New foreign ownership regulations could allow buyers from other countries to take out mortgages on Indonesian property in a potential "game-changer" for the country's real estate market, according to Seven Stones Indonesia.

The Straits Times reported last week that Indonesia’s Minister of Agrarian and Spatial Planning, Sofyan Djalil, told Indonesian property tycoons during a July 23 webinar that new rules providing foreigners similar ownership rights to nationals were set to be ratified into law by the end of August.

According to the Times, the plan is part of a nationwide strategy to help Southeast Asia’s biggest economy recover from the economic effects of the COVID-19 pandemic.

Current regulations only allow foreigners who are resident in Indonesia to own property under a Hak Pakai (right to use) title.

This can easily be converted back to Hak Milik (freehold) should an Indonesian national purchase.

Terje Nilsen, CEO of Seven Stones Indonesia, said while the agency doesn’t believe new regulations would allow foreigners to own Hak Milik (as an Indonesian would) as it would undermine the Indonesian Constitution and Agrarian Law, they could be allowed to purchase using a Hak Guna Bangunan (right to build) title under updated regulations, meaning they would be able to take out a mortgage to do so.

"The potential of a foreigner being allowed to hold an HGB title inline with Indonesian citizens is a game-changer," he said.

"If it also allows for foreigners to mortgage in Indonesia it will open up a much larger market than in the past when it was all cash driven.

"This will encourage foreigners to chose Indonesia as a first or second home option.

"Especially now when more and more people work from home.

"And they can call Bali and other places in Indonesia home.”

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