Freehold (SHM) — and why most foreigners don't hold it
Hak Milik (SHM) is Indonesia's freehold title, reserved for Indonesian citizens. It's the title most Balinese land is held under, but a foreign individual cannot hold it directly — hence leasehold's popularity for villas marketed to foreign buyers.
What a leasehold actually is
A leasehold (commonly called hak sewa in everyday use, though the legal basis is a registered lease agreement rather than a separate land right like HGB) gives you the right to use the land and building for a fixed term — commonly 25–30 years, often with an option to extend for a further term negotiated up front. You are not on the certificate as the land owner; the Indonesian landowner remains on title, and your rights sit in the lease agreement itself.
What to check before signing a lease
- Is the lease registered with the local land office, or only a private agreement between you and the owner? A registered lease is far safer.
- Extension terms — is the extension price and process fixed now, or left to be renegotiated later at the owner's discretion?
- Transferability — can you sell or sublease the remaining term to someone else, and does that need the landowner's consent?
- What happens to the building at the end of the term — does it revert to the landowner, get removed, or get compensated?
Freehold-adjacent alternatives
Individuals with a valid KITAS/KITAP can use Hak Pakai on a qualifying house or apartment instead of a lease — see our KITAS and property guide. Investors buying for commercial use (a villa operated as a business, for instance) sometimes use a PT PMA holding HGB instead — see the PT PMA guide.
General information, not legal advice. Lease terms are negotiated individually — always have your own notary or lawyer review the specific agreement before you sign or pay anything.