Many people who buy a house in a housing estate get a surprise when they read the certificate. It doesn’t say Sertifikat Hak Milik (SHM, the strongest freehold title). It says Hak Guna Bangunan (HGB, a right to build and own buildings on land for a fixed term), complete with an end date.

There’s no need to panic. HGB is a valid right. For a home owned by an Indonesian citizen (WNI), it can be upgraded to Hak Milik by applying to the Kantor Pertanahan (the district land office).

This guide is for homeowners who want to make that upgrade, including those whose certificate is still with the bank because the home loan (KPR) isn’t paid off yet.

Why so many estate houses are on HGB

Housing developers are usually companies. Under the Basic Agrarian Law (UU No. 5 Tahun 1960, known as UUPA), only Indonesian citizens can hold Hak Milik, so a developer holds the project land on HGB. When the land is split into plots and sold, the certificate you receive is HGB too.

HGB runs for a set term. Under PP No. 18 Tahun 2021, it is granted for up to 30 years, can be extended for up to 20 years, and can then be renewed for up to 30 years. The end date is printed on the certificate.

Each extension means more paperwork and more fees. With SHM, there is nothing to extend. That’s why an upgrade is worth considering as soon as you meet the conditions.

Who can apply

The basis for this route is Kepmen Agraria/Kepala BPN No. 6 Tahun 1998, a ministerial decree. The main conditions are:

  • The applicant is an Indonesian citizen. Foreigners and legal entities such as companies can’t hold Hak Milik.
  • The property is used as a home. It’s a house, not a shophouse, warehouse or business premises.
  • The land is up to 600 m².
  • The certificate is already in your name. Only the registered right holder can apply.

If your land is larger than 600 m², a different route applies, with more requirements. Ask the land office directly.

If you bought from a developer and the certificate is still in the developer’s name, first complete the AJB (Akta Jual Beli, the deed of sale) before a PPAT (Pejabat Pembuat Akta Tanah, the official who draws up land deeds) and the transfer into your name.

Documents to prepare

Requirements vary a little between offices. Usually they include:

  • The original HGB certificate.
  • ID card (KTP) and family card (Kartu Keluarga) of the right holder, as proof of citizenship.
  • The building approval (PBG) or old IMB permit showing residential use. If you don’t have one, ask which substitute the office accepts, such as a letter from the kelurahan or village office.
  • The current PBB bill (SPPT) and payment receipt for the annual land and building tax.
  • The applicant’s statement letter, usually in a format provided by the land office.
  • The application form, plus a power of attorney if someone applies for you.

If the PBB bill is still in the developer’s or a previous owner’s name, ask the regional tax office how to update it. The PBB data is often checked during the application.

If the building permit for your house is unclear, our guide to PBG, the replacement for the IMB explains how it differs from the old IMB and how to get one.

The process and the fees

The usual order is:

  1. Go to the counter at the Kantor Pertanahan where the land is registered, or ask a PPAT to help.
  2. Hand in your documents and fill in the change of right application.
  3. Staff check the certificate data and your file.
  4. Pay the official fee according to the bill from the counter.
  5. The HGB certificate is withdrawn and an SHM is issued in your name. In offices that have started electronic services, the SHM may be issued as an electronic certificate.

The main cost is PNBP (Penerimaan Negara Bukan Pajak, non-tax state revenue) at the official tariff of Kementerian ATR/BPN. Also ask the land office or a PPAT whether a regional tax applies to a change of right in your kabupaten or kota, because the rules can differ. If you use a PPAT, their fee is separate.

Processing time also differs between offices. Ask for an estimate at the counter, and keep the file receipt so you can follow up. Don’t hand your original certificate to a middleman who promises a fast track. Apply yourself at the counter or through a PPAT you chose.

Once the SHM is issued, check the name, area and location. A typo is far easier to fix right away than years later.

If the bank still holds the certificate

If your home loan isn’t paid off, the bank holds your HGB certificate and it carries a Hak Tanggungan (the mortgage lien). Upgrading the title changes the very right that is pledged, so the bank has to agree.

You have two options:

  • Do it with the bank. The bank gives its consent and usually asks for its lien to be registered again on the new SHM. Ask the bank about its procedure and costs.
  • Wait until the loan is paid off. Once the loan is cleared and roya (the removal of the lien) is done, you apply for the upgrade yourself. Roya is explained in our guide on clearing the mortgage lien after your loan is paid off.

The second option is usually simpler. But if the HGB has little time left, talk to the bank early so your right doesn’t lapse in the meantime.

Cases that follow a different route

  • The HGB has expired. The first job is to extend or renew the right. Ask the land office which route applies to you, and don’t put it off.
  • HGB on top of an HPL. Some estates are built on Hak Pengelolaan (HPL, a management right held by a government body or agency). An upgrade usually needs the HPL holder’s approval. Check the origin of the right on the certificate, or ask a PPAT.
  • Shophouses and business premises. The residential route doesn’t cover a ruko, warehouse or office. Ask the land office whether another route exists. Keep in mind that companies can’t hold SHM. If you might one day sell the ruko to a company, the right would have to be changed first.
  • Land over 600 m². The ministerial decree route doesn’t apply, and there are more requirements.

The general difference between SHM and HGB is covered in our guide on SHM, HGB and AJB.

If you are buying a house that is still on HGB

An HGB house can be bought in the usual way: an AJB before a PPAT, taxes paid, then the transfer into your name. Once the certificate is in your name, you can apply for the upgrade.

Before you make an offer, do three things:

  • Check the HGB end date. If little time is left, an extension or upgrade will be one of your first jobs.
  • Check where the right comes from. HGB on top of an HPL follows a different route, as explained above.
  • Agree who handles the upgrade. Some sellers are willing to upgrade the title before selling. If not, factor the cost and time into what you offer.

Where to start

  1. Take out your certificate and note the type of right, the land area and the HGB end date.
  2. Make sure the certificate is in your name and that you are an Indonesian citizen.
  3. Gather the PBG or IMB and the latest PBB receipt.
  4. If the bank holds the certificate, ask about its procedure, or plan to apply after roya.
  5. Visit the land office to ask about current requirements and the PNBP breakdown.

If you’re looking for a house and want to know the certificate status before you make an offer, you can ask Vorneo on WhatsApp.