Bali property and bali villas for sale - what is hak pakai certificate what is hak pakai certificate and how to convert it to hak milik certificate (shm)

Understanding What is Hak Pakai

The Hak Pakai certificate is a term that often appears in discussions about property, especially land. In simple terms, the Hak Pakai certificate is a legal document that proves the right for an individual or a business entity to utilize state-owned land or land owned by someone else. At first glance, the understanding of the ownership certificate seems similar to the Building Use Right Certificate (SHGB). However, in reality, these two types of land certificates are different documents, as are their functions and the types of rights contained within them.

To learn more about the intricacies of the Hak Pakai certificate, read the complete discussion below.

Understanding the Hak Pakai in Agrarian Law

When discussing the Hak Pakai certificate, it’s crucial to address the definition of the Hak Pakai itself, as the two are clearly interconnected. The complete definition of the Hak Pakai is explained in Article 41 of Law No. 5 of 1960 on Basic Agrarian Regulation (UUPA).

According to this regulation, the Hak Pakai is defined as:
“The right to use and/or collect yields from land directly controlled by the State or land owned by others, which confers authority and obligations determined in the decision of its grant by an authorized official or in an agreement with the landowner, which is not a lease or land cultivation agreement, as long as it does not conflict with the spirit and provisions of the basic agrarian law.”

Based on this law, it can be concluded that the Hak Pakai certificate is a right to use property granted to another party, for development, construction, etc.

The Hak Pakai is subject to a usage time limit, meaning that the holder of the Hak Pakai certificate cannot utilize or manage the land indefinitely.

The regulations regarding the period for utilizing state land and land owned by others under the Hak Pakai are contained in Article 45 of Government Regulation (PP) No. 40/1996.

It states that the duration of the Hak Pakai is a maximum of 25 years and can be extended for another 20 years (for state-owned land).

Revocation/Cancellation of the Hak Pakai

The ownership of the Hak Pakai can be revoked or canceled by law, under the following conditions:

  • Canceled by the ministry or the competent authority.
  • The holder of the management right or the ownership right can revoke it before the end of the term if the obligations of the Hak Pakai holder are not fulfilled.
  • Non-fulfillment of the terms or obligations written in the agreement between the parties regarding the granting of the Hak Pakai or the use of the management right.
  • A court decision that has become final and binding, which can result in the cancellation of the Hak Pakai certificate.

Who Is Eligible To Obtain Hak Pakai In Indonesia?

Unlike the Freehold Certificate (SHM) which can only be owned by Indonesian citizens, the Hak Pakai can be granted by the state to foreign nationals residing in Indonesia.

The issuance of the Hak Pakai certificate depends on the decision of the property owner.

If the building or land is state-owned, then the issuance of the certificate will await the decision of the minister.

If the land or building is privately owned, the decision to grant the right of use is entirely at the discretion of the property owner.

To avoid confusion, here are the subjects or people who can obtain the Hak Pakai certificate:

  • Indonesian citizens
  • Foreign nationals residing in Indonesia
  • Legal entities established according to the law and domiciled in Indonesia
  • Departments, non-departmental government institutions, and regional governments
  • Religious and social bodies
  • Foreign legal entities with official representation in Indonesia
  • Foreign state representatives and representatives of international bodies.

Upgrade Hak Pakai to Hak Milik Procedure

Hak Milik can be granted over a Hak Pakai land title, which is used as a residential property by an individual (Indonesian citizen) with land size of 600 m2 or less, based on the request by the person who holds the Hak Pakai title.

This is as stated in the Decree of the Minister of Agrarian Affairs / Head of BPN Number 6 of 1998 concerning the Granting of Ownership of Land for Residential Homes (“Kepmen No. 6/1998”).

The other requirement that must be fulfilled to upgrade the status of Hak Pakai to Hak Milik is to apply to the Head of the Regency / Municipality Land Office, accompanied by the following documents:

  1. Land certificate (Hak Pakai Certificate)
    Prepare the original certificate which is to have it’s status changed since the original certificate is the most important document. You will also need several photocopies of certificates for backup.
  2. A copy of the IMB (Building Permit)
    Building Permit documents are required as evidence of the legality that land is used for a residential building. In addition, a letter from the village head is required, stating that the building is/will be used for residential purposes, if the building permit has not been issued by the authorized institution.
  3. A copy of the latest SPPT PBB (land and building tax)
    Specifically for land size of 200 m2 or more. Proof of payment of SPPT PBB tax is required to see the track record of payment of taxes and conditions of the land, such as the land area and the extent of the buildings affected by taxes.
  4. A copy of Applicant’s Identity Card
  5. Statement letter
    You need to attach a statement that specifies that the applicant will have a SHM for no more than 5 parcels of land entirely or one SHM for a land parcel, covering a total of not more than 2000 m2. This statement form which is provided by the BPN, may be collected at the local Land Office. This is to meet the requirements stipulated in the Decree of the Minister of Agrarian Affairs / Head of BPN No. 6 of 1998 concerning the Granting of Land Ownership Rights for Residential Homes.

Upgrade Costs

If the existing certificate is Hak Pakai (Right to Use), then the buyer may upgrade the certificate to SHM (Certificate of Freehold Property). The costs are as follows:

  • Income to the State in accordance with applicable provisions
    2% x (NJOP land – IDR 60 Million)

However, things maybe different in reality. We strongly suggest that you seek advice from a notary or lawyer regarding the costs involved.

Based on our experience, it’s approximately IDR 25 million


As we are not qualified legal advisers, we can only provide general information. For those wanting full legal advice, one needs to acquire the services of a qualified legal adviser.

If you wish further information, we recommend that you contact a Lawyer/legal adviser or speak with a notary, who can help to answer any legal questions which you may have.


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