Before buying land in Lombok, Indonesia, it’s crucial to understand the types of land titles available and which ones are accessible to foreign investors. Whether you’re planning to build a villa, start a resort, or develop a commercial property, understanding the legal framework will help protect your investment and ensure compliance with Indonesian land laws.
The Five Main Types of Land Titles in Lombok, and Indonesia are as follows:
- Hak Milik (HM)
- Hak Guna Bangunan (HGB)
- Hak Sewa (HS)
- Hak Guna Usaha (HGU)
- Hak Pakai (HP)
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Hak Milik (SHM) - Freehold Title
SHM is the highest and most absolute form of land ownership in Indonesia. This title grants the holder full rights to the land, including the ability to sell, lease, mortgage, transfer, or bequeath it to heirs. It is a perpetual title and requires no extensions.
Important Note for Foreigners: SHM is exclusively available to Indonesian citizens. While some foreign individuals attempt to acquire land under this title using nominee arrangements (where an Indonesian holds the title on their behalf), this practice carries legal risks and is strongly discouraged.
For a comparison between nominee structures and foreign-owned companies (PT PMA), read this article: Local Nominee Versus Foreign Company.
Hak Guna Bangunan (HGB) - Right to Build
Hak Guna Bangunan (HGB) is a popular land title that grants the right to construct buildings and conduct business activities on a designated plot of land. It is especially suitable for investors planning property development or commercial operations in Lombok.
Key Features:
- Initially granted for 30 years, extendable by 20 years and renewable for an additional 30 years
- Allows the title holder to transfer, sell, mortgage, bequeath, or lease the rights
- Available to Indonesian citizens, local companies, and foreign-owned companies (PT PMA)
HGB is one of the most flexible land titles for foreign investors in Indonesia. If you establish a foreign-owned company (PT PMA), you can legally acquire HGB land for commercial or residential development. HGB can be converted back into a Hak Milik (SHM) title when it is transferred to an eligible Indonesian citizen.
Planning to set up your foreign company in Lombok? HGB is the most recommended title for long-term investment and development.
Hak Sewa (HS) - Leasehold
HS is an option is available for those who don’t want to buy land in Lombok. Depending on the lease agreement, the lease may be transferred to other party. The lease duration is not specifically stipulated by laws, but normally it last for 30 years with 20 years + 30 years extensions.
Furthermore, the leasehold title is available for either Indonesian individual or company and foreign owned company. This title terms and conditions is very much based on mutual agreement of the lessor and the lessee.
Hak Guna Usaha (HGU) - Right to Cultivate
HGU title gives the title holder the rights to manage and cultivate state-owned land. The purpose is to run agribusiness related activity such as agriculture and husbandry.
Further, the duration of this title is 25 years with 35 years extension option. HGU is available for either Indonesian individual or company and foreign owned company.
Hak Pakai (HP) - Right to Use
HP title provides the right for title holder to use or to collect results of state-owned or individually owned land. HP title is transferable only with the government or owner’s prior consent.
The duration of this title is not specifically stipulated by laws. HP is available for either Indonesian individual or company and foreign owned company.
Comparison Table of Land Titles in Indonesia
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Get Legal Assistance Before You Invest
Navigating Indonesia’s land regulations requires local legal insight. At www.lomboklawyers.com, we help foreign investors secure land legally and safely in Lombok and Mandalika.
Contact us today for a free consultation and personalized advice on the most secure land title for your project.
