Expat Guide to Leasing Property in Indonesia

Congratulations on the big move to Indonesia! 

Are you still scratching your head on finding your home away from home? This is undeniably a tedious process, especially for someone who is blindsided by a city’s ins and outs. 

Leasing property in Indonesia remains one of the most practical and widely adopted options for expats, despite the process being governed by specific legal frameworks that must be properly understood to ensure a smooth and compliant transaction. It’s a viable and adaptable pathway to both residential and commercial presence. 

While no lease framework is reserved exclusively for expat tenants, strict adherence to immigration regulations and thorough verification of property legality are paramount. When approached with careful due diligence and informed professional support, leasing in Indonesia becomes not only secure but also seamlessly rewarding.

Essential lease documentation

Execute all lease agreements in writing, duly stamped, and clearly outline key terms such as rental value and lease duration. These should include:

- Detailed property description (location, size, condition)
- Dispute resolution clauses, whether through amicable settlement or legal proceedings
- Full identification of both landlord and tenant
- Lease duration and renewal options
- Rental amount, payment method, and payment schedule
- The rights and obligations of both parties

Types of property lease agreements in Indonesia

Leasing property in Indonesia is primarily regulated under the Indonesian Civil Code (Kitab Undang-Undang Hukum Perdata), specifically Articles 1547 to 1600, which covers a lease as an agreement, whereby one party grants another the right to enjoy the use of an asset for a specified period in exchange for an agreed rental payment. 

But before jumping in, ensure to verify the legal status of the property to avoid future disputes. Property in this sense covers an array of options as listed below:

1. Residential house lease

Intended for landed houses or private villas used as personal residences. KITAS or KITAP is generally required for long-term leases; ensure all ownership documents are complete.

2. Commercial property lease

Applies to shop-houses (ruko), retail spaces, and office buildings. Business permits may be required, including approvals from relevant investment authorities.

3. Apartment or condominium lease

Covers individual apartment or strata-title units and is especially popular among expats. The process is typically straightforward, though tenants must comply with building management rules.

4. Warehouse or industrial land lease

Designed for industrial operations such as storage, logistics, or manufacturing. Business licensing and environmental compliance are mandatory.

5. Land lease

Applies to vacant land, commonly for development or agricultural purposes, and usually involves longer lease terms. Land-use permits are required, and this option is best suited for long-term investment strategies.

Requirements applicable to expat tenants 

Relocating is never easy, especially when it’s to a foreign city. Although lease types apply universally, expats  are subject to additional requirements:

1. Immigration documentation

A valid KITAS or KITAP is typically required, particularly for long-term residential or business-related leases.

2. Business licensing

Commercial properties or warehouses may require expat tenants to obtain business permits issued by relevant authorities, particularly if the property is used for operational activities.

3. Property legal due diligence

Tenants should confirm the completeness of property documentation, including land certificates, building permits (IMB), and proof of land and building tax payments (PBB), to mitigate legal risk.

Tips to navigate the leasing process

Do you have a better picture of property leasing in Indonesia? We have a few insider tips for you!

1. Engage professional support via property agents and legal advisors, as they can assist with contract drafting and due diligence.

2. Budget for additional costs, including security deposits, administrative fees, and applicable value-added tax (VAT).

3. Review contract clauses carefully, such as maintenance responsibilities, utility charges, and usage restrictions.
Select a strategic location as proximity to schools, hospitals, and transportation hubs enhances convenience and quality of life.

4. Take the next step further with purchasing property - we share how in our Expat Guide to Owning Property in Indonesia.