Only foreign retirees can buy landed houses

The Jakarta Post, Jakarta | Tue, 05/18/2010 9:40 AM | Headlines
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As a response to a growing demand for allowing foreigners to own a property in Indonesia, the Public Housing Ministry says that foreign retirees will be the first to be allowed to fully own a landed house in the country.

Minister Public Housing Suharso Monoarfa said a regulation was now being prepared to allow foreign
retirees to buy landed houses for residence.

The plan was meant to enable retirees to enjoy their retirement, and to get benefits from their stay in Indonesia, he said.

The plan would allow foreign retirees to use bank credits to finance up to 50 percent to pay for the house and to repay with installments over a maximum of three years.

“We want to prevent speculation in the country’s property market,” Suharso was quoted by Kontan business daily as saying.

He, however, said that if the foreigners’ purchase is meant for investment, they will be allowed only to buy apartments on condition that they pay cash, not using bank credits.

Commenting on the plan, property analysts said that these plans were confusing.

“The government’s plan to allow only foreign retirees to buy landed houses is going to mean a difficult task,” Arief Rahardjo of property consulting firm Cushman and Wakefield told The Jakarta Post on Monday. He added it would be very difficult to distinguish between those who wanted to invest and those who wanted to stay in Indonesia.

Chairman of the Real Estate Indonesia association of developers Teguh Satria told the Post that the proposed regulation was still not clear.

“The criteria of elderly or retiree and the considerations behind the plan are not clear yet,” Teguh said.
About the planned requirement for foreigners to pay cash to invest in apartments, Arief said that such a requirement was not hard for foreigners to fulfill because apartment prices in Indonesia were lower than in other countries.

“But how about those who want to use the apartment for residence?” he asked.

The ministry also plans to revise the regulation that allows expatriates ownership for up to 70 years.

At present, foreigners are only allowed to hold leasehold title for 25 years, which can be renewed for 25 years, and then another 20 years.

“We are considering whether we will prolong the leasehold title for expatriates but the tenure will not be 70 years,” he said.

Teguh acknowledged that the 1960 Basic Agrarian Law allowed foreigners to use land for no longer than 70 years, and scrapping the “25-25-20” scheme therefore would be the best possible option.

“It will be easier if we give expatriates the right for 70 years from the beginning,” Teguh said.

Teguh compared the regulation with those in other countries in the region like Malaysia and Singapore, which allowed 99 years of foreign leasehold title.

“This is actually the right time to attract foreigners to buy property in Indonesia since our financial condition is stable,” he said. (not)

If the foreigners’ purchase is meant for investment, they will be allowed only to buy apartments under certain conditions, for cash.

http://www.thejakartapost.com/news/2010/05/18/only-foreign-retirees-can-buy-landed-houses.html