Foreigners looking to purchase property in Indonesia must adhere to pricing regulations set by the Ministry of Agrarian Affairs. Different provinces have varying minimum price requirements for condominiums and landed houses. Any agreement below the legal price is considered invalid, potentially nullifying the transaction.
The pricing regulations for property ownership by foreigners in Indonesia are governed by the following legal provisions:
- Minister of Agrarian Affairs Regulation No. 18 of 2021 on Procedures for the Determination of Management Rights and Land Rights (“Permen Agraria No. 18/2021”);
- Minister of Agrarian Affairs Decree No. 1241/SK-HK.02/IX/2022 on the Acquisition and Pricing of Residential Houses for Foreigners (“Kepmen Agraria No. 1241/2022”).
Foreigners can only acquire landed houses or condominium units at a minimum price set under the Minister of Agrarian Affairs Decree No. 1241/2022. The minimum price varies across different provinces in Indonesia.
Minimum Price for Condominium Units That Can Be Acquired by Foreigners:
- Jakarta : 3,000,000,000
- Banten : 2,000,000,000
- West Java : 2,000,000,000
- Central Java : 2,000,000,000
- East Java : 2,000,000,000
- Bali : 2,000,000,000
- Yogyakarta : 2,000,000,000
- Other location/provinces : 1,000,000,000
Minimum Price for Landed Houses That Can Be Acquired by Foreigners:
- Jakarta : 5,000,000,000
- Banten : 5,000,000,000
- West Java : 5,000,000,000
- Central Java : 5,000,000,000
- East Java : 5,000,000,000
- Yogyakarta : 5,000,000,000
- Bali : 5,000,000,000
- West Nusa Tenggara : 3,000,000,000
- North Sumatra : 2,000,000,000
- East Kalimantan : 2,000,000,000
- South Sulawesi : 2,000,000,000
- Riau Islands : 2,000,000,000
- Other location/provinces : 1,000,000,000
Due to his unawareness to the Indonesian laws, what are the Legal Consequences of an Agreement entered Into by a Foreigner Who Has In Binding Agreement to acquire a Landed House or Condominium Unit Below the Required Minimum Price?
In our opinion, the agreement underlying the property acquisition is considered as a NULL and VOID (Nietig) because it contradicts applicable laws and regulations. This is in accordance with the legal requirements for a valid agreement as stipulated in Article 1320 paragraph (4) juncto Article 1355 of the Indonesian Civil Code, which mandates that an agreement must not conflict with statutory provisions
This means that the agreement is deemed never to have existed, has no binding legal force from the outset (ex nihilo), and the parties must be restored to their original positions (restitutio in integrum).
If payment or transfer of property has already occurred (for example, if the foreigner has paid for the condominium unit), the transaction must be reversed to its original state before the agreement was made. The party that received the payment must return it to the foreigner concerned.
Author: Kristian Ade Chandra – Partner at C&R Phase Counsellors at Law.
