Real Estate Legal Compliance in Indonesia – 2025 Investor’s Guide by The Bali Lawyer
Navigating real estate laws in Indonesia can be complex, especially for investors, developers, and property owners unfamiliar with the country’s legal framework. Whether you are purchasing land, developing property, or leasing commercial space, understanding and adhering to real estate legal compliance is essential to avoid penalties, ownership issues, or invalid transactions.
At The Bali Lawyer, we provide professional legal services focused on ensuring real estate compliance across Indonesia. This guide outlines all the essential legal elements you need to know in 2025 to ensure your property investment or development is fully protected and compliant with Indonesian laws.
Why Real Estate Legal Compliance Matters in Indonesia
Indonesia’s real estate market is dynamic and attractive, particularly in tourism hotspots like Bali and growing commercial centers like Jakarta, Surabaya, and Lombok. However, land ownership and property transactions are governed by specific legal structures that require strict compliance.
Failure to comply with real estate regulations can result in:
Loss of ownership or usage rights
Inability to obtain building permits or SLF certification
Legal disputes or criminal liability
Delays in development and licensing
Financial penalties and government sanctions
Legal compliance protects your investment, ensures your rights, and provides a clear path for long-term property development or usage.
Who Needs Real Estate Legal Compliance Services?
Our services are designed for:
Foreign investors or expatriates buying property
Indonesian citizens acquiring or developing land
Companies building commercial or industrial facilities
Real estate developers planning large-scale projects
Hospitality businesses purchasing resorts or villas
Individuals or families inheriting or transferring property
Whether you are a first-time buyer or an experienced developer, we provide tailored solutions for full legal compliance.
Key Areas of Real Estate Legal Compliance in Indonesia
1. Land Ownership Regulations
Indonesian law restricts direct land ownership by foreigners. Legal ownership rights in Indonesia include:
Hak Milik (Freehold) – Only available to Indonesian citizens
Hak Guna Bangunan (Right to Build) – Available to PT PMA and local companies, valid up to 30 years
Hak Pakai (Right to Use) – Can be granted to foreign individuals under certain conditions
Hak Sewa (Leasehold) – Land lease agreements for a specified period (up to 25-30 years with extensions)
Foreigners must use the proper legal channel—either through a lease agreement, nominee structure (with caution), or a PT PMA (foreign-owned company)—to access land or property. We help you determine the most secure and compliant option.
2. Zoning and Spatial Planning (KKPR)
Before purchasing or developing any property, it’s essential to verify Kesesuaian Kegiatan Pemanfaatan Ruang (KKPR), or spatial use suitability. KKPR determines what type of activity is allowed on the land.
Types of zoning include:
Residential
Commercial
Tourism
Industrial
Agricultural
Conservation areas
We assist with verifying zoning, securing KKPR approval, and adjusting land use classifications if necessary.
3. Building Permits (PBG)
To construct, renovate, or expand any structure in Indonesia, you must obtain a PBG (Persetujuan Bangunan Gedung). This legal permit replaced the former IMB system and ensures that construction plans align with Indonesian regulations.
The PBG process involves:
Technical architectural and engineering drawings
Construction supervision plans
Fire safety and drainage designs
Compliance with spatial planning and zoning
We provide full assistance with preparing documents and submitting applications through the OSS RBA system.
4. SLF (Function Worthiness Certificate)
After construction is complete, a Sertifikat Laik Fungsi (SLF) is required to certify that the building is structurally sound, safe, and fit for occupancy.
An SLF is mandatory for:
Commercial properties (offices, hotels, shops)
Industrial facilities (factories, warehouses)
Residential apartments and housing developments
Without an SLF, the building cannot be legally occupied or used for business operations.
5. Environmental Compliance (AMDAL or UKL-UPL)
Depending on the size and function of your property, you may be required to submit environmental documents such as:
AMDAL (Environmental Impact Analysis) – For large-scale or high-impact developments
UKL-UPL (Environmental Management and Monitoring Efforts) – For smaller or medium-impact developments
These must be approved before construction can begin. Our legal team helps identify the requirements and prepare submissions.
6. Land Certificate Verification
Verifying the status of land certificates is crucial in any property transaction. We conduct thorough due diligence to confirm:
Legal ownership
Absence of disputes, liens, or mortgages
Compatibility with the intended use
Validity of title (SHM, SHGB, SHP, etc.)
We also assist with title transfers, notary coordination, and registration of land certificates with the BPN (National Land Agency).
7. Lease and Purchase Agreement Drafting
Contracts must comply with Indonesian law and clearly define rights, obligations, timelines, and dispute resolution methods.
We draft and review:
Lease agreements for commercial and residential properties
Sale and purchase agreements (AJB)
Joint development or land-use contracts
Rental and sublease arrangements
Land acquisition agreements for corporate clients
8. Property Tax and Fiscal Compliance
Property ownership and usage in Indonesia are subject to several taxes:
BPHTB (Land and Building Transfer Fee)
PBB (Annual Property Tax)
VAT (Value Added Tax on certain sales or leases)
Income tax on rental income or capital gains
Our team ensures accurate calculation and timely payment of all relevant taxes to avoid penalties.
9. Company-Owned Properties
If you plan to hold property through a business entity, we help you establish and manage a compliant legal structure:
Setting up a PT PMA (foreign-owned company)
Registering business licenses and NIB
Acquiring land and property under the company’s name
Managing legal compliance and reporting obligations
Due Diligence Services
Before entering any property transaction, it’s critical to conduct legal due diligence. Our process includes:
Reviewing land ownership and status
Checking zoning and spatial planning compatibility
Ensuring compliance with local regulations
Investigating encumbrances or disputes
Validating building permits and SLF certificates
This protects you from buying problematic or restricted property.
Common Legal Issues in Indonesian Real Estate
Buying property in a conservation or protected zone
Using nominee arrangements without legal safeguards
Skipping land certificate checks or zoning validation
Beginning construction without a valid PBG
Ignoring SLF and operational licensing requirements
Failing to register contracts with notaries and BPN
We help you avoid these pitfalls with thorough legal oversight and full project compliance support.
Areas We Cover
Our real estate legal compliance services are available throughout Indonesia, including:
Bali (Denpasar, Ubud, Canggu, Seminyak)
Jakarta
Surabaya
Bandung
Lombok
Yogyakarta
Batam
Medan
Kalimantan
Papua
No matter the location or property type, we provide the same reliable legal expertise and dedication.
Why Choose The Bali Lawyer?
As a legal service based in Bali with nationwide reach, we understand the complexities of real estate law in Indonesia. Our clients include investors, companies, expatriates, and developers seeking secure and legal property solutions.
We offer:
Complete legal compliance services
In-depth knowledge of national and regional regulations
Transparent, clear communication in English and Bahasa Indonesia
Licensed legal consultants and partner notaries
Fast, efficient handling of permits and certifications
Custom solutions for foreign and domestic clients
Real estate legal compliance in Indonesia is essential for protecting your property rights and ensuring your investment is secure. From land acquisition and zoning approvals to permits, taxes, and SLF certification, The Bali Lawyer offers a complete range of services to meet your needs.
Let us guide you through the process and give you peace of mind that your property is legally protected and fully compliant with Indonesian regulations.