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Buying property in Medan as a foreigner involves navigating Indonesia's complex legal ownership structures and mandatory documentation processes.
Foreign buyers must understand the specific legal frameworks available to them, including Hak Pakai (Right to Use) and leasehold arrangements, while working with licensed notaries to ensure proper title verification and regulatory compliance throughout the entire transaction.
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Foreigners can buy property in Medan but cannot own freehold land directly, requiring legal structures like Hak Pakai or leasehold agreements with 25-30 year terms.
The purchase process involves mandatory notary oversight, title verification at the local Land Office (BPN), and payment of 5% transfer tax plus additional fees totaling IDR 2-3 million.
| Step | Key Action | Estimated Cost/Duration |
|---|---|---|
| 1. Legal Structure Selection | Choose between Hak Pakai, Leasehold, or Strata Title | Consultation: IDR 500,000-1,000,000 |
| 2. Title Verification | Check land certificate at BPN Medan | IDR 50,000 / 1-2 days |
| 3. Due Diligence | Notary verifies documents and boundaries | IDR 1,000,000-2,000,000 / 3-7 days |
| 4. Purchase Agreement | Sign preliminary agreement with down payment | 10-30% of property value |
| 5. Tax Payment | Pay 5% transfer tax (BPHTB) | 5% of property sale value |
| 6. BPN Registration | Transfer ownership at Land Office | IDR 500,000-1,000,000 / 7-14 days |
| 7. Certificate Update | Receive updated land certificate | Included in registration fees |
How do I check if foreigners are even allowed to buy property in Medan?
Foreigners are legally allowed to buy property in Medan, but with significant restrictions on direct land ownership.
As of September 2025, Indonesian law prohibits foreigners from owning freehold land (Hak Milik) directly. Instead, you must use specific legal structures such as Hak Pakai (Right to Use), leasehold agreements, or purchase apartments with strata titles.
The most straightforward way to verify your eligibility is to consult with a licensed Indonesian notary (PPAT) in Medan who can explain which ownership structures apply to your specific situation. If you hold a KITAS or KITAP (Indonesian residence permit), you have access to more ownership options including Hak Pakai titles.
Since 2023, certain property purchases can be made using just a foreign passport, subject to specific investment thresholds and land size limitations. However, these passport-only purchases still require compliance with Indonesia's foreign investment regulations.
What are the legal property ownership options available to foreigners in Indonesia?
Foreigners in Medan have five main legal pathways to acquire property, each with distinct terms and limitations.
| Ownership Type | Duration/Terms | Requirements |
|---|---|---|
| Leasehold (Hak Sewa) | 25-30 years, renewable | Any foreigner, no residency required |
| Hak Pakai (Right to Use) | 30 years, extendable | KITAS/KITAP holder or specific criteria |
| Hak Guna Bangunan (Right to Build) | Through PT PMA company | Foreign-owned company structure |
| Strata Title (Apartments) | Indefinite (subject to building) | Units in HGB-titled developments |
| Passport-Only Purchase | Varies by regulation | Meet investment and size criteria |
How do I find out if the land title of a property in Medan is valid and transferable?
Verifying land title validity requires a formal check at the local Land Office (Badan Pertanahan Nasional - BPN) in Medan.
Request the original land certificate (Sertifikat Tanah) from the seller and conduct a title search at BPN Medan with a fee of approximately IDR 50,000. This search will reveal any encumbrances, liens, disputes, or unpaid taxes associated with the property.
Engage a licensed notary (PPAT) or legal advisor to verify the certificate's authenticity and confirm the title type matches what the seller claims. The notary will check the certificate's serial numbers, official stamps, and cross-reference the property boundaries with BPN records.
Ensure the seller has paid all property taxes (Pajak Bumi dan Bangunan - PBB) and community fees up to date, as outstanding payments can block the transfer process.
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Who should I contact first, a notary or a real estate agent, to start the process?
Contact a licensed notary (PPAT) first, as they are the only officials legally authorized to handle property transactions in Indonesia.
While real estate agents can help you locate suitable properties and negotiate prices, all legal documentation and transfer processes must be overseen by a PPAT notary. Starting with a notary ensures you understand the legal framework before making any commitments.
The notary will explain which ownership structures are available to you based on your residency status and help you understand the complete cost structure including taxes and fees. They can also recommend reputable real estate agents if needed.
This approach protects you from agents who might not fully understand foreign ownership restrictions or who might misrepresent property titles to close deals quickly.
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What specific documents do I need from the seller before signing anything?
The seller must provide five essential documents before you can proceed with any legal agreements.
First, obtain the original land certificate (Sertifikat Tanah) which proves legal ownership. Second, request the seller's national ID (KTP) if they're Indonesian citizens, or complete company documentation if the seller is a PT PMA company.
Third, verify proof of payment for land and building tax (PBB) for the current year and previous years. Fourth, obtain a certificate of encumbrances or clearance statement from BPN confirming no liens or disputes exist.
Fifth, request proof that all utilities (electricity, water, gas) and community association fees are paid up to date. Missing any of these documents can delay or completely block the transaction process.
How does the due diligence process work in Medan and who usually handles it?
Due diligence in Medan is conducted by your PPAT notary or legal advisor and involves comprehensive verification of property, seller, and legal status.
The process includes physical property inspection, boundary verification using BPN maps, title authenticity checks, zoning compliance verification, and review of all seller documentation. Your notary will also confirm the seller's legal authority to sell and check for any pending legal disputes.
The notary investigates the property's history, including previous ownership transfers, to identify any red flags or irregularities. They verify that the property matches its legal description and that all taxes and fees are current.
