Indonesian Government May Unlock Real Estate For Expats

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12-01-2010, 03:46 PM
kingwilly

Indonesian Government May Unlock Real Estate For Expats

Indonesian Government May Unlock Real Estate For Expats

Expatriates in Indonesia may soon be able to make the jump from being renters to owners, as the State Ministry of Public Housing announced on Thursday that it was planning changes to the law that would allow foreigners to own homes in cities and special economic zones.

Housing Minister Suharso Monoarfa said expats would be able to buy houses in special economic zones, such as in Batam and Kalimantan, where overseas companies receive incentives to run factories. Foreigners living in cities would be limited to owning apartments.

“I am not trying to indulge [expats],” he insisted at a seminar in Jakarta. Under the current law on foreign property ownership, expats are only allowed to hold fixed-term housing leases of up to 25 years, although they are permitted one extension for another 25 years.

The proposed change in government policy comes after numerous calls from property developers to ease restrictions on foreign property ownership, which has led to expats exploiting a wide variety of legal loopholes to indirectly own houses and apartments.

For example, an expat can give a local resident money to buy a home, with the parties signing an agreement beforehand that the resident would receive a loan from the foreigner worth the same amount as the home.

While the property is in the local’s name, it is signed over to the expat as collateral for the loan, making the foreigner the de facto owner.

“We have been asking the government to extend foreigners the right to hold leases to apartments and houses for a minimum of 75 years. But if it they be allowed to purchase property outright, that will be definitely good,” Teguh Satria, chairman of the Indonesian Real Estate Developers Association (REI), said on Thursday.

He added that relaxing foreign ownership regulations would make the Indonesian property market more competitive, compared to neighboring Malaysia and Thailand.

“Malaysia has already changed its property regulations. Previously, foreigners were only permitted to own two properties but now they are able to purchase more. They are even allowed to buy 49 percent of the apartment units in one building,” Teguh added.

http://thejakartaglobe.com/business/...-expats/351454
12-01-2010, 05:21 PM
BugginOut

Quote:

Originally Posted by kingwilly

For example, an expat can give a local resident money to buy a home, with the parties signing an agreement beforehand that the resident would receive a loan from the foreigner worth the same amount as the home. While the property is in the local’s name, it is signed over to the expat as collateral for the loan, making the foreigner the de facto owner.

That sounds like a good idea here. "I don't own it. It's collateral for a loan."

Or is there an occupational ban on foreigners loaning money here too?
12-01-2010, 07:31 PM
crazy dog

But will Thais ever do it????
12-01-2010, 08:54 PM
dirtydog

^No point really, they would just keep amending and changing the rules every few months anyway :(
12-01-2010, 09:23 PM
TizMe

Quote:

Originally Posted by BugginOut

That sounds like a good idea here. "I don't own it. It's collateral for a loan."

The only problem with that... in 10 or 20 years when the value of the property is now much more than the value of the loan. The "owner" sells the place from under you, repays you your pittance and pockets the balance.
12-01-2010, 09:27 PM
Tom Sawyer

^^
It's better to rent in Thailand for that reason - and it's also cheaper too - as the rent-to-value ratio is much lower here than other countries. Also let's you walk away in a hurry should you need to do so. Could you imagine sinking 12 or 20 million baht into a condo here, then the authorities changing the rules so you can't actually live in it cause you don't qualify to enter the country? It's aleady happening - though they eased off a bit recently. But the intention to get ever tougher is clearly there and has been for a decade at least.
13-01-2010, 04:32 AM
kingwilly

Currently, many expats here can only buy properties if it's entirely in their wife or girlfriends name. And just to make sure of no little loopholes that johnny foreigner might exploit, an indonesian national will actually lose their right to buy property unless they have signed a special prenup prior to marrying explicitly stating that any and all properties bought throughout the union belong solely to the indonesian and in the event of a divorce cannot be part of the division of claims. Neither does Thailand have the sole claim to changing visa status rules for nasty expats.
13-01-2010, 08:58 PM
Tom Sawyer

^
you're actually better off KW than us in Thailand. We can sign all the prenups we like - but the land will always belong to the Thai spouse. We (all foreigners married to Thais) must sign at the Land Office (registering the property) saying we acknowledge the money to buy the place was "SOLELY" that of the Thai National. A divorce would simply be met with the agreement that said it was the money of the Thai - not yours - to buy the place, so you have no claim.

Sweet, eh? We can buy condos, if we import 100% of the cash from abroad (there's a hocus-pocus way to do it via Thai bansk - but it's frought with hazards).

And at the end of the day, why bother if "they" (country -- and maybe some spouses too) don't really want us in the first place - just the cash?

Good to see Dirty Dog hasn't banned members for saying these things - not enough advertising yet from the Thai Visa wankers I guess..
:mid:
13-01-2010, 10:01 PM
Beadle

Why risk buying anything in the Third-World?
13-01-2010, 10:28 PM
wefearourdespot

Quote:

Originally Posted by Beadle

Why risk buying anything in the Third-World?

Because it makes you save a lot of money in the long run.
For example buying my condo in View Talay for 700,000 baht back in 2003 I saved 7,000 baht of monthly rent for 6 years = 504,000 baht , plus the condo itself revalued about 300,000 baht
13-01-2010, 10:32 PM
wefearourdespot

Quote:

Originally Posted by kingwilly

“Malaysia has already changed its property regulations. Previously, foreigners were only permitted to own two properties but now they are able to purchase more. They are even allowed to buy 49 percent of the apartment units in one building,” Teguh added.

