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Everything you need to know before buying real estate is included in our Indonesia Property Pack
Buying property as a foreigner in Medan requires navigating Indonesia's complex ownership laws and bureaucratic processes.
Unlike Western countries where foreigners can typically buy freehold property directly, Indonesian law restricts foreign ownership to specific property types and legal structures, making the process more complex but still achievable with proper guidance and preparation.
If you want to go deeper, you can check our pack of documents related to the real estate market in Indonesia, based on reliable facts and data, not opinions or rumors.
Foreigners can buy apartments and condominiums but cannot own freehold land directly in Medan, requiring alternative legal structures like leaseholds or PT PMA companies.
The buying process typically takes 1-3 months and involves higher costs than Western markets, with total fees ranging from 6-12% of property value including taxes, notary fees, and legal costs.
| Property Type | Foreigner Ownership | Key Requirements |
|---|---|---|
| Apartments/Condominiums | Yes (Hak Pakai/Leasehold) | Strata title, minimum investment thresholds |
| Landed Houses (Direct) | No | Indonesian citizenship required for freehold |
| Landed Houses (via PT PMA) | Yes | Company formation, investment permit, ongoing compliance |
| Leasehold Properties | Yes | 25-80 year lease terms, renewal negotiations |
| Hak Pakai Rights | Yes (with restrictions) | Residency status, minimum investment amounts |
| Agricultural Land | No | Reserved for Indonesian citizens |
| Heritage Properties | Limited | Special permits, cultural preservation requirements |
How easy is it compared to buying a house in western countries?
Buying property in Medan is significantly more complex than purchasing real estate in Western countries due to Indonesia's strict foreign ownership restrictions.
In most Western countries, foreigners can directly purchase freehold property with full ownership rights. In Medan, foreigners cannot own freehold land and must navigate alternative legal structures like leaseholds, PT PMA companies, or Hak Pakai rights.
The bureaucratic process involves more documentation, notary requirements, and legal verification steps compared to Western markets. Title searches are more complex, and the risk of disputes or unclear ownership history is higher.
Processing times in Medan typically range from 1-3 months, which is comparable to some Western markets, but delays due to documentation issues or bureaucratic complications are more frequent.
It's something we develop in our Indonesia property pack.
What types of properties can foreigners legally buy in Medan, and what can't they?
As of September 2025, foreigners have several legal options for property ownership in Medan, but with significant restrictions on land ownership.
Foreigners can purchase apartments and condominiums with strata titles under Hak Pakai or leasehold arrangements. These typically come with 25-80 year terms and renewal options.
Landed properties can be acquired through PT PMA (foreign investment company) structures, leasehold agreements, or Hak Guna Bangunan (right to build) titles, each requiring specific investment thresholds and compliance requirements.
Foreigners are completely prohibited from owning freehold (Hak Milik) land, which is reserved exclusively for Indonesian citizens. Agricultural land, certain heritage properties, and strategically sensitive areas are also off-limits.
Recent regulations allow direct purchase with passport-only requirements for certain property types, but with strict minimum investment amounts and land size restrictions.
What are the exact steps in the buying process, from start to finish?
The Medan property buying process follows a structured sequence that typically takes 1-3 months to complete.
| Step | Action Required | Timeline |
|---|---|---|
| 1. Budget & Research | Set budget including all fees (6-12% of property value), research neighborhoods | 1-2 weeks |
| 2. Engage Real Estate Agent | Select agent experienced with foreign buyers in Medan | 1 week |
| 3. Legal Due Diligence | Verify title, permits, ownership history through notary/lawyer | 2-3 weeks |
| 4. Sales Purchase Agreement | Sign and notarize SPA, pay 10-30% deposit | 1 week |
| 5. Payment Transfer | Transfer balance through legal banking channels | 1-2 weeks |
| 6. Ownership Transfer | Notary registers ownership, government updates records | 2-4 weeks |
| 7. Certificate Issuance | Receive Hak Pakai certificate or relevant ownership document | 1-2 weeks |
| 8. Tax Settlement | Pay BPHTB and related fees, obtain tax clearance | 1 week |
| 9. Property Possession | Take possession, update utilities, arrange insurance | 1 week |
What documents do you need, and which are mandatory versus optional?
Document requirements for foreign property buyers in Medan are extensive and vary depending on the ownership structure chosen.
Mandatory documents include a valid passport, residency permit (KITAS/KITAP for certain ownership types), Sales Purchase Agreement, proof of payment transfers, land/building certificates, Indonesian tax number (NPWP), and notarized ownership transfer deed.
Optional or situational documents include corporate formation papers for PT PMA purchases, investment permits, marriage certificates for joint purchases, and power of attorney documents for remote transactions.
All foreign documents must be translated into Bahasa Indonesia by certified translators and legalized through the Indonesian consulate in your home country before use in transactions.
The Indonesian tax number (NPWP) is increasingly required for all property transactions and should be obtained early in the process to avoid delays.
Do you need to be physically present in Indonesia, or can you handle the process from abroad?
Physical presence in Indonesia is not strictly mandatory for all steps of the property buying process in Medan.
Most transactions can be handled remotely by granting power of attorney to a trusted local representative, typically a lawyer or legal firm experienced in foreign property transactions.
Key signing ceremonies and notary meetings can sometimes be conducted remotely or through authorized representatives, but identity verification and certain title transfer steps may still require presence.
Banking requirements for large transfers and certain government registrations often necessitate at least one visit to Indonesia during the transaction process.
Remote handling is most feasible for apartment purchases and leasehold arrangements, while PT PMA formations typically require more hands-on involvement and may benefit from physical presence during setup.
What are the classic mistakes and pitfalls foreigners usually make when buying in Medan?
The most common and costly mistake is failing to conduct thorough title verification, which can result in disputes or complete loss of property rights.
- Inadequate Title Research: Not verifying land status, encumbrances, or ownership history through proper legal channels
- Risky Nominee Arrangements: Using Indonesian citizens as nominees without proper legal protection, violating Indonesian law
- Skipping Notary Requirements: Attempting to bypass mandatory notarization, making transactions legally invalid
- Underestimating Hidden Costs: Failing to budget for all taxes, fees, and ongoing compliance costs (6-12% of property value)
- Inadequate Market Research: Not understanding local neighborhood dynamics, infrastructure development, or resale potential
- Poor Legal Representation: Using inexperienced lawyers unfamiliar with foreign property transactions
- Currency and Transfer Issues: Not planning for exchange rate fluctuations and banking transfer requirements
Are real estate agents in Medan generally reliable, and how do you choose a good one?
Real estate agent reliability in Medan varies significantly, as the industry lacks universal regulation and professional standards compared to Western markets.
Choose agents with proven track records handling foreign buyers, proper licensing from Indonesian real estate associations, and established offices rather than independent operators.
Reliable agents should provide clear commission structures (typically 2-3% of property value), coordinate legal and translation services, and demonstrate knowledge of foreign ownership regulations and documentation requirements.
Red flags include agents pushing nominee arrangements, requesting unusual upfront payments, lacking proper office facilities, or being unwilling to provide client references from previous foreign transactions.
It's something we develop in our Indonesia property pack.
Will the legal system protect you if something goes wrong with the transaction?
Indonesia's legal system provides structured protection through notarial requirements and government registry systems, but enforcement and dispute resolution can be slow and unpredictable.
All property transactions must be notarized and registered with government authorities, creating official legal records that provide some protection against fraud or disputes.
Foreign buyers receive strongest legal protection by strictly following regulated transaction procedures, using experienced local legal counsel, and ensuring all agreements are properly documented and notarized.
Dispute resolution through Indonesian courts can be lengthy and expensive, making prevention through thorough due diligence and proper legal structure selection crucial for foreign buyers.
Legal recourse is available but limited for foreigners who violate ownership laws through improper nominee arrangements or attempt to circumvent regulations.
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What precautions should you take before signing any deal?
Comprehensive due diligence is essential before committing to any property transaction in Medan, given the complex legal landscape and potential for disputes.
Require complete title and zoning verification through qualified notaries and legal experts, including checks for encumbrances, liens, and ownership history going back at least 10 years.
Verify seller identity through official documents and confirm their legal authority to sell the property, especially important for corporate-owned or inherited properties.
Ensure all agreements are bilingual (Indonesian and English), properly notarized, and clearly specify ownership structure, renewal terms, and exit clauses.
Conduct thorough property inspections for structural integrity, permit compliance, and utility connections before finalizing any agreements.
How long does the whole process usually take from start to finish?
The complete property buying process in Medan typically requires 1-3 months when all documentation is properly prepared and no legal complications arise.
Simple apartment purchases with clear titles and experienced agents can be completed in 4-6 weeks, while complex transactions involving PT PMA formation or problematic titles may extend to 4-6 months.
Delays commonly occur during title verification (2-4 weeks), notary processing (1-2 weeks), and government registration (2-3 weeks), particularly during Indonesian holiday periods or when dealing with older properties.
Foreign buyers should plan for potential extensions due to translation requirements, document legalization processes, and coordination with overseas banking for large transfers.
It's something we develop in our Indonesia property pack.
What taxes, fees, and costs should you expect, with a clear breakdown?
Total transaction costs for foreign property buyers in Medan typically range from 6-12% of the property purchase price, significantly higher than most Western markets.
| Cost Type | Percentage/Amount | Who Pays |
|---|---|---|
| Land and Building Rights Transfer Tax (BPHTB) | 2-5% of property value | Buyer |
| Notary Fees | 1-2% of transaction value | Buyer |
| Real Estate Agent Commission | 2-3% (negotiable) | Usually seller, sometimes split |
| Legal/Consulting Services | $1,000-5,000 USD fixed fee | Buyer |
| Document Translation & Legalization | $200-800 USD | Buyer |
| Stamp Duty & Administrative | 0.5-1% of property value | Buyer |
| PT PMA Formation (if applicable) | $2,000-5,000 USD | Buyer |
Is it possible to pay in cash, and if so, how does that work?
Cash payments are legally permitted for property purchases in Medan, but must be conducted through Indonesia's formal banking system for compliance and traceability.
Large cash transactions require bank transfers rather than physical currency exchange, with all payments documented through official banking channels to satisfy anti-money laundering regulations.
Foreign buyers typically wire funds from overseas banks to Indonesian accounts, with currency conversion handled by Indonesian banks at prevailing exchange rates.
Cash payments above certain thresholds (typically $10,000 USD equivalent) may trigger additional scrutiny from Indonesian financial authorities and require source-of-funds documentation.
Payment can be structured in installments (deposit, progress payments, final payment) or as lump sum transfers, depending on agreement terms and seller preferences.
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Can foreigners actually get a mortgage, what rates and conditions apply, and what tips can help secure one?
Mortgage availability for foreigners in Medan is extremely limited, with most Indonesian banks reluctant to lend to non-residents due to regulatory restrictions and risk management policies.
The few banks that offer foreign mortgages typically require substantial collateral (150-200% of loan value), Indonesian residency permits, local employment or business presence, and minimum deposit requirements of 40-60%.
Interest rates for foreign borrowers range from 8-15% annually as of September 2025, significantly higher than rates offered to Indonesian citizens (6-10%) due to perceived higher risk.
Alternative financing options include private lending arrangements through local business entities, seller financing agreements, or international mortgages secured against assets in your home country.
Most foreign property purchases in Medan are conducted with cash payments due to these financing limitations.
Does buying property open a path to residency or citizenship in Indonesia?
Property purchase alone does not automatically grant residency or citizenship rights in Indonesia, unlike some other Southeast Asian countries.
However, certain property investments can support visa applications, particularly the two-year Investor KITAS through PT PMA structures with minimum investment thresholds of $350,000 USD for manufacturing or $2.5 million USD for services.
The recently introduced "Second Home ITAS" visa program allows foreigners to obtain 5-10 year visas with property investment minimums of $130,000-350,000 USD, depending on location and property type.
These visa programs require ongoing compliance with investment maintenance, tax obligations, and periodic renewals, but do not lead to permanent residency or citizenship pathways.
Indonesian citizenship through naturalization requires separate qualifications including language proficiency, cultural integration, and typically 5+ years of continuous residency through other visa categories.
Where do foreigners most often buy property in Medan, and why?
Foreign property buyers in Medan concentrate in specific neighborhoods that offer international amenities, infrastructure quality, and established expat communities.
- Setiabudi: Most popular area featuring established expat community, international schools, modern shopping centers, and high-quality infrastructure
- Polonia: Quiet residential area favored by families, offering good schools, parks, and stable property values with lower crime rates
- Medan Baru: Rapidly developing district with ongoing infrastructure improvements and strong capital appreciation potential
- Kampung Baru: Affordable entry point with strong rental yields (6-8% annually) attracting investor-focused buyers
- Cemara Asri & Bumi Asri: Gated communities providing security, international school access, and Western-style amenities
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Buying property in Medan as a foreigner requires careful navigation of Indonesian ownership laws, thorough due diligence, and expert local guidance to avoid costly mistakes.
While the process is more complex than Western markets, successful foreign property ownership is achievable through proper legal structures, experienced professionals, and realistic expectations about timelines and costs.
Sources
- BambooRoutes - Medan Property Guide
- Own Property Abroad - Foreigner Property Purchase Medan
- Wise - Buy Property in Indonesia
- DSG Pay - Property Buying Guide Indonesia
- Global Property Guide - Indonesia
- Own Property Abroad - Indonesian Cities Investment
- Indonesia Real Estate - Buying Process Guide
- InvestAsian - Indonesia Property Guide