Nowadays, there are various kind of companies established in Indonesia. In term of construction, these companies require a building located on a land. Therefore, according to Law Number 5 of 1960 on the Principle Provisions of Agrarian, there are several rights over land. One of these rights over land is the right to build which can be defined as the right to establish and own a building on a land. The Government Regulation Number 40 of 1996 develops and improves this right to build. The right to build can be given or imposed on state land, land submitted to the right of management, and land submitted to the right of ownership. The right to build can also be used as collateral for loans pledged with mortgage rights.


Allocation of Right to Build

According to the Article 19 of the Government Regulation Number 40 of 1996 describes that right to build is given to Indonesian citizen and legal entities established under Indonesian law and domiciled in Indonesia. The right to build isn’t given to foreigners and foreign entities, so according to article 39 of the Government Regulation Number 40 of 1996 for foreigners and foreign entities, they only have the right to use. The right to build can be granted for a period of 30 years and can be extended for another 20 years. The right to build is given by a decision of the Minister or by an officer appointed upon the recommendation of the management right holders, and have been registered in the book of land in the land office.

Obligations of Holders of Right to Build

The holder of the right to build has to:

  1. to pay money of which amount and terms of payment are specified in the decision , use the land in accordance with its allocation and requirements as stipulated in the decisions and its agreements;
  2. preserve both land and existing building and preserving the environment;
  3. surrender the land back to the State, the holder of Right to Manage or holder of Right of Ownership after the Right to Build is expired;
  4. deliver the certificate of Right to Build which has expired to the Head of the Land Office.
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Assignment of the Right to Build

In article 34 Government Regulation Number 40 of 1996, it is mentioned that the Right to Build can be transferred to another party, through a sale and purchase, exchange, capital investment, grants, and inheritance.


Expiration of the Right to Build.

The Right to Build expires if its term ends, is terminated before the term has expired if any requirement is not fulfilled, released voluntarily by the holders of their rights before the the term has expired, is revoked for public purposes, if the land is abandoned or destroyed.


Isrilitha Pratami Puteri