Many would-be tenants compare shophouses (ruko) on the yearly rent alone. Two shophouses with the same rent can cost very different amounts over a year, because the items outside the rent differ.
This article breaks those items down: PBB, power, water, signage tax, neighbourhood fees and repairs. For each one it covers who usually pays, what can be negotiated, and what belongs in the agreement. The general guide to choosing a shophouse to rent is in tips for renting a ruko.
Custom, not law
Almost every cost split below is custom, not an obligation that the law assigns to one side. The rental agreement decides. So you can’t compare rent figures until you know what the tenant has to cover.
A well-built rental agreement is covered in what a rental agreement should contain. The table below summarises the usual custom, and each item is explained after it.
| Cost item | Usually paid by | Note |
|---|---|---|
| PBB | Owner | Can be passed to the tenant if written down |
| Power and water | Tenant | Make sure the meter and the bills are in the right name |
| Signage tax | The tenant who puts up the sign | Rate and permit are set locally |
| Neighbourhood and security fees | Varies | Ask the amount before signing |
| Income tax on rent (PPh) | Owner, with withholding or self-payment rules | See the rental tax article |
| Major repairs | Owner | Default rule, can be set differently |
| Minor repairs | Tenant | Default rule, can be set differently |
PBB
Pajak Bumi dan Bangunan (PBB, land and building tax) is paid every year on the land and the building of the shophouse. By rental custom, the owner pays it.
Two variations are common. An owner who has already priced the PBB into the rent doesn’t bill it again. Another owner asks the tenant to reimburse the PBB each year, especially on long leases.
Whichever way it goes, write it down: who pays, when, and who gets the proof of payment. If the tenant carries it, ask for a copy of the official bill every year so the figure is clear.
Power and water
The tenant usually pays for the power and water they use. Some points that often cause disputes:
- Own meter or shared. A shophouse with its own meter is much easier. If it shares the owner’s meter or another floor’s, agree how to split it, for example with a sub-meter.
- Installed capacity. Some businesses need more power than is installed. Ask who pays for an upgrade, and whether the upgrade stays with the building after the lease ends.
- Tariff class. The electricity tariff for a business can differ from a household tariff. Ask PLN or the owner which class applies to that shophouse.
- Whose name is on the bill. Make sure there are no arrears from the previous tenant, and that it is clear who is responsible if there are.
- Water. Check the source, PDAM (municipal water) or a well, and its quality. The article on checking well water and PDAM quality helps you test it.
Record the meter readings on handover day, with a photo. That’s your evidence if an odd bill turns up later.
Signage tax (pajak reklame)
The sign in front of a shophouse can be subject to signage tax. Under Law No. 1 of 2022 (the HKPD law), signage tax is a regional tax assessed on the rental value of the signage, with the rate set by regional regulation and a ceiling of 25 percent.
That means the figure differs from city to city. A small sign on your own wall and a large billboard above the building are not treated alike. A region can also require a permit or approval before the sign goes up.
What to do before you order a sign:
- Ask the licensing office and the regional tax office in your city whether the sign is taxed, and roughly how much.
- Ask the owner whether there are rules on how signs look, for example for the facade or a ruko complex.
- Write down who handles the permit and who pays the tax. It’s usually the tenant, since the tenant puts the sign up.
Don’t guess the rate in Banjarmasin or Banjarbaru from another city. Ask directly.
Neighbourhood, cleaning and security fees
Shophouses in a complex often have a monthly fee for cleaning, security and upkeep of shared areas. For a standalone shophouse, a similar fee is usually a cleaning or security contribution paid to the neighbourhood.
Ask the amount before you sign, and ask whether it rises over time. Get it in writing. A small monthly item that wasn’t mentioned at the start can add up after a year.
Income tax on the rent
An owner who rents out a shophouse pays final income tax (PPh) on the rent. The rate and the base are covered in full in the article on income tax on rental income: 10 percent of gross rent under Government Regulation No. 34 of 2017.
One point matters for the tenant. If the tenant is a company designated as a tax withholder, it withholds 10 percent when it pays. Ask the owner whether the rent they quote already includes the PPh. That 10 percent difference is often only noticed at the first payment.
Repairs: who bears what
Civil law splits the duties of a lease in general terms. The owner must hand over the property and maintain it so it stays fit for use, including repairs needed during the lease, except small ones. The tenant uses and looks after the property properly, and bears small day-to-day repairs. These rules are in the Civil Code (Articles 1550, 1551, 1560 and 1583).
The split is a default, so the agreement can set it differently. In shophouse practice:
- Owner: a leaking roof, structural cracks, the frame, the main electrical installation and the main water lines.
- Tenant: lights, taps, door locks, interior paint, a folding or roller door damaged by daily use, and damage from the tenant’s own business activity.
- Grey area: air conditioners, water pumps, generators, and a roof that leaks because the tenant added load or made holes. Settle it in the agreement, don’t wait for something to break.
The easiest way to cut down on arguments is to make a condition list of the shophouse at handover, with photos, and agree a limit for small repairs. For example, the tenant handles damage below a set amount and the owner handles the rest.
For renovations the tenant does themselves, read renovating a rented ruko.
Deposit and upfront payment
Besides recurring costs, some money is paid at the start. A rental deposit is normally returned at the end of the lease after deductions for damage or arrears. How it works is covered in rental deposits, and the same logic applies to a shophouse.
On payment terms, yearly or monthly, the trade-offs are in yearly or monthly rent. For renewals and rent increases, see renewing a lease and raising the rent.
How to work out the real yearly cost
Make a simple table with one column for each shophouse you are comparing:
- The yearly rent.
- PBB, if it is passed to the tenant.
- Estimated power and water for a year (ask for the previous tenant’s bills).
- Signage tax, if you will put up a sign.
- Cleaning and security fees.
- An allowance for small repairs.
- The total of all of it, then divide by 12 for the monthly figure.
Fill every column with figures you can prove, not estimates from memory. A shophouse that looks more expensive on the rent is sometimes cheaper once everything is added up.
Questions for the owner before you sign
- Who pays the PBB, and is it included in the rent?
- Is there a separate power and water meter? In whose name?
- Are there monthly or yearly fees on top of the rent?
- Can I put up a sign? What are the limits on size and look?
- Which repairs does the owner bear and which does the tenant?
- Does the rent figure already include PPh?
- How much is the deposit, and when is it returned?
A guide to setting the rent from the owner’s side is in setting the rental price. And if you are weighing whether a shophouse suits your business, read investing in a ruko to see the owner’s side.
For shophouses currently for rent in Banjarmasin and nearby, see the Vorneo property catalogue. If you want help weighing the costs of one shophouse, reach us through the contact page.
