Lombok is becoming a prime destination for land investment due to its natural beauty, growing tourism, and government-backed projects like the Mandalika SEZ (Special Economic Zone). Whether you’re looking to build your dream villa, start a resort, or invest in real estate, understanding the process of buying land in Lombok is crucial.
This guide covers everything you need to know, from legalities and costs to navigating land ownership laws for foreigners. Let’s dive in.
Why Buy Land in Lombok?
Lombok is not just Bali’s quieter neighbor; it’s a destination in its own right with massive growth potential. Here’s why Lombok stands out:
- Affordable Land Prices: Compared to Bali, land in Lombok is significantly cheaper, offering better value for investors.
- Growing Tourism Industry: Lombok is experiencing an increase in tourist arrivals, particularly after the opening of international flights to Lombok International Airport.
- Government Initiatives: The Mandalika SEZ is attracting global investors with promises of infrastructure, tax incentives, and world-class resorts.
- Natural Beauty: Lombok boasts unspoiled beaches, lush hills, and pristine waters, making it perfect for luxury resorts and villas.
Can Foreigners Buy Land in Lombok?
The short answer is no—foreigners cannot directly own land in Indonesia, including Lombok. However, there are legal ways to acquire property. Let’s explore the options.
1. Hak Pakai (Right to Use)
This is a lease agreement where foreigners can secure land for up to 30 years, with options to renew for another 20-30 years. This structure is ideal for personal use, such as building a villa.
2. Setting Up an Indonesian Company (PT PMA)
One of the most secure ways for foreigners to invest in land in Lombok is by setting up a PT PMA (Perseroan Terbatas Penanaman Modal Asing), which is an Indonesian foreign investment company. Here’s how it works and the steps involved:
Setting Up a PT PMA: A Secure Way to Own Land in Lombok
A PT PMA is a legal entity that allows foreigners to conduct business and own assets, including land, in Indonesia. The process is detailed but offers long-term security and flexibility.
Why Choose a PT PMA?
- A PT PMA can own land under the “Hak Guna Bangunan” (Right to Build) title, which is valid for up to 80 years (30 years initially, with extensions).
- It allows you to legally run businesses in Indonesia, making it ideal for resorts, hotels, or property development.
- You maintain direct control over the company and its assets.
Steps to Set Up a PT PMA in Lombok
- Define Your Business Scope
Decide on the purpose of your company. Common sectors include hospitality, property development, and tourism-related businesses. Ensure your business complies with Indonesia’s Negative Investment List, which outlines sectors open to foreign investment. - Prepare Necessary Documentation
- A copy of your passport and those of other shareholders.
- A business plan detailing the company’s goals and operations.
- Proof of investment funds (the minimum capital requirement is USD 50,000 for most sectors).
- Engage a Legal Consultant
Partner with a local legal or notary firm experienced in setting up PT PMAs. They will help you navigate bureaucratic processes and ensure compliance. - Register Your Company
Submit the required documents to the Investment Coordinating Board (BKPM) in Indonesia. Once approved, you’ll receive the company’s establishment deed and legal entity status. - Obtain Licenses
- NIB (Business Identification Number): This is essential for company registration.
- Location Permit: If your business involves land, you’ll need this permit to confirm zoning compliance.
- Environmental Permits: If applicable, especially for large developments.
- Purchase Land Under the PT PMA
Once the company is established, it can acquire land under the Hak Guna Bangunan title. Ensure you work with a trusted real estate agent and verify the land’s legal status with a notary. - Tax and Compliance
A PT PMA must comply with Indonesian tax regulations, including filing annual reports and paying corporate taxes.
Other Ways to Acquire Land in Lombok
If setting up a PT PMA isn’t suitable for your needs, consider these alternatives:
Nominee Agreement
This involves partnering with an Indonesian citizen to own the land on your behalf. While common, it comes with significant legal risks, as the land remains legally under the nominee’s name.
Long-Term Leases
Foreigners can lease land for up to 80 years under the Hak Pakai structure. This option is simpler and requires less upfront investment but may not be suitable for large-scale projects.
Steps to Buy Land in Lombok
Whether you’re purchasing through a PT PMA or leasing land, the buying process involves several critical steps:
1. Define Your Purpose
Clarify whether you’re buying for personal use, business, or investment. This will determine the type of land and legal structure needed.
2. Work with a Reputable Agent
Choose trusted property agents, such as:
3. Verify Land Titles
Ensure the land has a SHM (Sertifikat Hak Milik), Indonesia’s highest ownership title. Conduct due diligence with the National Land Agency (BPN).
