An HGB doesn’t last forever. A shophouse, a warehouse or a house in a housing estate bought twenty-five years ago can have a certificate that ends within a few years. Owners who only notice when the end date is close usually run out of time.

This article explains how long an HGB runs, the difference between extension and renewal, when to apply, the requirements, and the costs. The basics of the different rights are in the difference between SHM, HGB and AJB.

How long an HGB lasts

The rule is in Article 37 of Government Regulation (PP) 18/2021. For an HGB (Hak Guna Bangunan, the right to build and hold buildings on land) on state land and on Hak Pengelolaan (HPL, a management right) land, the term is:

  • 30 years from the grant, at most.
  • Extended by 20 years, at most.
  • Renewed for 30 years, at most, after the extension period ends.

Added up, one parcel can be held for up to 80 years in three stages. That figure is a ceiling, not a right you get automatically. Each stage has to be applied for and approved.

For an HGB on someone else’s Hak Milik land, the term is at most 30 years. After that the right is renewed through a new deed granting HGB over the Hak Milik. It rests on the landowner’s agreement, so approval depends on what the two parties settle.

The end date is on the certificate. Check it before you buy or rent a property that stands on an HGB.

Extension and renewal

These two terms are often treated as the same thing, but they differ:

  • Extension (perpanjangan) adds time to a right that is still running, up to 20 years. It is filed before the right ends.
  • Renewal (pembaruan) grants a new right over the same land, up to 30 years, after the extension period has ended.

The order is always extension first, then renewal. So an owner whose HGB has just begun can’t ask for a renewal straight away. The first stage has to run its course.

The rules also allow a renewal to be filed before the extension period has fully ended. Ask the Kantor Pertanahan (land office) how this works in practice in your area.

When to apply

Under Article 41(1) of PP 18/2021, an extension application is filed at the latest before the HGB term ends. That sentence sets a final deadline, not a recommended time.

In practice, don’t wait for the last month. Checking the file, re-measuring and approval take time, and how long can’t be predicted. The earliest date an application may be filed isn’t given here because it couldn’t be confirmed from the text of the rules. Ask the Kantor Pertanahan directly how long before the end date you may already file.

Some reasons to start earlier:

  • You plan to sell or pledge the property. Buyers and banks look at the remaining HGB term.
  • The certificate is held by a bank as collateral, so you need the bank’s permission.
  • There are arrears or problems to clear first.
  • The HGB sits on HPL, which needs approval from another party.

Requirements for an extension

An extension is not automatic. Article 41(1) of PP 18/2021 gives the main condition: the land must already be used and put to use in line with the purpose for which the right was granted. A building once approved for a factory that now stands abandoned, or a shophouse used outside its permitted purpose, can be refused.

Besides that, the Kantor Pertanahan usually checks:

  • Land use in line with the purpose of the right and with the spatial plan;
  • The holder still qualifies as an HGB holder. Individual Indonesian citizens and Indonesian legal entities may hold an HGB;
  • No dispute over the parcel;
  • Obligations to the state and to other parties are met, including Pajak Bumi dan Bangunan (PBB, land and building tax).

The documents usually requested include the original certificate, the holder’s identity, PBB receipts, and proof of land use such as a building permit or building approval. The exact list differs between offices, so ask the Kantor Pertanahan for a written list.

HGB on HPL

If your HGB stands on Hak Pengelolaan land, there is one more step. Article 38(2) of PP 18/2021 requires the HPL holder’s approval for an HGB on HPL. In practice, extensions and renewals also need the HPL holder’s recommendation or approval, and the land-use agreement sets it out.

The HPL holder can set new terms, including a payment or rent. In some situations it can refuse. So an owner of a shophouse or house on HPL should keep the relationship and the payments in order well ahead of time. Examples and how to recognise it are in HGB on HPL.

Costs

The cost of an extension has several items:

  • PNBP (penerimaan negara bukan pajak, non-tax state revenue) for the service at the Kantor Pertanahan. The amount follows the tariff in force and generally depends on land area and value.
  • Re-measurement, when needed.
  • Handling fees if you use a PPAT (land deed official) or a consultant.
  • A payment or rent to the HPL holder, if the HGB sits on HPL.

No rupiah figures are given because the amount varies by area, location and the HPL holder’s policy. Ask the Kantor Pertanahan for a written calculation, and don’t pay through anyone who won’t give a receipt.

If the HGB expires and isn’t extended

Article 37(3) of PP 18/2021 says that when an HGB has run out, the land goes back to being land directly controlled by the state, or to being HPL land. The building on it follows the applicable rules and any agreement.

Paragraph (4) leaves room for priority for the former holder, taking into account things such as whether the land is used well and fits the spatial plan. That is a possibility, not a guarantee. An owner who lets the HGB lapse and then files a new application isn’t in the same position as one who extended on time.

The effect on sales and KPR

The remaining HGB term affects price and financing:

  • Buyers work out how many years remain and whether an extension is possible. A short remainder should lower the price.
  • Banks usually want the remaining HGB term to exceed the loan tenor. That’s why a KPR (home loan) on a property with an HGB close to expiry is hard to get. See KPR application requirements.
  • Sellers who extend first can offer a certificate with a long remaining term, which usually makes the deal smoother.

Owners of houses in housing estates can take another route: converting the HGB to SHM. If you are an individual Indonesian citizen and the house is a home, the steps are in the guide to turning HGB into SHM. For a shophouse or warehouse held in a company’s name, that route doesn’t apply and extension is the only way. For shophouses as an investment, read investing in a ruko too.

The steps in short

  1. Check the HGB end date on the certificate.
  2. Check whether the land is state land, HPL, or someone else’s Hak Milik.
  3. Make sure PBB is paid and the land is used in line with the purpose of the right.
  4. Ask the Kantor Pertanahan for a written list of requirements and a cost calculation.
  5. If it sits on HPL, contact the HPL holder first.
  6. File well before the end date, and keep the receipt.

If you are looking for a shophouse, warehouse or house on an HGB in South Kalimantan and want to know how much of the right remains before you buy, Vorneo can help check the certificate with you. To sell a property on an HGB, see titip jual (listing with us), and reach us through the contact page for viewing support.