NEW HOUSING OWNERSHIP REGIME BY THE FOREIGNERS
An Overview of the Arrangement of Residential and Apartment for Foreigners
The arrangement of residential ownership by foreigners is now entering into a new stage. On 29 September 2016, the Government issued Ministry of Agrarian and Spatial Planning Affairs Regulation Number 29 of 2016 on Procedures for Granting, Releasing or Transferring of Right to Housing Ownership by Foreigners having Domiciled in Indonesia (“Regulation 29/2016”).
However, to what extent the Regulation 29/2016 accommodates both national and foreign interests? Does the Regulation 29/2016 has been in line with the spirit of national agrarian law? This article will describe the legal aspects of the arrangement of the ownership of a dwelling house or residential owned by foreigners domiciled in Indonesia.
Chronology and Legal Basis
As a derivative of Article 11 of Government Regulation No. 103 of 2015 on Ownership of Dwelling House or Residential by Foreigners Domiciled in Indonesia (“Regulation 103/2015”), Regulation 29/2016 is a legal product which revokes and supersedes the similar level of regulation, namely the Regulation of the Ministry of Agrarian and Spatial Affairs No. 13 of 2016 (“Regulation 13/2016”).
Meanwhile, Regulation 103/2015 is a regulation which revokes and supersedes Government Regulation No. 41 of 1996 (“Regulation No.41/1996”).
Residential Ownership by Foreigners under Regulation 103/2015 vis a vis Regulation 41/1996
Since the enactment of Regulation 103/2015, thus the Regulation 41/1996 which has been guiding for 9 years is practically declared invalid. There is one amendment and two additional provisions were made to the Regulation 41/1996. The first relates to the definition of “Foreigners which domiciled in Indonesia”. The amendment takes place on the very basic criteria, of which foreigners are legally eligible to own a resident. The second, the additional provisions which are not set out in Regulation 41/1996 in connection with the transfer of residence or dwelling house as a consequence of the occurrence of legal acts and legal events.
In relation with the notion of foreigners domiciled in Indonesia, Regulation 103/2015 does not make significant changes to the Regulation 41/1996. Nonetheless, fundamental changes can be still highlighted in the operational definition of foreigners domiciled in Indonesia. Regulation 41/1996, for instance, defines “Foreigners who are domiciled in Indonesia” as foreigners whose presence in Indonesia benefits to the national development”.
Meanwhile, Regulation 103/2015 states that “Foreigners who are domiciled in Indonesia” are non-Indonesian citizens whose existence provide benefits, conduct business, work or invest in Indonesia.
The extension of Foreigner criteria as referred to in Regulation 103/2015 and its correlation with the property ownership are considered to have facilitated to the foreigners to own a residence in Indonesia. In addition, some voices are skeptical with the presence of Regulation 103/2015 due to the absence of more detailed arrangement (particularly) about what kind of business the foreigner should run, or how much capital threshold should be involved, or what position to occupy in term of working. Finally, the lack of clarity drives this Regulation 103/2015 reap much controversy that we could discover.
Regulation 103/2015 further regulates the rights of land which can be owned by Indonesian citizens who marry foreigners. Article 3 of Regulation 103/2015 explains that Indonesian citizens who marry foreigners can still have rights to the land as other Indonesia citizens. However, it should be noted that the legality of the ownership of land shall be subject to stipulation in which the Indonesian citizens and foreigners who have conducted their marriage shall have been a separation of assets set forth in an agreement on separation of assets, as mentioned in Article 3 Regulation 103/2015 which cited as follows:
“The right to land as referred to in paragraph (1) shall not constitute a joint asset as evidenced by the separation agreement of asset between husband and wife, made by notarial deed.”
Therefore, should Indonesian citizens and foreigners turn into a marriage, thus the ownership of land rights by Indonesian citizens may only be permitted to the extent that the agreement of asset separation exists, despite the said separation is limited to the separation of property in term of land rights, as it is not permitted by law.
Dwelling House and Flats (“Sarusun”) Ownership for foreigners
Referring to Article 4 Regulation 103/2015, foreigners are only permitted to possess a dwelling house or residential to the extent that the said residential meet the following terms and conditions:
- Single House above the land having of:
- Right to Use; or
- Right to Use over Right of Ownership controlled by the agreement of granting Right to Use over Right of Ownership with the deed of the Land Deed Official.
- Sarusun which built above the plot of land having Right to Use.
Meanwhile, the meaning of Single House is a house that has its own plot and one of the walls of the building is not built right on the boundary of the plot. Neither the Single House nor Sarusun are allowed to be owned by foreigners except the said House and/or Sarusun are purchased as the first owner. Thus, the purchase of second hand house or Sarusun is not permitted under Regulation 103/2015.