Great.
Now they just have to arrange a local Beach Road with 50 ringgit hoes and I'm ready to move :mid:
13-01-2010, 10:37 PM
wefearourdespot

Quote:

Originally Posted by kingwilly

Indonesian Government May Unlock Real Estate For Expats

Expatriates in Indonesia may soon be able to make the jump from being renters to owners, as the State Ministry of Public Housing announced on Thursday that it was planning changes to the law that would allow foreigners to own homes in cities and special economic zones.

Housing Minister Suharso Monoarfa said expats would be able to buy houses in special economic zones, such as in Batam and Kalimantan, where overseas companies receive incentives to run factories. Foreigners living in cities would be limited to owning apartments.

Excellent.
If they change visa regulations so that I could actually live in the condo they so generously allow me to overpay , I might even consider it :mid:
13-01-2010, 10:39 PM
nikster

Well in Thailand foreigners can't own land. The marriage regulations are simply there to ensure there's not a backhanded way to still own land as a foreigner. Same for occasional crackdowns on schemes like setting up a company to buy land. No need to get upset there - if you are looking for ways around this law, you are looking for trouble.

Just stick to buying or selling things you can actually legally own here, which is pretty much anything else. Vehicles. Units in a condo. Gold?!
13-01-2010, 10:41 PM
nikster

Quote:

Originally Posted by TizMe

Quote:

Originally Posted by BugginOut

That sounds like a good idea here. "I don't own it. It's collateral for a loan."

The only problem with that... in 10 or 20 years when the value of the property is now much more than the value of the loan. The "owner" sells the place from under you, repays you your pittance and pockets the balance.

Yeah I thought of that too - however the owner would need to come up with the loan money prior to selling the place, which is a bit of a speed bump. As in they can't sell the land as long as it's still a collateral for the loan.

Maybe a way around this would be to make the loan have crazy interest rates so that it will never be repaid. 100% interest per year or something like that.

I wonder if that scheme would work in Thailand - probably, until the next crackdown ;)
13-01-2010, 10:44 PM
kingwilly

Quote:

Originally Posted by wefearourdespot

Quote:

Originally Posted by Beadle

Why risk buying anything in the Third-World?

Because it makes you save a lot of money in the long run.
For example buying my condo in View Talay for 700,000 baht back in 2003 I saved 7,000 baht of monthly rent for 6 years = 504,000 baht , plus the condo itself revalued about 300,000 baht

So your capital investment dropped 60% in value, not including inflation nor Interest on that money in stocks or bank which should have averaged 10% per annum, or about another 490,000 baht

Great investment :rolleyes: but I bet owning it impressed the $3 cum pipes...:rolleyes:
14-01-2010, 10:31 AM
crazy dog

Quote:

Originally Posted by Tom Sawyer

^^
It's better to rent in Thailand for that reason - and it's also cheaper too - as the rent-to-value ratio is much lower here than other countries. Also let's you walk away in a hurry should you need to do so. Could you imagine sinking 12 or 20 million baht into a condo here, then the authorities changing the rules so you can't actually live in it cause you don't qualify to enter the country? It's aleady happening - though they eased off a bit recently. But the intention to get ever tougher is clearly there and has been for a decade at least.

Ha Ha good post but I wish I could convince the Mrs of this who often complains about renting as a waste of money when we could buy, that's I could buy of course. I might build on her land in the future but don't want to buy. Did get dragged off to a new build the other week that were only 1.39 mil of course when you get there the only ones left were 1.5 mil and although the show homes looked great the ones half built did not look so good. Under sales pressure to sign up I asked for the plans, you know proper drawings with the room an plot dimensions on-they handed me a brochure with artists impression of complete house on it, no thanks.
14-01-2010, 11:16 AM
wefearourdespot

Quote:

Originally Posted by kingwilly

Quote:

Originally Posted by wefearourdespot

Quote:

Originally Posted by Beadle

Why risk buying anything in the Third-World?

Because it makes you save a lot of money in the long run.
For example buying my condo in View Talay for 700,000 baht back in 2003 I saved 7,000 baht of monthly rent for 6 years = 504,000 baht , plus the condo itself revalued about 300,000 baht

So your capital investment dropped 60% in value, not including inflation nor Interest on that money in stocks or bank which should have averaged 10% per annum, or about another 490,000 baht

Great investment :rolleyes: but I bet owning it impressed the $3 cum pipes...:rolleyes:

For "revalued" I meant what it gained , not the new value ... it's worth at least 1,000,000 now, with a 300,000 baht increase.
Indeed a complete evaluation of the investment should consider figurative interests , but a 10% rate is completely unrealistic , stock market improved nothing in these 6 years (it was 800 at 2004 start, it's 750 now) and gov bonds yield after 15% tax was under 4%.
So 4% on 700,000 x 6 years = 168,000 baht in lost interest.
504,000 baht in saved rent + 300,000 baht value increase - 168,000 baht in lost interest = 636,000 baht net gain compared to rent.
So now if you can just point me to where I can find those 3$ cum pipes ... :mid: