Indonesia opened the property market to those foreigners who reside (legally) in Indonesia. However, it also set tough requirements regarding foreign ownership of Indonesian property. Moreover, it remains nearly impossible for expats to obtain a local mortgage to finance the purchase of property. Although local credit may actually not be attractive for foreigners as interest rates are high in Indonesia, it is interesting to take a closer look at why Indonesian banks reject to sell mortgages to foreigners and whether foreigners are actually enticed to buy property in Indonesia?
In late-2015 Indonesian President Joko Widodo signed a government regulation (Government Regulation No. 103/2015 on House Ownership of Foreigners Residing in Indonesia) that allows expats who reside (legally) in Indonesia to own landed houses in the country for a period up to 80 years. Earlier in the year, expats had already been allowed to own luxurious apartments. However, foreign ownership of landed houses or apartments falls under the so-called ‘right-of-use’ category, locally known as hak pakai, which is weaker than the ‘right-of-ownership’ category or hak milik that can be acquired by Indonesian citizens.