After deciding to move or settle in Indonesia, finding a place to live can be both exciting and stressful. Properties in Indonesia range from spacious single-family homes with gardens to comfortable serviced apartments, offering a wide range of attractive options.
Indonesia is expected to achieve high growth rates, and its property market remains robust in line with economic stability. In particular, demand for housing loans remains strong, with new housing loan disbursements increasing by approximately 11% year-on-year in the first quarter of 2024. We highly recommend this blog for anyone considering purchasing property in Indonesia.
However, there are many differences from rental customs in Japan, and proceeding without an understanding of the law or contracts can often lead to unexpected problems later.
We have handled housing-related legal consultations for many Japanese expatriates and their families. In this article, we will explain three important legal points to consider when renting a house in Indonesia, based on our experience, from a practical perspective based on the Indonesian legal system, and from a practical perspective.

The Importance of "Language" and "Legalization" of Rental Contracts
In Indonesia, rental contracts are generally made in writing. Oral agreements can cause problems, so be sure to sign the contract.

The Importance of Legal Aspects
Language: Article 31 of Law of the Republic of Indonesia Number 24 of 2009 concerning the National Flag, National Language, National Emblem, and National Anthem states that "contracts made in Indonesia must be drafted in the Indonesian language." (Source: Ministry of Law and Human Rights of the Republic of Indonesia) Therefore, rental agreements must be drafted in the Indonesian language. Contracts written only in English or Japanese may not be legally valid in the event of a dispute.
Bilingual contracts: In many cases, when Japanese citizens enter into a rental agreement, the contract is drafted in both Indonesian and English (or Japanese). In this case, the contract should be written in both languages.
Bilingual agreements: In many cases, when Japanese citizens enter into a rental agreement, the agreement is drafted in both Indonesian and English (or Japanese). In this case, ensure the agreement includes a clause stating that "the Indonesian version is the valid version, and in the event of any ambiguity in interpretation, the Indonesian version shall prevail."
Notarization: It is recommended that long-term lease contracts and contracts involving large sums of money be notarized by a notary (Notaris). A notarized contract serves as strong evidence that the contents of the contract have been agreed to by the parties involved, which is beneficial in the event of a legal dispute.

Pitfalls and Precautions
Pitfall: Feeling reassured by only having a contract in English or Japanese. Even if the property agent says "no problem," it's important to understand that this has weak legal standing.
Precautions: Always ensure the contract is in Indonesian, and if necessary, consider notarization. The safest bet is to have a professional lawyer or trusted property agent review the contract.

Rules and provisions regarding "deposit" and "rent" payments
In Indonesia, the rules regarding payments in rental agreements are very different from those in Japan.

Importance of legal aspects
Annual payments (lump-sum payments) are common: In the Indonesian property rental market, it is common to pay one or two years' rent in advance. This is not regulated by law, but many property owners require this payment method.
Deposit handling: A deposit is money held as security for unpaid rent or property damage. Unlike the Japanese concept of "restoration to original condition," in Indonesia, property owners often unilaterally deduct repair costs from the deposit. Because disputes regarding deposit refunds are so common, it's crucial to include a clear clause in the contract.
Legal Protection: There is no specific law governing rentals in Indonesia, but the provisions of the Civil Code (KUH Perdata) regarding rentals apply. This requires the tenant to use the property with care and diligence, and the landlord to ensure that the tenant can use the property peacefully and comfortably.

Pitfalls and Preventive Measures
Pitfalls: The problem of not getting the security deposit back. When you move out, the landlord may unfairly demand excessive repair costs, using excuses such as "there are scratches on the walls" or "damaged furniture."
Preventive measures:
Clearly define the terms in the contract: Make sure the contract clearly states the terms for the return of the security deposit, the timeframe for the return, and any deductible costs (such as repairs).
Photograph the property upon move-in: Before moving in, document the condition of the property in detail using photos or videos. This will serve as legal evidence if the landlord makes unreasonable claims upon move-out.
Keep payment records: When paying rent or a security deposit, always ask for a receipt and keep it safe.

Ensure the "purpose of use" and "zoning" of the rental property
When renting a property, it is crucial to ensure the purpose of the property to avoid future problems.

Legal Regulations
Zoning: Under Indonesia's Spatial Planning Law, each area is divided into "residential areas," "commercial areas," "industrial areas," and so on. As a general rule, single-family homes and apartments designated as residential areas cannot be used as offices.
Articles in the Lease Agreement:
The lease agreement must clearly state the "purpose of use" of the property. If it is listed as "for residential use," using the property as an office would be unlawful.
Sublease Prohibition: Lease agreements almost certainly contain a clause prohibiting sublease to third parties.
This is so the landlord can identify the tenant and determine where the responsibilities lie. Subletting the property to another party without permission is a breach of contract and grounds for eviction.

Pitfalls and Prevention
Trap: During the preparation stage for establishing a company, you may discover that the property you plan to use as a home office is only approved for residential use.
Preventive Measures:
Clear the Purpose of Use: Before signing the lease, clearly explain to the landlord or real estate agent how you plan to use the property and ensure it is feasible.
Check the Contract: Carefully read the “purpose of use” clause in the contract and ensure it aligns with your intended use. If there are any discrepancies, consider renegotiating the contract or looking for another property.

Conclusion
Renting a house in Indonesia is an exciting time to start a new life. However, there are also hidden risks due to differences in laws and customs.
By understanding these legal issues from the outset, you can avoid unexpected problems and start your life in Indonesia with peace of mind. Lease agreements are complex, and for those who are not legal experts, they can be difficult to understand. For more information about living in Indonesia, please visit the Indonesian Embassy website.
Our law firm helps you find a place to live in Indonesia with peace of mind and smoothness by reviewing lease agreements and supporting negotiations with property owners. If you have any questions about housing, please contact us anytime. We sincerely hope your new life in Indonesia will be wonderful.