Law 1/2011 in English: the housing law articles a foreign buyer meets

Most of Indonesia's housing law is about public housing. A handful of its articles decide how a foreigner may occupy a Bali home and whether a house may be run as a business.

Law 1/2011, the articles a foreign buyer meets, in order

Indonesia’s housing law is mostly about public housing and settlements. A handful of its articles decide things a foreigner in Bali meets directly: how a foreigner may occupy a house, whether a house may be run as a business, and what a developer selling off-plan may and may not do. Law 6/2023 amended parts of it; the articles below are the current text.

The foreigner’s two routes, stated in the housing law itself

Article 52(1) says it in one line: a foreigner may live in or occupy a house by lease (hak sewa) or hak pakai (Law 1/2011 art. 52(1)). The elucidation gives the reason, the nationality principle: land ownership is for Indonesian citizens, while a foreigner's right to live in a house runs only through hak sewa or hak pakai (Law 1/2011, elucidation to art. 2(c)). Houses themselves may be built on hak milik, HGB over State or HPL land, or hak pakai over State land (Law 1/2011 art. 43(1)).

The housing law therefore says the same as the land law, from the other side: the two lawful routes into a Bali home are a lease and hak pakai. Anything presented as a third route — a nominee’s freehold — is not one of them. Why nominees fail. Hak pakai explained.

A house used as a business

Article 49(1) allows a house to be used for business on a limited basis, without endangering or disturbing its residential function (Law 1/2011 art. 49(1)), and leaves the details to regional by-law. That is the statutory root of the line between a home that is occasionally let and a villa that is run as accommodation. Where the line falls in a Bali regency is a by-law question, and the regencies’ by-laws on it are among those we have not read.

A villa run full-time as accommodation is a licensed tourism business with its own code, not a home with a business on the side. The accommodation codes. Renting a villa out.

Plots sold before the land is sorted

Bali land is often sold as plots carved out of a larger parcel. The housing law has a cluster of prohibitions aimed at that. No one may sell selling a housing-environment unit (Lisiba) whose land-right status has not been resolved (Law 1/2011 art. 137), and a legal entity may not sell selling settlement units while the land-right status of the residential environment is unresolved (Law 1/2011 art. 145(1)). No one may build building housing or settlements outside areas specifically designated for them, or in places that could endanger property or people (Law 1/2011 arts. 139-140); no official may issue issuing a housing building permit that does not match the function and use of the space (Law 1/2011 art. 141); and a developer may not go back on the estate’s roads and utilities by converting the promised infrastructure, facilities and utilities to other uses (Law 1/2011 art. 144). Each of these carries administrative sanctions (Law 1/2011 art. 150(1), as amended by Law 6/2023).

The practical reading: a plot is only as good as the parent certificate it is split from. Before paying for a “kavling”, ask for the parent certificate and the split — the individual certificate in your name, or at least the land office’s record that the split has been applied for. Buying land in Bali. Whether the zone allows housing.

Developers: the same 20% and 80% as the regulation

An off-plan house may be sold on a PPJB only after land ownership status, what is agreed, the PBG, infrastructure, and at least 20% of the housing built (Law 1/2011 art. 42(2), as amended by Law 6/2023), and a legal-entity developer may not hand over or draw more than 80% from the buyer before the PPJB conditions are met (Law 1/2011 art. 45). Building not as promised — building housing that does not match the criteria, specifications, requirements and infrastructure promised (Law 1/2011 art. 134, as amended by Law 6/2023) — is prohibited. The sanctions include a written warning, restrictions or a stop on building, sealing, an order to demolish, or an order to rebuild as promised (Law 1/2011 art. 150(2), as amended by Law 6/2023), and where it causes harm it is a criminal fine where it causes victims or damage to health, safety or the environment (Law 1/2011 art. 151, as amended by Law 6/2023).

These are the statutory roots of the detailed off-plan rules in the housing regulation — refunds, the seven-day review, the marketing disclosures. PP 12/2021, article by article.

This is commentary, not legal advice. The official Indonesian text on JDIH BPK is the authority.

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