For a small business, shophouse (ruko) rent is often one of the biggest costs. It is usually paid a year upfront, and the fit-out that adapts the space to your business ends up built into someone else’s property.

Picking the wrong shophouse is rarely fixable halfway through. Moving means losing the remaining rent, the fit-out and the customers who know where to find you.

This guide is for business owners looking for a shophouse. It covers what to check on site, at government offices and in the lease, before any rent changes hands.

Traffic, parking and visibility

Busy doesn’t always mean good for business. What matters is whether passers-by can stop, and want to.

  • One-way streets. Make sure traffic passes your door from the direction your customers come from.
  • Road medians. Customers on the other side may have to drive a long way round. Find out where the nearest U-turn is.
  • Traffic speed. On roads where vehicles move fast, people rarely stop on impulse.
  • Commuting direction. A breakfast business suits the side of the road people take to work, while an evening food stall suits the side they take home.
  • Visibility from a distance. Trees, poles, billboards or buildings that jut forward can hide your sign.
  • Customer parking. Count how many motorbikes and cars can park without blocking the road, and whether the space is shared with the shop next door.
  • Loading. A business that takes regular deliveries needs somewhere for a van to stop.

Measure the frontage and depth yourself instead of trusting the listing. Frontage decides your shop window and door, and depth decides your workspace and stock room.

Visit at several times: morning, midday, evening and the weekend. Roughly count the people passing, and watch where they stop and park.

Zoning and business licences

Business licensing now centres on the Nomor Induk Berusaha (NIB, the business identification number), applied for through the Online Single Submission (OSS) system. The NIB needs a business address, and that location has to fit the designated land use for your activity.

So a shophouse in a zone that doesn’t allow your type of business can hold up your licence. Check the zoning before you sign, with the regency or city spatial planning office, or on GISTARU, the spatial plan map of the Ministry of ATR/BPN. How to do it is covered in our guide to checking zoning before you buy.

Ask the owner to show the Persetujuan Bangunan Gedung (PBG, the building approval) or the old IMB building permit as well. Some businesses, such as those selling food or providing health services, may need extra permits depending on their type and scale.

If your business produces smells, noise or waste, as a workshop or a laundry does, talk to the head of the RT (the neighbourhood unit) and the neighbours too. Complaints from residents can disrupt a business even when every permit is in order.

The building, power and water

Inspect the building as if you were going to live in it:

  • Roof and walls: leak stains, cracks and paint bubbling from damp.
  • Floor level: whether it sits above the road, and whether it has flooded in heavy rain or at high tide.
  • The front door: a jammed rolling door or folding gate is expensive to replace.
  • Toilet and plumbing: taps, the toilet, waste pipes and the septic tank.
  • The drain out front: a blocked gutter means water pooling at your door every time it rains.
  • Stairs and escape routes from the upper floor in case of fire.

Check the power capacity on the meter, then add up what your equipment needs, such as freezers, ovens, machines and air conditioning. If it falls short, a power upgrade is requested from PLN through the PLN Mobile app or a PLN office. Agree on who pays for the upgrade, and whether the extra capacity stays with the shophouse when you leave.

Some heavy equipment may need a three-phase connection. Ask PLN before you sign the lease.

For water, ask about the source, the PDAM (the regional water utility) or a well. A food or drink business needs clear water and a reliable supply.

Signage and the upper floor

Signs and advertising boards are regulated by the local government. Ask whether your shop sign needs a permit or is subject to the regional advertising tax (pajak reklame). Ask the owner, too, whether the row of shophouses has rules on the shape and size of signs.

The upper floor is often a bonus nobody has thought through. Decide early what it will be used for:

  • Living space: check the ventilation, the bathroom and whether access is separate from the shop.
  • Storage: ask whether the floor can carry heavy goods.
  • Office or workroom: check the sockets, lighting and internet signal.
  • Subletting: make sure the lease allows it, because a lease may forbid subletting without the owner’s consent.

Lease terms that protect your business

A shophouse lease needs more detail than a house lease, because your business is invested in the space. The general points are in our guide to what to include in a rental agreement. For a shophouse, make sure these are in writing:

  • The lease term and renewal option, including the notice deadline.
  • Rent increases at renewal, and how they will be set.
  • Alterations: what you may change, and whether you must restore the original layout when the lease ends.
  • What you can take with you, such as display units, air conditioners and added fittings.
  • The Pajak Bumi dan Bangunan (PBB, the annual land and building tax), billed to the owner each year, and who pays it.
  • Subletting part of the shophouse to someone else.
  • Leaving early, for example if the business closes, and whether the remaining term can pass to a replacement tenant.
  • A sale of the shophouse during the lease, and what happens to your contract.
  • Opening hours and access, if the shophouse is in a complex with rules on trading hours or a gate.

If the shophouse needs work before you can open, try to agree that the lease term starts once the fit-out is finished. A few weeks without rent means a lot to a business that isn’t trading yet.

If your business is an entity appointed as a tax withholder, you must deduct the final income tax (PPh final) of 10 percent from the rent and give the owner a withholding slip. Agree in the lease whether the rent figure includes that tax.

Before paying, match the owner’s name on the certificate or the PBB bill with the ID card of the person renting it out. If someone else is handling it, ask for a written power of attorney from the owner and speak to the owner directly.

If the shophouse has several owners, such as a group of heirs, get written consent from all of them, or a power of attorney to the one person who signs the lease.

Look at the type of certificate too. A shophouse may be on a Hak Guna Bangunan (HGB, a time-limited right to build) title, which has an expiry date. Make sure it doesn’t run out during your lease.

Ask whether the shophouse is pledged as security for a bank loan. If the owner defaults on the loan, the property can be auctioned and your lease disrupted.

Pay into an account in the owner’s name, and get a signed receipt for every payment.

Next steps

  1. Visit the shophouse at several different times and watch the flow of customers.
  2. Check the zoning for your type of business before you discuss price.
  3. Inspect the building, power supply and water with someone who knows what to look for.
  4. Take the list of lease clauses above into the negotiation.
  5. Pay only after the owner’s identity is confirmed.

You can compare shophouses currently for rent in Vorneo’s lists for Banjarmasin and Banjarbaru.