A Step-by-Step Guide to Buying Property in Indonesia as a Foreigner

Buying property in Indonesia comes with incredible opportunities — from serene villas in Bali to modern apartments in Jakarta. But for foreigners, the process isn’t always straightforward. Local laws around ownership are unique, and buying a home here isn’t the same as in many other countries.

Still, with the right approach and legal guidance, it’s entirely possible to lease or own property safely and within the law.

This guide covers everything you need to know — from ownership rules and legal pathways to choosing the right location — so your property journey in Indonesia is clear and stress-free.

Choosing the right structure is key. If you’re planning to live in the property or retire in Indonesia, Hak Pakai is often the best fit. You’ll get the legal right to use the land, and it’s fairly straightforward with the help of a notary.

Leasehold is another choice. This means you don’t own the property but can rent it long-term — usually for 25 to 30 years. You can often extend this agreement. Leasehold is flexible and useful if you’re not ready to commit for life but still want long-term use.

Want to invest or rent it out? Then consider a PT PMA. This is a foreign-owned company that can legally hold property. It’s more complex and takes time and money to set up, but it gives you more control and options. Always talk to a legal expert before you decide. Picking the right path early will save you trouble later.

When buying property in Indonesia as a foreigner, selecting the right location is not just about scenery — it’s about strategic value. While Bali has long been the go-to destination, Lombok is now emerging as a serious contender for smart investors. With government-backed initiatives like the Mandalika Tourism Special Economic Zone, and significant infrastructure upgrades including a modern international airport and new roads, Lombok is positioning itself as a more affordable, less saturated alternative with high growth potential.

“Lombok offers what many investors missed out on in Bali ten years ago — a rare window to enter a rising market at the ground floor,” says Yasmina Remmal, Chief Growth Officer (CGO) at Nour Estates. “Whether you’re eyeing beachfront land in Selong Belanak or development plots near Kuta Mandalika, the opportunities in Lombok align with both lifestyle appeal and long-term value creation.”

The island’s natural beauty, paired with increasing tourist inflow and supportive foreign investment policies, makes Lombok an ideal location for buyers looking for future appreciation, rental income, or retirement property. Choosing the right area early — while prices are still competitive — can make a significant difference in both return and enjoyment.

Additionally, Jakarta is the capital city and business hub. It’s busy and crowded but offers more job opportunities and better access to services. Many foreigners who work in Indonesia choose to live here because it’s more urban and well-connected.

Other rising areas include Lombok, Batam, and Yogyakarta. These places are cheaper and less crowded than Bali or Jakarta. You can find great deals and enjoy quieter surroundings. The right location depends on your goals — do you want to live, invest, or rent? Visit different regions if you can before making your final decision.

Once you’re ready to buy, don’t go it alone. Hiring a trusted notary and legal consultant is a must. In Indonesia, a licensed notary (called PPAT) handles all land transactions. They prepare the legal documents and register the ownership at the land office.

It’s best to find someone who speaks your language or has bilingual staff. Miscommunication can cause delays or mistakes. Also, not every agent is reliable, so check their background or ask for recommendations from other foreigners who’ve bought property.

Corey Schafer, SEO Specialist at Florin|Roebig explains, “A legal consultant can help review contracts, explain rights, and make sure everything is done by the book. They know the local rules better than you. This step might cost you a bit more, but it will protect you from bigger losses later. Never skip legal support when buying abroad — it’s worth every penny.”

According to James Shorter, Founder of BRCKS, “Before you sign anything, do proper due diligence. This means checking everything about the property to avoid problems later. First, confirm the land title is valid. Ask the notary to check the certificate to ensure it’s legally owned and not in dispute.”

Also, check for any building permits like the IMB. If the property doesn’t have the correct zoning or building permission, you could face trouble or even lose the right to use it. Many beautiful villas in Bali don’t have the right paperwork — stay alert.

Don’t forget taxes. Ask about any unpaid property taxes or debts linked to the land. You don’t want to take on someone else’s bills. A thorough review might take time, but it helps you avoid scams, fake titles, or illegal sales. Always verify before you buy.

Once due diligence is complete, you’ll move to the Sale and Purchase Agreement (SPA). This is a formal document signed by you and the seller. It outlines the price, payment terms, and legal conditions of the deal.

Usually, you’ll pay a down payment first, around 10–30% of the total price. The rest is paid when the final deed is signed. The agreement also lists any penalties if someone backs out or delays the process. Your notary will guide you through this step and help prepare the paperwork.

Take your time to read and understand the SPA before signing. Make sure every detail matches your understanding — from the property size to payment schedule. If something feels off, ask questions. It’s better to delay than sign a bad deal. The SPA is a big step, so treat it seriously, explains John Gill, Operations Director at Easy Concrete Supply.

When it’s time to pay, use legal and traceable methods. Most buyers use a direct bank transfer, either to the seller or an escrow account. Escrow is safer. Your money stays with a third party until all conditions are met.

Be sure to declare the funds properly, especially if you’re bringing money from abroad. Indonesia has currency regulations, and large undeclared transfers could raise red flags. Your bank or legal consultant can guide you on how to report everything.

Also, check who is responsible for taxes. Usually, the seller pays income tax, and you might have to cover some transfer taxes. Discuss this in the SPA so there are no surprises. Don’t pay in cash or take shortcuts — always keep records of your payments.

After payment, your notary will help you register the property. This happens at the National Land Agency (BPN). The land title is officially transferred and updated with your name or your company’s name, depending on the ownership structure.

The registration includes the issuing of a land certificate — either Hak Pakai, leasehold, or through PT PMA. This document proves your legal right to use the property. Keep it safe. You’ll also get a copy of the sale deed.

Registration can take a few weeks to months. Follow up with your notary to make sure it’s progressing. Also, ask for a breakdown of the registration fees. These are usually a small percentage of the property value. Once complete, you are now the legal holder of the property.

Owning property in Indonesia comes with responsibilities. You must pay annual property taxes (PBB), and if you rent it out, there may be income tax on your rental earnings. Keep up with these to avoid fines, explains Timothy Allen, Sr. Corporate Investigator at Oberheiden P.C.

You also need to maintain the property. Broken fences, water leaks, or unclean spaces can lead to issues with local authorities or neighbors. If you’re not living there, hire a local manager to take care of things in your absence.

Lastly, make sure your visa or stay permit is in order. Some ownership types require a KITAS (limited stay permit). Check with immigration services to make sure you’re compliant. Staying informed about your rights will keep your investment safe and hassle-free.

Many foreigners use Indonesian properties as rental investments. Bali especially has a booming short-term rental market. You can list villas on Airbnb and earn good returns during tourist seasons, explains Julian Merrick, Founder of SuperTrader.

Popular tourist spots like Seminyak, Ubud, and Canggu often attract high occupancy rates and premium rental prices during peak months.

However, some areas have zoning rules that limit rentals. Always check if short-term renting is allowed in your chosen location. Some places only permit long-term leases or require a business license. Ignoring these regulations can lead to fines or closure, so legal clarity is essential before you start renting your property.

If you plan to rent your property, consider hiring a local property manager. They can handle bookings, guests, and maintenance. This saves time and keeps your guests happy. Many managers also help navigate permits and taxes. Real estate in Indonesia can be a smart investment — just make sure you follow the local laws and work with the right people.

Buying property in Indonesia as a foreigner is possible — but it takes the right steps, legal support, and clear planning. From choosing the right ownership method to registering your title, each phase matters. Don’t rush. Understand the local laws and be aware of zoning restrictions, land use rights, and residency requirements.

With the right guidance, you can enjoy your piece of paradise safely, legally, and with full peace of mind.