Land rights in Indonesia: SHM, HGB, HGU and Hak Pakai

Indonesian law doesn’t give everyone the same kind of ownership. It grants rights over land, and each right fixes who can hold it, for how long and for what use. Only Indonesian citizens can hold freehold. Companies, foreign-owned ones included, hold rights with a term, and a foreign individual holds a right of use.

The framework is the Basic Agrarian Law (Law 5 of 1960). The detail is in Government Regulation 18 of 2021, in force since 2 February 2021. A right to build, cultivate or use exists only once the land office registers it, and the certificate is the proof. In the table, a term’s three figures are the first grant, an extension and a renewal.

Right	Who can hold it	How long	Usual use
Freehold (Hak Milik, SHM)	Indonesian citizens and a few designated bodies	No end date	Any use the zoning allows
Right to build (HGB)	Citizens and Indonesian companies, including a PT PMA	30, 20 and 30 years on state or HPL land; 30 on freehold, renewed by deed	Houses, shops, offices, warehouses and factories
Right to cultivate (HGU)	The same as HGB	35, 25 and 35 years	Plantations, farming, fisheries and livestock
Right of use (Hak Pakai)	As HGB, plus foreigners, foreign companies with a representative office and religious and social bodies	As HGB	A foreigner’s home and specific uses
Right of management (HPL)	Public bodies, state and regional companies and the Land Bank Agency	No term set	Estates and zones that grant rights to others

Freehold (Hak Milik)

Freehold, recorded on a certificate called SHM (sertifikat hak milik), is hereditary and the strongest and fullest right the law knows. It can be sold, inherited and mortgaged, and the owner can grant a right to build or a right of use over it by a deed before a land deed official (PPAT).

Only Indonesian citizens can hold it, with a short list of bodies the government designates, such as state banks and religious and social bodies. Article 26 of the Basic Agrarian Law voids any transfer of freehold to a foreigner. The land falls to the state, and the buyer can’t reclaim the price. A foreigner who acquires freehold by inheritance or marriage has one year to give it up. The lawful routes for a foreigner are in buying property as a foreigner.

Right to build (HGB)

The right to build (Hak Guna Bangunan, HGB) lets the holder own buildings on land that isn’t theirs. Companies usually hold commercial land and developer estates on it. It can sit on state land, management-right land or someone’s freehold. On freehold, only a new deed with the owner renews it, so its future depends on that owner.

The extension can be applied for once the land is used as intended and at the latest before the term ends, and a renewal within two years after it ends. The holder has to build on or use the land as granted within two years.

Right to cultivate (HGU)

The right to cultivate (Hak Guna Usaha, HGU) is for farming, fisheries and livestock on state land or management-right land, and it’s the title a company plantation needs. The Basic Agrarian Law sets a minimum of 5 hectares and asks for proper capital and sound business practice from 25 hectares. At up to 35, 25 and 35 years, an HGU can last 95 years in all. As with HGB, the extension is applied for before the term ends and the renewal within two years after.

The grant comes with duties. The holder must start the business within two years and report on the land’s use every year. It may not clear land by burning or leave it idle. A limited liability company with a plantation HGU of 250 hectares or more must also help the surrounding community develop plantations on at least 20% of the HGU area. If that wasn’t done at the first grant, it falls due at extension or renewal. Plantation permits and HGU covers how.

An HGU can be mortgaged and sold, and it can be cancelled when its duties aren’t met or the land is declared abandoned. Since 6 November 2025, Government Regulation 48 of 2025 sets how the state deals with abandoned land and areas, including plantations and mines their holders leave unworked.

Right of use and right of management

The right of use (Hak Pakai) with a term follows the HGB terms, and it’s the right a foreigner’s house sits on. A second form, with no term, is only for government bodies, foreign embassies and international bodies.

The right of management (Hak Pengelolaan, HPL) is a share of the state’s own authority over land, given to public bodies and state or regionally owned companies, or set over customary land for its community. The holder plans the land and lets others use it. Rights granted over it need the holder’s approval, and when they end the land goes back to the HPL holder, not to the state. Some industrial estates and economic zones work this way, so read the agreement with the HPL holder as closely as the certificate.

Renewals and losing a right

An extension or renewal isn’t automatic. It’s granted only if the land is still well used, the grant’s conditions were met, the holder still qualifies, the land fits the spatial plan and it isn’t needed for public use. A holder that stops qualifying has one year to transfer the right to someone who does, or the right ends by law. When the last term runs out, the land returns to the state or the HPL holder, and any new grant to the former holder is up to the land ministry (ATR/BPN).

Before you rely on a title

• Match the right to the buyer: freehold for citizens; HGB, HGU or Hak Pakai for a company; Hak Pakai or an apartment unit for a foreign individual.
• Note the end date and when the extension or renewal falls due.
• For a right over someone’s freehold or HPL land, read the deed or agreement behind it.
• Check the certificate at the land office before any money moves (how to check a land certificate).
• Check that the land isn’t inside a designated forest area, which no title cures (forest area status).