Understanding SHM Title in Indonesia: Complete Guide to Land Ownership Rights
Owning property in Indonesia can be a complex process, especially for those unfamiliar with local land laws and ownership structures. One of the most important legal terms you’ll encounter in the Indonesian property market is SHM (Sertifikat Hak Milik) — the Certificate of Ownership. This document represents the highest form of land ownership in Indonesia and carries significant implications for both local and foreign property owners.
At The Bali Lawyer, our experienced legal team specializes in property law and assists clients in understanding the complexities of land ownership, title transfers, and property rights in Indonesia. This comprehensive guide will help you understand what an SHM title is, how it differs from other land certificates like HGB (Hak Guna Bangunan) and Hak Pakai, and what you need to know before investing in property in Indonesia.
What is SHM (Sertifikat Hak Milik)?
SHM, or Sertifikat Hak Milik, translates to Certificate of Ownership. It is the most powerful and permanent form of land ownership available in Indonesia. An SHM title grants the holder full ownership of the land indefinitely, including the right to use, sell, lease, inherit, or transfer it.
Unlike other forms of land titles, SHM ownership is recognized as absolute ownership, giving the owner complete control over the property within the boundaries of Indonesian law. However, this right is exclusive to Indonesian citizens. Foreigners cannot directly hold SHM titles under their name.
If a foreign national wishes to invest in land in Indonesia, there are other options, such as Hak Pakai (Right to Use) or Hak Guna Bangunan (Right to Build), which provide usage or building rights for specific durations but do not confer full ownership.
Legal Foundation of SHM Ownership
The SHM title is governed under Law No. 5 of 1960 on Basic Agrarian Principles, which defines land rights and ownership in Indonesia. According to this law:
SHM is granted only to Indonesian individuals or certain legal entities recognized by the government.
The ownership is permanent, and there is no expiration date on SHM titles.
The owner has the full right to utilize and manage the land according to its designated use (residential, agricultural, etc.).
This makes SHM the most secure and desirable type of land certificate in Indonesia for citizens.
Who Can Hold an SHM Title?
Only Indonesian citizens are eligible to hold SHM titles. This rule is established to protect national land ownership from foreign control and ensure that Indonesian land remains in the hands of citizens.
However, there are certain legal frameworks that allow foreign individuals to acquire land usage rights through Hak Pakai, or to invest via an Indonesian company (PT PMA) that may hold Hak Guna Bangunan (HGB). These titles provide long-term use of the property, though they do not equal SHM ownership.
If you are a foreigner interested in owning property in Bali or anywhere in Indonesia, The Bali Lawyer can help you explore legal and safe options tailored to your needs while ensuring full compliance with local laws.
What Does an SHM Title Contain?
An SHM certificate includes important details such as:
Owner’s name and identification number
Exact location and land area
Map and boundaries of the property
Land registration number
History of ownership and previous transfers
Official stamp and signature from the National Land Agency (BPN)
These details make the SHM certificate an official and legally binding document, ensuring the owner’s full control and protection over the land.
Benefits of Holding an SHM Title
Owning land with an SHM certificate provides numerous legal and practical advantages:
Full Ownership Rights
The holder has complete control over the land — including selling, leasing, mortgaging, or gifting it without restrictions (within legal guidelines).Permanent Ownership
Unlike temporary land rights, SHM titles have no expiration date. The ownership continues indefinitely and can be passed down to heirs.Strong Legal Protection
The SHM certificate is recognized by the National Land Agency (Badan Pertanahan Nasional – BPN), offering the highest level of legal protection in Indonesia.Ease of Transfer and Sale
Because it represents full ownership, transferring or selling an SHM property is straightforward and highly desirable to buyers.Increased Property Value
Land with an SHM certificate often commands higher market value compared to properties with other titles, due to its legal strength and permanence.
Differences Between SHM, HGB, and Hak Pakai
Understanding the difference between SHM, HGB, and Hak Pakai is crucial before purchasing or investing in property in Indonesia.
| Type of Title | Who Can Own It | Duration | Ownership Rights |
|---|---|---|---|
| SHM (Sertifikat Hak Milik) | Indonesian citizens only | Permanent | Full ownership |
| HGB (Hak Guna Bangunan) | Indonesian citizens or legal entities (including PT PMA) | Up to 30 years, renewable | Right to build and use land |
| Hak Pakai (Right to Use) | Indonesian citizens, foreigners, or legal entities | 25–80 years depending on the case | Right to use but not own the land |
While HGB and Hak Pakai provide access to property ownership for foreign investors, they do not provide the same legal authority or permanence as an SHM title.
Foreign Ownership and SHM Properties
As mentioned earlier, foreigners are not legally permitted to own land under an SHM title. However, there are legal pathways for foreigners to invest in or use property in Indonesia:
Leasehold agreements – A long-term lease that allows foreign individuals to use the land for a set period, usually 25–30 years, with renewal options.
Hak Pakai (Right to Use) – This gives foreigners or foreign companies the right to use land legally for residential or commercial purposes.
PT PMA company structure – A foreign-owned company established in Indonesia that can hold HGB (Right to Build) titles.
At The Bali Lawyer, we provide expert guidance to foreigners who wish to safely invest in property within Indonesia’s legal framework, ensuring compliance and protection for all parties involved.
How to Verify an SHM Title
Before buying or transferring a property, verifying the authenticity of the SHM certificate is essential. The steps usually include:
Checking the certificate at the BPN office – The National Land Agency can verify the land’s registration and ensure it’s not under dispute.
Reviewing the land boundaries and size – Ensuring they match what is stated on the certificate.
Confirming the owner’s identity – The name on the SHM must match the seller’s identification documents.
Ensuring there are no encumbrances – Checking if the land is not mortgaged or used as collateral.
Our legal team at The Bali Lawyer can handle all verification procedures to safeguard your transaction and guarantee legal ownership.
How The Bali Lawyer Can Help You
Whether you are an Indonesian citizen looking to secure your SHM title or a foreign investor navigating Indonesia’s property laws, The Bali Lawyer offers professional legal assistance across all stages of land acquisition and ownership. Our services include:
Legal due diligence and land verification
Property title transfer and registration
Contract drafting and review
Advice on foreign ownership structures
Legal representation in land disputes
Our team ensures that your property transaction is fully compliant, transparent, and legally protected.
Why Choose The Bali Lawyer?
Expertise in Indonesian Property Law – Our legal team specializes in real estate, land rights, and ownership regulations in Bali and across Indonesia.
Trusted by Locals and Expats – We assist both Indonesian and international clients, ensuring all property dealings meet national legal standards.
End-to-End Legal Support – From title verification to ownership transfer, we manage the entire process efficiently.
Confidential and Reliable Service – Every case is handled with professionalism, discretion, and precision.
Understanding what an SHM title is and how it differs from other land rights like HGB and Hak Pakai is essential for anyone looking to own or invest in property in Indonesia. SHM provides the highest level of ownership available, granting full control and legal security to Indonesian citizens.
For foreigners, there are still legitimate and strategic ways to enjoy property rights in Indonesia through Hak Pakai, long-term leases, or company structures.
At The Bali Lawyer, we are committed to helping clients make informed, legally sound decisions in all property-related matters. Whether you’re an Indonesian citizen applying for an SHM title or a foreigner exploring property investment opportunities, our experienced lawyers will guide you through every step of the process.
Contact The Bali Lawyer today to learn how we can assist you with property ownership, SHM title verification, and legal compliance in Indonesia.