SHM, HGB, PBG, PKKPR: how to read an Indonesian land title before you buy

Why the paperwork is the product

In Australia the title system does most of the work for you. In Indonesia, especially on the coast of Lombok, much of the land has been held by families for generations without modern certificates. The buyer who understands the documents is protected. The buyer who trusts the brochure is not.

SHM: Hak Milik, or freehold

SHM (Sertifikat Hak Milik) is Indonesian freehold. Only Indonesian citizens can hold it. If you are a foreigner and someone tells you the villa is "freehold", they either mean the underlying land is SHM in an Indonesian's name, or they are not telling the truth. Either way it is not yours.

HGB: Hak Guna Bangunan, the building right

HGB is a right to build on and use land for a fixed term: 30 years initially, extendable by 20 and then renewable for a further 30. An Indonesian foreign-investment company, a PT PMA, can hold HGB. This is the structure through which foreigners own villas in their own company's name, and it is how Kinnara Capital sells individually titled villas at Saraya. Check the certificate, the term remaining and the extension history.

PKKPR: the zoning confirmation

PKKPR confirms what the land may be used for. A beach block zoned for agriculture cannot legally carry a resort villa. Ask for it before you ask about the finishes.

PBG: the building permit

PBG replaced the older IMB as Indonesia's building approval. It is the document that makes a building legal. A completed villa without a PBG is a liability, not a home.

How a careful developer does it

Kinnara Capital's approach in Buwun Mas is to buy land only after ownership has been confirmed by the courts and the BPN land office, and to hold powers of attorney so that certificates pass directly into the company's name once issued. It is slow. It is also the only way to be sure.

What to do with this

Take every document to an independent Indonesian notary and lawyer that you choose and pay for. Have them check the certificate at the BPN office in person. Then, and only then, talk about price.