INDONESIA Law and Practice Contributed by: Yogi Sudrajat Marsono, Heru Pamungkas, Agnes Maria Wardhana and Andin Aditya Rahman, Assegaf Hamzah & Partners
Notary/PPAT fees for drawing up the deed of land/property transfer are capped at a maximum of 1% of the transaction price. The transfer of shares in a property-owning com - pany may incur income tax on any capital gains arising from the transaction. 2.11 Legal Restrictions on Foreign Investors Foreign individuals or entities having representa - tive offices in Indonesia are limited to HP and strata titles. Landed houses must meet the following criteria: • classified as luxury houses with a spe - cific minimum price per province (typically exceeding IDR5 billion or the equivalent of USD320,000 for Java and Bali islands); • limited to one plot of land per person/family; and • the land area must not exceed 2,000 square metres. Apartment units have restrictions on minimum price, minimum size and maximum number of units, and they must be utilised for residential settlement, which varies depending on prov - ince (ie, over IDR3 billion or the equivalent of USD190,000 for Jakarta, and IDR2 billion or the equivalent of USD128,000 for the rest of Java and Bali islands).
such as banks or other lenders. The process involves applying to the lender, undergoing a credit evaluation, negotiating credit terms, final - ising the facility agreement, and receiving dis - bursement upon approval. For individuals, the most common type of loan is House Ownership Credit ( Kredit Pemilikan Rumah ), typically used for purchasing residential properties. Another financing option is through real estate investment trusts (REITs), which are known as Dana Investasi Real Estate (DIRE) in Indonesia and are designed to collect funds to be invested mostly in property portfolios. A DIRE is conduct - ed through a collective investment agreement between an investment manager and a custo - dian bank, with investors’ contributions man - aged to build a portfolio of properties or shares. Please see 5.3 REITs for further details on REITs. 3.2 Typical Security Created by Commercial Investors A commercial real estate investor typically cre - ates a mortgage security, granting the lender a security interest in the property being acquired or developed. This arrangement serves as col - lateral, allowing the lender to sell the property to recover the debt in case of default, through either public auction or private sale. Mortgage security is incorporated in a mort - gage certificate issued by the local land office, which holds executorial power similar to a court decision with permanent legal force, enabling the lender to enforce their rights in case of the debtor’s default. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are no restrictions on granting mortgage security over real estate to foreign lenders, although the enforcement of the mortgage would
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
Acquisitions of commercial property, including large property portfolios, are generally financed through loans obtained from financial institutions
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