BUYER’S GUIDE – STEP-BY-STEP
All you need to know before investing in Indonesia

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FOREIGN BUYER GUIDE

Key Issues When Buying Real Estate in Lombok

Buying property in Lombok can be an exciting opportunity, but for foreign buyers, understanding the legal structure, zoning, costs and due diligence process is essential.

This guide addresses the key questions foreign buyers should consider before purchasing real estate in Lombok.

LEGAL & OWNERSHIP CONCERNS

Is a leasehold safe, and what happens when it expires?

A properly structured leasehold is a notarised, legally enforceable contract, not a handshake deal.

Standard terms run 25 to 30 years, and with a well-drafted extension clause specifying the duration, notice period and pricing, total terms of 50 to 80 years are achievable.

The real risk sits entirely in that clause. Without it written explicitly into the agreement, you have no automatic right to extend, and the property simply reverts to the landowner.

Insist on a properly negotiated extension clause before you sign anything.

Are nominee agreements legal, and what’s the risk?

No. Never use this structure, regardless of how it is presented to you.

Can a foreigner actually own property here, or is it always through someone else?

You own it — not “someone else” holding it for you.

A leasehold gives you direct contractual rights in your own name.

A PT PMA is your own company, with you as shareholder, holding a registered title (HGB).

Hak Pakai, for residents, is a government title issued directly to you.

None of these require trusting a third party with your ownership.

Understand which structure suits your goal before you start looking at properties, not after.

What happens if the landowner dies or sells?

If your lease is properly notarised and ideally registered at BPN (Land Titles Office), it is binding on the landowner’s heirs or any new buyer of the underlying land.

Informal or unregistered arrangements offer no such protection and can leave you exposed the moment ownership changes hands.

This is precisely why the quality of your Notary and paperwork matters more than the charm of the seller.

ZONING: WHY IT MATTERS

Zoning is a critical issue now in Lombok.

The Government or BPN has recently been changing zoning from Residential to Agricultural (no building permissible) without informing owners.

Some buyers in Bali and Lombok have purchased land thinking it is Tourism or Residential, only to find out later that they have bought property that can’t be developed or subdivided and is now Zoned Agriculture.

This dramatically affects the value of the land.

It is critical that you:

Get the correct zoning in writing, with proof of zoning from your Notary, as part of the due diligence of the property.

What is a PT PMA, and is it worth the cost?

A PT PMA is a foreign-owned company holding an HGB title, the strongest ownership structure available to foreigners.

It has capital requirements of around IDR 2.5 billion, whilst the Total Investment Plan must still exceed IDR 10 Billion.

Your Notary can provide details.

The IDR 2.5 Billion is the actual cash or assets you must deposit into the Company Bank account.

The IDR 10 Billion is the Total Value of the project/s (excluding land and Buildings).

PMA setup costs are roughly USD 1,500 to 3,000.

It is genuinely worth it if you plan to operate a formal rental business or any business, since current regulations require it for licensed short-term rentals.

If you simply want a personal villa with no commercial ambitions, leasehold is usually the better choice.

WHAT DOES THE NOTARY DO?

Your Notary handles property transfers and formal deeds or SERTIPIKATS of title for certified land.

They organise the AKTA JUAL BELI, which is the formal sale and purchase agreement between the seller and the buyer.

They ensure the formal requirements of the parties are met and provide legal counselling.

They complete due diligence on the land to ensure the title is clean, with no issues or encumbrances.

As a matter of course, the Notary must check the zoning, typically through the OSS licensing system.

Island Properties Real Estate has several Notaries we can recommend, and strongly suggest you talk to a Notary to confirm the information above and to check out and inspect the property.

The Notary will also check that the land has no hereditary issues.

Hereditary issues include determining who legally owns the property.

If the owner has died, for instance, and has left the property to their heirs, the heirs now own the property.

The legal owner/s or heir/s must sign the legal Sale and Purchase Agreement (AKTA JUAL BELI).

MARKET & FINANCIAL CONCERNS

Are the rental yield numbers real, or just marketing?

Some are real. Many are optimistic.

Genuine gross yields currently range from roughly 6 to 14 percent, depending on area and quality.

However, developer and seller projections routinely round up and rarely account for management fees, tax and maintenance.

