Subsidised houses turn up often in over kredit ads, where a buyer pays the owner a lump sum (the harga over) and carries on with the loan. The lump sum looks light, the instalment is small, the house is ready to live in, and the process is promised to be quick.
The catch is that a subsidised house isn’t bought with an ordinary KPR (Kredit Pemilikan Rumah, an Indonesian bank mortgage). Program rules bind the owner, and those rules decide whether the house can be transferred, when, and how.
This guide is for owners of a subsidised house who want to let it go, and for buyers looking at an offer to take one over.
FLPP subsidised mortgages in brief
The most common subsidised KPR uses FLPP (Fasilitas Likuiditas Pembiayaan Perumahan, the government’s housing finance liquidity facility). It is meant for the first home of eligible low-income buyers, and is managed through BP Tapera (Badan Pengelola Tabungan Perumahan Rakyat, the public housing savings agency) together with the lending banks.
Because the interest is lighter than on a commercial KPR, subsidised instalments look cheap in ads. That relief is funded by the government through the program, which is why the conditions are strict.
Subsidised houses are usually small, with a building of up to about 36 m². Registered projects and developers can be checked in SiKumbang, the government’s information system for subsidised housing.
The key point: the facility is given to a buyer who qualifies, for a house that buyer lives in. It isn’t part of the house that simply passes to whoever buys it next. The basics of the program are in understanding subsidized housing programs in Indonesia.
Must be lived in, and the five-year restriction
Two basic rules bind the owner of a subsidised house:
- The buyer must live in the house. A subsidised house is given to be lived in, not as an investment.
- In the first five years, the house generally may not be sold, transferred or rented out, except in specific conditions set by the program.
Those exceptions are specific and can change with the program’s rules. Don’t guess whether your situation qualifies. Ask the lending bank directly, and get the answer in writing.
Ask too from what date the five years count for your house, so you know exactly when the restriction ends.
Renting it out counts as well. A subsidised house let to someone else, even if it isn’t sold, is no longer lived in by the person who received the subsidy.
What happens if the rules are broken
Selling, transferring or renting out a subsidised house outside the rules can lead to the subsidy facility being withdrawn. The loan may then move to different terms, and the seller stays on record as the borrower who has to sort it out.
An informal takeover in the first five years breaks two rules at once. The house changes hands, and the subsidy recipient no longer lives in it.
The seller isn’t the only one at risk. A buyer who has paid the lump sum is in the weakest position of all, because they hold no recorded right to the house.
After five years: two possibilities to ask the bank about
Once the five-year restriction has passed, a transfer can be discussed. It still goes through the bank, the same way as an ordinary takeover covered in how to take over a home loan safely through the bank.
There are two possibilities to ask about:
- The subsidy continues with the new buyer, if that buyer meets the program’s criteria. If the bank allows this, the buyer is usually assessed like a new subsidised applicant, including income, whether they already own a home, and credit history.
- The loan moves to commercial terms. The interest rate and instalment follow an ordinary mortgage, so the instalment can be very different from the one in the ad.
If the buyer doesn’t qualify for the subsidy, another option is a new mortgage at another bank to pay off the seller’s remaining loan. Bank-to-bank payoffs work much like the process in how to take over (refinance) your mortgage to another bank.
Whichever route applies, recalculate the instalment with the bank’s figures, not the ad’s. The gap between a subsidised and a commercial instalment can change the total cost of the house a great deal.
Worked example (illustrative numbers only): an instalment of Rp 1.2 million a month becomes Rp 1.8 million once the loan moves to commercial terms. The difference is Rp 600 thousand a month, or Rp 72 million over the remaining 120 months.
Why an informal takeover is riskier here
All the usual risks of an informal takeover still apply. The certificate and the debt stay in the seller’s name, a power of attorney ends if the seller dies, and the bank only knows the seller.
With a subsidised house, there’s more:
- A breach of the program rules, which can lead to the subsidy being withdrawn.
- Your instalment depends on someone else’s subsidy. If it’s withdrawn, the instalment can change and you have no standing to negotiate.
- The seller has used a facility meant for their first home, and that problem stays in their name.
Be wary of ads promising a subsidised house with no bank process, just the lump sum and immediate move-in. That promise usually means the informal route.
For buyers: compare with buying one yourself
Before taking over someone else’s subsidised house, ask yourself one question first: do you qualify for a subsidised KPR? If you do, buying a unit in a project registered in SiKumbang, with an application in your own name, is often simpler. The facility is yours, and you don’t depend on anyone’s permission to transfer.
If you still prefer a takeover, compare two figures. First, the harga over plus the outstanding principal. Second, the price and down payment of a similar new subsidised house in the area you want.
Check the documents as you would for any resale house. That means the bank’s statement of the remaining debt, the name and status on the certificate, proof that PBB (the annual land and building tax) is paid, and the physical condition. A subsidised house that has been lived in for some years may need work on the roof, walls or drains.
Questions for the bank before you agree
Ask the seller to come with you to the lending bank, then ask:
- When does the five-year restriction end for this house?
- Does the seller’s situation fall under an exception the program allows?
- Can the subsidy continue with the buyer if they qualify?
- If not, what interest rate and instalment apply after the transfer?
- What are the outstanding principal, the arrears and the costs of a change of borrower?
- Which documents are needed from the seller and the buyer?
Get the important answers in writing. A verbal answer from one officer can easily differ from the bank’s final decision.
What to do next
If you own a subsidised house and must move before five years are up, talk to the bank first, before you advertise or accept money from anyone. If your situation isn’t covered by an exception, ask what other options exist before you decide.
If you’re a buyer, don’t pay a lump sum until the bank confirms the house can be transferred and you know the instalment that will apply.
If you’d like to talk through an offer you’re considering, the Vorneo team is on WhatsApp.