4. Check Zoning and Permits
Verify that the land is zoned for your intended use, whether residential, commercial, or agricultural.
5. Legalize the Transaction
Hire a licensed notary (PPAT) to handle the sale and purchase agreement, ensuring all legal requirements are met.
Costs Involved in Buying Land in Lombok
Buying land involves more than just the purchase price. Here’s a breakdown of associated costs:
| Expense | Approximate Cost |
|---|---|
| Land price | $20-$200 per sqm, depending on location |
| Notary fees | 1-2% of transaction value |
| Buyer’s tax (BPHTB) | 5% of land value |
| Seller’s tax | 2.5% of land value |
| Due diligence and survey | $500-$1,000 |
| Agent fees | 2-5% of the land price |
Common Mistakes to Avoid When Buying Land in Lombok
Investing in Lombok’s real estate market is exciting, but there are potential pitfalls. Avoiding these common mistakes can save you time, money, and frustration.
1. Skipping Due Diligence
One of the most critical steps in buying land is verifying its legal status. Failing to check the land certificate can result in disputes or financial loss. Always:
- Verify the SHM (Sertifikat Hak Milik) title with the National Land Agency (BPN).
- Confirm zoning compliance, especially if you’re planning commercial development.
- Check for encumbrances, such as debts or liens, on the property.
2. Trusting Unverified Agents
While many property agents in Lombok are reputable, some operate without proper licenses. Working with unverified agents increases the risk of fraud or misrepresentation. Always choose agents with a strong track record and positive reviews, such as:
- Reef Property Lombok
- South Lombok Land Sales
3. Underestimating Costs
Many buyers focus only on the purchase price and overlook additional costs like taxes, legal fees, and notary charges. Unexpected expenses can significantly inflate your budget. Create a detailed cost estimate, including:
- Notary fees (1-2% of land value).
- Buyer’s tax (5% of land value).
- Survey and due diligence costs ($500–$1,000).
4. Ignoring Local Laws
Foreigners who attempt to bypass Indonesian land ownership laws risk legal trouble. For example, nominee agreements, where the land is owned by an Indonesian citizen on your behalf, can lead to disputes or loss of property.
5. Failing to Plan for Infrastructure
In remote areas of Lombok, basic infrastructure like roads, electricity, and water supply may be limited. Ensure the land has access to utilities or account for the cost of development.
6. Not Consulting a Legal Expert
The Indonesian legal system can be complex, especially for foreign buyers. Without a legal consultant, you may miss critical steps, like ensuring the land is free of disputes or obtaining proper permits. Hiring a legal expert or notary experienced in real estate transactions is essential.
Top Locations to Invest in Lombok
1. Kuta Lombok
Known for its vibrant tourism scene, Kuta is perfect for villas and resorts.
2. Selong Belanak
This area offers pristine beaches and is ideal for luxury developments.
3. Senggigi
An established tourist hub with strong infrastructure and scenic views.
4. Mandalika SEZ
A government-backed project with enormous investment potential.
FAQs About Buying Land in Lombok
1. Can I own land in Lombok as a foreigner?
Direct ownership isn’t possible, but you can lease land or acquire it through a PT PMA.
2. What is the safest way for foreigners to buy land?
Setting up a PT PMA is the most secure option, offering full legal control.
3. Are there risks with nominee agreements?
Yes, as the land is legally owned by the nominee, disputes or legal challenges can arise.
4. How long does it take to set up a PT PMA?
The process typically takes 6-8 weeks, depending on approvals.
5. What are the tax implications for landowners?
Buyers pay a 5% tax on the land value, while sellers pay 2.5%.
6. Do I need to pay taxes on leased land?
Yes, if you lease land under the Hak Pakai structure, you may still be liable for annual land taxes (PBB).
7. Can I offset taxes through my PT PMA?
Yes, expenses related to land development, maintenance, and operations can often be deducted from your taxable income under a PT PMA.
8. What happens if I don’t comply with tax laws?
Non-compliance can lead to fines, penalties, or legal action. Always consult a tax professional to ensure you meet your obligations.
Conclusion
Buying land in Lombok is a rewarding investment if you navigate the process carefully. Setting up a PT PMA offers the most secure route for foreign investors, while long-term leases are a simpler alternative. Regardless of your choice, always work with reputable agents and legal professionals to ensure a smooth transaction.
Ready to invest in Lombok’s booming real estate market? Start by exploring listings on trusted platforms like Reef Property Lombok and take your first step towards owning a piece of paradise!
