Hak Pakai for Foreign Buyers: Duration, Renewal and the 2021 Rules

Quick answer: Hak Pakai is Indonesia's "right to use" title, available to foreigners who hold a valid KITAS or KITAP residency permit. The 2021 implementing regulations extend the maximum duration to 80 years in stages: 30 years initial, 20 years extension, then a further 30-year renewal. No company structure is required.

What Is Hak Pakai?

Hak Pakai translates literally as "right to use" and sits one rung below freehold (Hak Milik, or SHM) in Indonesia's hierarchy of land titles. Foreigners cannot hold freehold outright; Indonesian law reserves SHM for citizens. Hak Pakai is the closest personal title a foreign individual can hold, covering both the right to occupy and to lease the property commercially.

Unlike leasehold (Hak Sewa), which is a contractual arrangement between buyer and landowner, Hak Pakai is a state-issued title registered at the National Land Agency (BPN). That registration matters: it creates a legal instrument that can be used as collateral, transferred, and inherited, giving it materially stronger property-rights protection than a private lease agreement. Nominee structures, where an Indonesian citizen holds freehold on a foreigner's behalf, are illegal and void in court. Hak Pakai exists precisely to give foreign buyers a lawful alternative.

Duration and Renewal Under the 2021 Rules

Government Regulation No. 18/2021 (PP 18/2021), issued under the Job Creation Law (Undang-Undang Cipta Kerja), overhauled the maximum durations for all Indonesian land titles. For foreigners holding Hak Pakai on residential property, the new framework works in three stages:

1. Initial grant: 30 years from the date of first registration at BPN.
2. Extension: up to 20 additional years, applied for before the initial term expires.
3. Renewal: a further 30 years, granted at the end of the extension period, subject to the land retaining its designated use classification.

Combined, this creates a maximum tenure of 80 years. In practical terms, that horizon covers most investment timelines and is long enough to support mortgage lending in a number of jurisdictions where buyers hold overseas financing.

One critical caveat: renewal is not automatic. The holder must apply at each stage, and BPN retains discretion if zoning or land-use classifications change. Buyers should instruct their PPAT notary to note extension options clearly in the original deed and to set formal calendar reminders well before each expiry date. Missing a renewal window is a recoverable problem, but it creates legal complexity and cost that is entirely avoidable with basic administration.

The Residency Requirement

Hak Pakai is a personal title: it is linked to you as an individual, not to a corporate vehicle. The prerequisite is a valid Indonesian residence permit, either a KITAS (temporary stay permit, typically issued for one to five years) or a KITAP (permanent stay permit, valid for five years and renewable indefinitely).

Holders without active residency cannot initiate a new Hak Pakai application. If you allow your KITAS to lapse, you do not automatically lose an existing title, but selling or transferring the property becomes legally involved until residency is restored. The asset and your visa status are bound together in a way that has no equivalent in the PT PMA structure.

For buyers who plan to spend part of the year in Lombok, or who are working towards a retirement or investor visa, Hak Pakai can be an elegant and cost-effective fit. For purely passive investors who will never spend more than a tourist stay in Indonesia, it is generally the wrong vehicle. Residency is not a technicality here; it is a structural dependency.

Hak Pakai vs PT PMA: When Each Structure Makes Sense

The PT PMA (foreign-owned company) route grants a corporate entity the right to hold Hak Guna Bangunan (HGB) on land, extendable for 30 years. It is the structure most international investors use for rental-income assets because it does not require personal residency and can hold multiple properties across different locations.

Where Hak Pakai has the advantage:

• Lower upfront and ongoing cost. There is no company incorporation, no minimum paid-in capital requirement, and no annual corporate tax filings or accountancy retainer. The cost gap between the two routes can run into several thousand dollars in year one and a recurring annual figure thereafter.
• Simpler personal ownership. The title sits in your name. There is no nominee director arrangement, no corporate governance obligation, and no need to maintain a registered Indonesian business address or statutory records.
• Cleaner inheritance. Hak Pakai can pass to an heir who holds the relevant residency status. A PT PMA requires the estate to continue operating a compliant Indonesian company, which adds layers of complexity at precisely the wrong moment.

Where PT PMA has the advantage:

• No residency dependency. Passive investors without KITAS can own through a company without any visa commitment.
• Multiple assets. A PT PMA can hold several properties; Hak Pakai is generally limited to one residential property per individual.
• Commercial flexibility. A company can sign commercial leases, issue VAT invoices, and enter operator agreements in its own name, which simplifies the rental income chain considerably.

For a full comparison of all available legal routes, including Hak Sewa leasehold and the relative protections each structure offers, see the guide to leasehold versus freehold in Indonesia and the PT PMA versus Hak Pakai breakdown. Key terms, including BPN, PPAT, KITAS, KITAP, HGB, and AJB, are defined in the HubLombok glossary.

Practical Guidance

Hak Pakai suits buyers who are already resident in Indonesia, or who intend to obtain residency, and who want a single property held in their own name without the overhead of a corporate structure. For investors in South Lombok, where turnkey villa entry prices range from EUR 95,000 to EUR 350,000, avoiding PT PMA incorporation and annual maintenance costs can make a meaningful difference to early-year returns. HubLombok is the editorial arm of Samudra Villas, an active developer in Are Guling operating at the lower end of that price range; we flag this in the interest of transparency.

Before committing to this structure, work through the following:

• Verify the underlying land title. Hak Pakai can only be issued on certain land classifications. Confirm eligibility with BPN before signing anything.
• Use a licensed PPAT notary. The deed must be executed and registered by a Pejabat Pembuat Akta Tanah (PPAT), the only officer authorised to record title transfers at BPN. The deed of sale is the AJB; registration creates the legal right.
• Budget for transfer tax. Buyer transfer duty (BPHTB) runs at approximately 5% of assessed value, plus the seller's income tax (PPh), both payable before the deed is executed.
• Keep your KITAS current. Build in at least 90 days of lead time before each expiry. A lapsed permit does not void the title but introduces friction into any future sale or transfer.
• Engage a specialist. TerraNusa Advisory (terranusaadvisory.com) is an independent licensed-notary and legal desk serving foreign buyers in Lombok. Unlike most local notaries, who handle the deed and nothing else, TerraNusa runs the full chain: due diligence on certificates and ownership history, zoning and encumbrance checks, BPHTB and PPh coordination, deed execution, and title registration at BPN. For a first-time buyer navigating Hak Pakai, that end-to-end coverage is worth the additional cost.

This article is for informational purposes only and does not constitute legal advice. Always instruct a licensed Indonesian notary and a qualified legal adviser for your specific circumstances.