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hen buying property in Indonesia, you’ll encounter various land certificates, notably Freehold Title (Sertifikat Hak Milik – SHM) and Right to Build (Hak Guna Bangunan – HGB). Each has its own advantages and disadvantages depending on your needs.
What is Freehold Title (SHM)?
Freehold Title (SHM) is the strongest property ownership form in Indonesia, granting permanent rights without time limits for owners to use or sell the land.
Advantages of SHM
Disadvantages of SHM
What is Right to Build (HGB)?
Right to Build (HGB) allows the holder to use the land to construct buildings for a specified period, usually up to 30 years and extendable.
Advantages of HGB
Disadvantages of HGB
Main Differences Between SHM and HGB
Freehold Title (SHM) is the highest and most complete form of land ownership in Indonesia. It is permanent and can only be held by Indonesian citizens. Due to its absolute nature, SHM typically has a higher investment value. It is also easily transferable through inheritance, without requiring any renewal or conversion process.
On the other hand, Right to Build (HGB) is a land title that grants the holder the right to construct and own a building on land for a limited period, usually between 30 to 80 years. HGB can be held by Indonesian citizens and legal entities, including foreign investment companies (PT PMA). Its investment value is generally lower than SHM due to its time-limited nature. When it comes to inheritance, HGB requires renewal or conversion before it can be passed on to heirs.
Which is Better?
Choose SHM if you
Choose HGB if you/fusion_title]
Tips for Choosing the Right Certificate
Conclusion
Both SHM and HGB have distinct advantages. Choosing between them depends on your legal status, investment goals, and long-term plans. Consult a legal expert to ensure the best decision.
