Thursday, January 7, 2010
Indonesian Government May Unlock Real Estate For Expats
Expatriates in Indonesia may soon be able to make the jump from being renters to owners, as the State Ministry of Public Housing announced on Thursday that it was planning changes to the law that would allow foreigners to own homes in cities and special economic zones.
Housing Minister Suharso Monoarfa said expats would be able to buy houses in special economic zones, such as in Batam and Kalimantan, where overseas companies receive incentives to run factories. Foreigners living in cities would be limited to owning apartments.
Under the current law on foreign property ownership, expats are only allowed to hold fixed-term housing leases of up to 25 years, although they are permitted one extension for another 25 years. The proposed change in government policy comes after numerous calls from property developers to ease restrictions on foreign property ownership, which has led to expats exploiting a wide variety of legal loopholes to indirectly own houses and apartments.
For example, an expat can give a local resident money to buy a home, with the parties signing an agreement beforehand that the resident would receive a loan from the foreigner worth the same amount as the home. While the property is in the local’s name, it is signed over to the expat as collateral for the loan, making the foreigner the de facto owner.