Makassar

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Buying Property

Sections

Buying Property in Makassar, Indonesia

1. Legal Framework and Restrictions for Foreigners

  • Ownership Types: Foreigners cannot own freehold land in Indonesia. However, they can acquire property through:
    • Leasehold: Typically for 25-30 years, renewable.
    • Right to Use (Hak Pakai): Allows foreigners to use land for a specific purpose, usually for 30 years, extendable.
    • PT PMA (Foreign Investment Company): Foreigners can establish a company to own property, but this requires significant investment and compliance with local regulations.

2. Costs Involved

  • Property Price: Varies widely based on location, size, and type (residential, commercial).
  • Taxes and Fees:
    • BPHTB (Property Transfer Tax): 5% of the property value.
    • Notary Fees: Typically 1-2% of the property value for legal documentation.
    • Land and Building Tax (PBB): Annual tax based on property value.
    • Legal Fees: If hiring a lawyer, expect fees around IDR 5 million to IDR 10 million (approximately USD 350 to USD 700).

3. Procedural Steps

  1. Research and Selection: Identify the property type and location. Engage a local real estate agent for assistance.
  2. Due Diligence: Verify property ownership, zoning regulations, and any encumbrances.
  3. Negotiation: Agree on the price and terms with the seller.
  4. Preliminary Agreement: Sign a preliminary sale agreement (Akta Jual Beli) and pay a deposit (usually 10%).
  5. Legal Documentation: Engage a notary to draft the sale agreement and handle the transfer of ownership.
  6. Payment: Complete the payment as per the agreement.
  7. Registration: Register the property with the National Land Agency (BPN) to formalize ownership.

4. Cultural and Local Considerations

  • Local Customs: Understanding local customs and etiquette is crucial. Building relationships and trust with local stakeholders can facilitate smoother transactions.
  • Language Barrier: Bahasa Indonesia is the official language. Consider hiring a translator or a bilingual agent.
  • Community Engagement: Familiarize yourself with local community practices and norms, especially if planning to live in the area.

5. Additional Information

  • Market Trends: Research current market trends in Makassar, as property values can fluctuate based on economic conditions.
  • Financing Options: Local banks may offer mortgage options for foreigners, but terms can vary. Ensure to check eligibility and requirements.
  • Insurance: Consider property insurance to protect against natural disasters, which are common in Indonesia.

6. Conclusion

Buying property in Makassar requires careful planning and understanding of local laws and customs. Engage local professionals to navigate the process effectively and ensure compliance with all regulations.