INDONESIA Law and Practice Contributed by: Yogi Sudrajat Marsono, Heru Pamungkas, Agnes Maria Wardhana and Andin Aditya Rahman, Assegaf Hamzah & Partners
6.6 Determination of New Rent Rent changes require mutual agreement, typi - cally in writing. Once agreed upon, changes can occur only with written consent. It is common to cap rent increases at a certain rate, consider - ing increases in the tax-assessed value of the property or inflation. 6.7 Payment of VAT 11% VAT is payable on rent for land and/or buildings. The VAT is collected and remitted by the taxable entrepreneur who rents out the land and/or buildings. 6.8 Costs Payable by a Tenant at the Start of a Lease A deposit may be required upon lease com - mencement, in addition to lease payment. This deposit serves to secure the lessee’s obligations and acts as the lessor’s protection against dam - ages, unpaid rent or breaches of lease terms. Lessees may also be obliged to pay a monthly service charge to the lessor, plus applicable VAT. 6.9 Payment of Maintenance and Repair In the context of apartments, the Apartment Law obliges developers to separate apartments into individual units, common areas (such as rooves, stairs, elevators, pipelines, electrical networks, floors, walls and other parts that are integral to the apartment building), common objects (swim - ming pools, gardens, parking lots and other parts that are not in functional unity with the apartments) and common land. Based on the Apartment Law, the management of an apartment building includes operational activities, maintenance and care of common are - as, common objects and common land, which are managed by the Association of Owners and Occupants of Apartments (PPPSRS).
The COVID-19 pandemic has not resulted in specific ongoing regulations regarding lease terms in Indonesia. 6.4 Typical Terms of a Lease The terms of a lease of business properties are freely negotiated between the parties. The typi - Parties typically define the commencement, con - clusion, any potential extensions and the proce - dure for extending the lease. Restrictions may vary based on the nature of the leased asset. For instance, for state or regional government properties, the standard lease term is commonly set at five years, with the possibility of extension. Maintenance and Repair cal terms are as follows. Length of Lease Term The agreements would detail the services and maintenance covered by the lessor and the costs entailed. Operating costs, including equipment repair and maintenance, are usually the lessee’s responsibility. Frequency of Lease Payments Parties typically regulate lease payments in the lease agreement. In a revenue-sharing model, for example, lease payments are usually agreed to be made quarterly, based on the audited financial report. Pandemic Issues Following the COVID-19 pandemic, some lease agreements stipulate a pandemic as a force majeure event. 6.5 Rent Variation The rent payable typically does not change throughout the lease term, with the possibility of cost adjustments at the start of a new period, based on the agreement of the parties.
383 CHAMBERS.COM
Powered by FlippingBook