Adrian Campbell

HGB title in Indonesia, explained in plain English

By Adrian Campbell4 minute readIndonesian property

In short

An HGB title in Indonesia is a building right: the legal right to put up buildings on a piece of land and own them for a fixed term. Foreign buyers hold it through a PT PMA company. The first grant lasts 30 years, followed by a 20-year extension and a 30-year renewal. Leasehold is the main alternative, and the two work very differently.

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What HGB title in Indonesia means

HGB is short for Hak Guna Bangunan. In English it is usually called a right to build, or a building right. It lets the holder construct buildings on a defined piece of land and own those buildings for a set term.

The right is recorded with BPN, Indonesia's national land agency, and it comes with its own certificate. That certificate, and the land records behind it, are what an independent lawyer should check before you pay a deposit.

HGB is not freehold. Full ownership, called Hak Milik and shown on an SHM certificate, is not open to foreigners. That is why the building right matters so much to overseas buyers. The wider rules are on my page about how foreigners hold property in Indonesia.

Holding HGB through a PT PMA

A foreign individual can't hold HGB in their own name. The right can be held by Indonesian citizens and by companies set up under Indonesian law. That second group includes a PT PMA: a company registered in Indonesia whose shareholders include foreigners.

So a foreign buyer who wants a building right holds it through a PT PMA. The company holds the HGB, and the buyer holds shares in the company.

A PT PMA is a working company with real obligations. It needs the right licences for what it does, regular reporting and someone to keep it in good standing. Those running costs belong in a buyer's sums from the first day.

The developer of Saraya, PT Kinnara Capital Indonesia, is itself a licensed PMA company. A buyer who chooses the HGB route uses the same kind of structure.

The 30 + 20 + 30 year HGB term

The HGB term comes in three stages.

Stage Length How it happens
First grant 30 years Issued and registered at BPN
Extension 20 years The holder applies to extend
Renewal 30 years The holder applies for a fresh grant

Added together, that is as much as 80 years.

Neither the extension nor the renewal is automatic. The holder has to apply. The land generally has to still be used for the purpose it was granted for, and the holder must still be eligible. A company with clean records and up-to-date reporting is in the strongest position when that day comes.

HGB versus leasehold in Indonesia

Leasehold, known locally as Hak Sewa, is the other common route. An Indonesian owner leases land, and often a villa on it, to the buyer for a fixed number of years under a written agreement.

HGB through a PT PMA Leasehold
What you hold A registered building right with its own certificate A contractual right under a lease
In whose name The PT PMA You, as the tenant
Term 30, then 20, then 30 years Whatever the lease says
Company running costs Yes No
When the term ends Apply to extend or renew The lease ends unless extended

Leasehold is quicker and cheaper to set up, and it suits plenty of buyers. Its weak point is that everything rests on the contract and the landowner. Any option to extend needs to be written into the lease, signed before a notary and checked by a lawyer who acts only for you.

I don't think one route is right for everyone. I'd rather buyers understood both and chose with their own adviser than took my word for it.

Why individually titled villas matter

Every villa at Saraya Beach Resort & Residences is individually titled. Each villa has its own title, rather than all of them sharing one master certificate for the whole site.

That makes a practical difference:

  • Clarity. The owner can see exactly what they hold, on paper that refers to one villa.
  • Separation. One owner's title doesn't depend on what happens to the villa next door.
  • Resale. A villa with its own title can be sold by itself, without untangling it from anyone else's.

The rental pool, the hotel operator and the shared gardens are layered on top through the owners' management agreement. I explain that side in my note on choosing a hotel operator for a villa resort. The title underneath stays with the villa.

At Kinnara Capital, land comes first. We buy only when a court ruling and BPN records both back up who the owner is.

What to check under either structure

Before committing to any villa in Indonesia, HGB or leasehold, I'd look at:

  • the land certificate, checked in person at BPN, including who holds it and anything registered against it
  • the building approval (PBG) and the zoning approval (PKKPR)
  • whether the notary is genuinely independent of the seller
  • how many years are actually left on the HGB or lease, not just the headline term

My fuller list is in my note on checking a developer before you buy off-plan.

This note is general information only. It is not legal or financial advice.

Common questions

Can foreigners hold HGB title in Indonesia?

Not in their own name. HGB can be held by Indonesian citizens and by companies set up under Indonesian law, which includes a PT PMA, a local company with foreign shareholders. A foreign buyer who wants a registered building right holds it through a PT PMA. Running one has its own licensing and reporting costs, so take independent legal advice first.

How long does HGB title last in Indonesia?

An HGB building right is first granted for 30 years. The holder can then apply to extend it by 20 years and later renew it for another 30, which adds up to as much as 80 years. Neither step is automatic. The land must still be used as permitted, and the holder must still be eligible.

Is HGB better than leasehold in Indonesia?

Neither suits every buyer. HGB is a registered building right with its own certificate, held through a PT PMA that carries ongoing company costs. Leasehold is simpler and cheaper to set up, but it rests entirely on a contract with the landowner. The right choice depends on your plans, your budget and advice from your own lawyer.

What does an individually titled villa mean?

It means each villa has its own title instead of sharing one master certificate with the rest of the project. Every villa at Saraya Beach Resort & Residences is individually titled. That makes it clear what each owner holds, keeps one villa separate from its neighbours and makes a single villa simpler to sell later.