What You Need to Know When Buying a Property in Lombok

Buying property in Lombok, Indonesia, can be an exciting venture, especially given the island's stunning natural beauty and growing real estate market. However, it is essential to navigate the complexities of property ownership in Indonesia carefully. Here’s a comprehensive guide on what you need to know before making your investment.

Understanding Legal Framework

One of the first steps in buying property in Lombok is understanding the legal framework surrounding foreign ownership. Foreigners cannot own land outright; instead, they must utilize specific legal structures:

• Hak Pakai (Right to Use): This title allows foreigners to use land for up to 70 years, with possible extensions.
• Hak Guna Bangunan (Right to Build): This option permits foreigners to build on land for up to 30 years, extendable for another 20 years or more[1].
• PT PMA (Foreign-Owned Company): Establishing a PT PMA allows foreigners to acquire freehold rights indirectly through a company structure[2].

It is crucial to engage with legal experts who specialize in Indonesian property law to ensure compliance and avoid potential disputes.

Conducting Due Diligence

Before purchasing any property, thorough due diligence is essential. This includes:

1. Verifying Land Titles: Ensure that the land has clear titles and is registered with the National Land Agency (BPN). Unregistered land can lead to complications[3].
2. Checking Zoning Regulations: Confirm that the land is zoned appropriately for your intended use—whether residential or commercial[4].
3. Inspecting Infrastructure: Assess existing infrastructure such as roads, electricity, and water supply. Understanding who will bear these costs is vital[5].

Choosing the Right Location

Lombok offers various locations suitable for different types of investments:

• Kuta Lombok: Known for its tourism potential and rental opportunities.
• Gili Islands: Ideal for beachfront properties and tourism developments.
• Selong Belanak: A premium area for luxury villas and eco-resorts[6].

Researching market trends and visiting these areas can help you make an informed decision.

Engaging Reputable Professionals

Working with experienced local professionals—such as real estate agents, notaries, and lawyers—is crucial. They can provide insights into market conditions, assist with negotiations, and ensure all legal documents are correctly processed[7]. Avoid relying solely on online information or unverified sources.

Understanding Costs Involved

When budgeting for your investment, consider additional costs beyond the purchase price:

• Taxes and Fees: Be prepared for transfer taxes (BPHTB), notary fees, annual property taxes (PBB), and other associated costs[8].
• Maintenance Costs: If you plan on renting out your property, factor in ongoing maintenance expenses[9].

Finalizing Your Purchase

Once you've completed due diligence and negotiated terms:

1. Sign a Sale & Purchase Agreement (AJB) with a notary.
2. Make payments securely via bank transfer or escrow services.
3. Register the transaction with BPN to obtain your land certificate[10].

By following these guidelines and conducting thorough research, you can navigate the process of buying property in Lombok successfully.