potential Sites: If possible, visit the land in Lombok to see it firsthand. This can provide valuable insights into the property’s surroundings, access, and potential that you might not get from online listings or descriptions.

4. Budget and Financing

Set a Budget: Consider all costs involved, including purchase price, taxes, legal fees, and potential development costs.
Financing: Determine how you will finance the purchase. If you require financing, check the availability of funding options, especially for foreign investors, as this can be more complex in Indonesia.

5. Find a Reputable Real Estate Agent

Local Expertise: A knowledgeable local real estate agent can provide invaluable assistance in finding properties, negotiating deals, and understanding the local market and legal requirements.
Agent Credentials: Look for agents with a strong track record and good reviews from previous clients, especially those with experience working with foreign investors.

6. Due Diligence

Land Status: Verify the land status and ensure no legal disputes or encumbrances on the property.
Land Survey: Conduct a land survey to confirm the boundaries and size of the property.
Permits and Zoning: Check local zoning laws and whether the land has the necessary permits for your intended use.

7. Negotiate and Finalize the Purchase of land in Lombok

Negotiation: Work with your agent to negotiate the price and terms of the sale. Be prepared to engage in negotiations to achieve a fair deal.
Legal Documentation: Ensure your legal advisor correctly prepares and reviews all legal documents. This includes the sale agreement, lease agreements (if applicable), and other necessary contracts.

8. Closing and Transfer of Ownership

Payment: Follow the agreed payment process, ensuring all financial transactions are documented.
Ownership Transfer: Complete the necessary steps for transferring ownership or lease rights, including registering the transaction with the local land office.

Buying land in Lombok can be a rewarding investment, offering both personal satisfaction and potential financial returns. By following these initial steps and working with knowledgeable professionals, you can navigate the complexities of the Lombok real estate market and make a successful investment.

About Nour Estates

We started Nour Estates with a simple idea: to make finding your dream land in Lombok as easy and enjoyable as a day at the beach. Our team is a mix of local folks and people from around the world who fell in love with Lombok just like you. We’ve been in your shoes, faced the challenges of buying land here, and learned all the ins and outs. Now, we’re here to share that knowledge with you.

We are here to find you the perfect land to invest in. Contact us today, and let’s start this exciting journey together!

Resources

Indonesian Investment Coordinating Board (BKPM): The BKPM offers comprehensive information on investment policies, regulations, procedures, and opportunities in Indonesia. It’s an essential resource for foreign investors looking to understand the investment climate and legal requirements.

Ministry of Agrarian Affairs and Spatial Planning/National Land Agency: For real estate investments, this agency provides crucial information on land ownership, registration, and land-related regulations in Indonesia. It’s valuable for understanding the legal aspects of land transactions.

Indonesian Ministry of Environment and Forestry: This is a resource for guidelines and regulations on environmental protection and sustainable development relevant to property development and business operations.

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