Ask for actual historical booking data, not projected figures, and model your own net return before believing anyone else’s number.

What does it actually cost, beyond the purchase price?

Budget an additional 8 to 12 percent on top of whatever price you agree.

This covers:

• Acquisition tax — around 5 percent

• Notary fees — roughly 0.5 to 2 percent

• Company setup costs if you are using a PT PMA

Buyers who only budget for the headline price are the ones who feel ambushed later.

Plan for the full cost from day one.

Is now a good time to buy, or will prices drop?

Nobody can time this market with certainty.

Tourism demand and genuinely limited land supply have supported values for years in Lombok, and values are typically level now.

To my knowledge, except in isolated areas, demand and values have never dropped.

How do I get money in and out of Indonesia?

Funds move through licensed banks and registered money transfer providers, with standard know-your-customer documentation required on both ends.

This is not a grey area to improvise around.

Using informal channels or unlicensed transfer agents creates real legal exposure.

Work with your bank and Notary to set up the correct transfer process before you need to move any significant sum.

For business licensing and company registration matters, the official OSS business licensing portal is the authoritative source.

PROCESS & TRUST CONCERNS

How do I know I’m not getting scammed?

Due diligence by your Notaris removes almost all of this risk.

There are three important steps:

1. Verify the land certificate directly through the official BPN National Land Agency, rather than trusting a copy from the seller.

2. Choose your own Notary, rather than accepting the seller’s.

3. Insist your deposit goes into a Notary escrow account, never directly to the seller or a nominee.

The buyers who get burned are almost always the ones who skipped one of these three steps under time pressure.

I don’t know anyone in Lombok. Who do I actually trust?

Trust the process and the paper trail, not a single personality.

An independent Notary, ideally an independent lawyer for anything substantial, and an agency with a genuinely verifiable track record together create checks on each other.

No single relationship, however warm it feels, should be the only thing standing between you and your money.

I visited once. Is that enough to make this decision?

A visit is useful, but it should not replace proper due diligence.

Before committing to a purchase, the land title, ownership, zoning, documentation and legal structure should all be properly checked.

Do not allow the pressure to secure a property to replace the proper legal and verification process.

FREQUENTLY ASKED QUESTIONS

What is the biggest risk foreign buyers face in Lombok?

The biggest risk is using an illegal nominee arrangement to hold property, or skipping due diligence on the land certificate and zoning before signing anything.

Both are entirely avoidable with the correct legal structure and proper verification at the outset.

How much should I budget beyond the purchase price when buying in Lombok?

Budget an additional 8 to 12% above the purchase price for acquisition tax, Notary fees and PT PMA setup costs if applicable.

This is the most common area where buyers underestimate their true total cost.

Is leasehold or PT PMA the right structure for a first-time foreign buyer in Lombok?

Leasehold suits buyers who want a personal villa without commercial ambitions and requires no company setup.

PT PMA suits buyers planning to operate a formal rental business, since current regulations require it for licensed short-term rentals.

KEY TAKEAWAYS FOR FOREIGN BUYERS

Almost every issue prospective buyers have is with paperwork and legal issues, not with market conditions.

Sort out the paperwork first, and the market takes care of itself.

Remember:

• Nominee agreements offer no legal protection whatsoever.

• Plan to spend at least 8–12% more than the purchase price to cover the costs for legalization, notarization and other administration costs.

• These are the costs that catch buyers most by surprise.

• Always rely on a Notary to check all facets and conduct due diligence on your property purchase.

• Verify the land title and zoning before signing anything.

IMPORTANT NOTICE

RELY ON A NOTARY TO CHECK ALL FACETS AND DUE DILIGENCE OF YOUR PROPERTY PURCHASE.

NB: The Government / BPN are continually changing these conditions, legal conditions and zonings.

YOU MUST TALK TO A NOTARIS TO LEARN, ON A MONTHLY BASIS, OF ANY CHANGES TO LAND OWNERSHIP.

DON’T RELY ON THE NOTARY TO TELL YOU OF ANY CHANGES — YOU MUST ASK YOUR NOTARY OR LAWYER REGULARLY OF ANY CHANGES.

If you follow this guide and your Notary, you will eliminate all the major issues with your real estate purchase.