This process typically takes 3-7 business days and costs IDR 1,000,000-2,000,000 depending on property complexity. Never skip due diligence even if the seller pressures you to close quickly.
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What taxes and fees do I need to pay as a buyer during the purchase?
Property buyers in Medan face several mandatory taxes and fees totaling approximately 7-8% of the property's sale value.
| Fee Type | Rate/Amount | Paid By |
|---|---|---|
| Transfer Tax (BPHTB) | 5% of sale value | Buyer |
| Income Tax (PPH) | 2.5% of sale value | Seller (but affects negotiations) |
| Notary and Conveyancing Fees | IDR 2-3 million | Buyer |
| Certificate Check Fee | IDR 50,000 | Buyer |
| BPN Registration Fees | IDR 500,000-1,000,000 | Buyer |
| Administrative Processing | IDR 500,000-1,000,000 | Buyer |
How is the purchase agreement drafted and what clauses should I pay special attention to?
The purchase agreement is drafted by your PPAT notary and must include specific clauses to protect your interests as a foreign buyer.
Pay special attention to the property identification section, ensuring it matches the land certificate exactly, including plot numbers, boundaries, and area measurements. The agreement must clearly state the sale price in IDR and specify payment terms and schedules.
Include conditions precedent such as successful title clearance, no encumbrances, and completion of due diligence. Add dispute resolution clauses specifying Indonesian law and local court jurisdiction. Include specific refund conditions if the sale cannot be completed due to legal or title issues.
Ensure the agreement specifies which party pays each tax and fee, and include clauses for handling defects discovered after signing. The agreement should also state the exact ownership structure you'll receive (Hak Pakai, leasehold, etc.).
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When and how is the down payment made, and is it refundable if something goes wrong?
Down payment is typically made upon signing the preliminary purchase agreement, usually ranging from 10-30% of the total property value.
The payment should ideally be held in an escrow account managed by your notary or a reputable law firm, though this practice isn't universally available in Medan. If escrow isn't available, ensure the receipt clearly states refund conditions.
Refundability depends entirely on the terms specified in your preliminary agreement. Include clauses that make the down payment refundable if title issues, encumbrances, or legal problems prevent completion of the sale through no fault of yours.
Never make down payments directly to sellers or real estate agents without proper legal documentation. The agreement should specify exact timelines for refunds and conditions under which you forfeit the down payment.
What steps are involved at the Land Office (BPN) in Medan to finalize the transaction?
The BPN registration process involves four mandatory steps that must be completed in sequence to legally transfer ownership.
First, your notary submits all transfer documents to BPN Medan, including the signed purchase agreement, original land certificate, identification documents, and proof of tax payments. Second, BPN staff verify the title authenticity and check for any outstanding issues or disputes.
Third, BPN issues a "Berita Acara Serah Terima" (Transfer Report) and updates their records to change the registered owner's name. Fourth, you pay the registration and certificate transfer fees, typically IDR 500,000-1,000,000.
The entire BPN process takes 7-14 business days if all documents are complete and correct. You'll receive the updated land certificate with your name as the new owner, completing the legal transfer.
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What common mistakes do foreign buyers make when dealing with Hak Pakai versus Hak Milik titles?
The most critical mistake foreign buyers make is believing they can legally own Hak Milik (freehold) titles directly as non-Indonesian citizens.
Many foreigners confuse Hak Pakai (Right to Use) with full ownership, not understanding that Hak Pakai titles are valid for limited periods (30 years initially) and require proper renewal procedures. Some buyers fail to verify which title type they're actually receiving, discovering later they have leasehold rather than the Hak Pakai they expected.
Another common error is proceeding without proper notary oversight, sometimes relying on informal agreements or nominee arrangements that have no legal standing. Some buyers don't understand that Hak Pakai titles can be extended but require meeting specific criteria and completing renewal procedures before expiration.
Foreign buyers also often underestimate the importance of maintaining their Indonesian residency status (KITAS/KITAP) to keep their Hak Pakai rights valid throughout the ownership period.
What are the typical scams or misunderstandings in Medan's property market that I should watch out for?
Medan's property market has several recurring scams that specifically target foreign buyers unfamiliar with Indonesian property law.
The most dangerous scam involves sellers presenting fake or duplicate land certificates that look authentic but aren't registered with BPN. Some agents promise "full ownership" under Hak Milik titles to foreigners, which is legally impossible and indicates fraudulent intent.
Watch for sellers who refuse to allow BPN verification or who pressure you to sign agreements without proper due diligence. Be suspicious of properties priced significantly below market value, as they often have hidden legal disputes or invalid titles.
Avoid agents who suggest using Indonesian nominees to hold Hak Milik titles on your behalf, as these arrangements have no legal protection and often result in total loss of investment. Some scammers forge notary stamps and signatures on documents, so always verify your notary's credentials directly with the local notary association.
Never trust sellers who claim urgent deadlines requiring immediate payment without proper documentation review.
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.
Successfully buying property in Medan requires understanding Indonesia's complex foreign ownership laws and working exclusively with licensed professionals.
The key to avoiding costly mistakes is conducting thorough due diligence, verifying all documents through BPN, and never rushing into agreements without proper legal oversight from a qualified PPAT notary.
Sources
- Investasian - Property Investment Risks Indonesia
- DSGPay - Buying Property in Indonesia for Foreigners
- Own Property Abroad - How Foreigners Can Buy Property Medan
- Indocasa Properties - Ownership
- Indonesia Incorp Asia - How to Buy Property
- Respicio - Property Title Verification Process
- BFI - Land Certificate Transfer Costs
- BambooRoutes - Indonesia Real Estate for Foreigners
-Average Property Prices in Medan