Property Association, Land Agency Agree on Property Sales and Puchase Deed

The Indonesian Real Estate Association (REI) have reached an agreement with the National Land Agency (BPN) regarding the arrangement of Sales and Purchase Deed on houses in districts that have yet to have a decree of Customs Acquisition Rights to Land and Building (BPHTB). The Association hopes that the agreement will make the sales and purchase transactions of properties progress smoothly.

Setyo Maharso, Chair of REI, said that the Association and the Chief of BPN, Joyo Winoto, have reached an agreement to facilitate making the Sales and Purchase Deed, so developers need not wait for the issuance of regional decree of BPHTB to conduct sales transactions.

“For regions that have yet to issue the decree, the local BPN will issue a notarized tax validation to conduct the Sales and Purchase Deed. Essentially, with this guarantee that the BPHTB issue has been cleared,” Setyo told IFT.

He also adds that the agreement is in line with the Minister of Finance Form Letter No.S-632/MK.07/2010 dated November 30, 2010. In the letter, the Minister of Finance explains that regional governments can collect BPHTB as income starting January 1, 2011. This is according to Law No.28/2009 regarding Regional Tax and Retribution. If the regional government has not issued a BPHTB decree, then acquisition rights to land and building in that region will be free of the customs fee. The requirement therefore, to pay BPHTB to process the ownership deed of land and building has become obsolete.

Based on the Minister of Finance Form Letter, Maharso said that the BPN can directly issue a validation. The notification letter from the Chair of the BPN will be sent to all BPN offices, including notary offices all over Indonesia.

According to data from the Ministry of Finance, up until the end of December 2010, there were 160 regional governments that have issued the regional decree of BPHTB. 108 regions are still arranging the decree, while 224 regions have yet to file a report.

Results of the delay to issue the decree of BPHTB can potentially cause a loss of Rp 2.4 trillion to the regional governments. Developers will also experience a loss of Rp 20 trillion in January, due to the inhibition of property sales transactions.

Developers Worry

Even though there is a guarantee from the National Land Agency (BPN), developers are still worried that the rule cannot be implemented easily in the regions. Adri Istambul, Deputy Secretary General of the Indonesian Real Estate Association (REI), said that with their huge autonomous power, the regional governments can chose to disobey the policy made by the central government.

He urged that the steps taken by the BPN would be followed with a Presidential Decree, thus strenthening its legality. According to Adri, the slow processing of the Sales and Purchase Deed due to the transfer of authority to collect BPHTB does not only affect housing sales for the middle-up classes, but impacts on low-cost housing as well.

Saud Pardede, Finance Director of PT Bank Tabungan Negara Tbk (BTN), admits that in a few regions, housing loan (KPR) transaction of Bank Tabungan Negara is a bit disrupted. He believes that the problem will not affect the housing loan target of this year, including the target with the housing financing liquidity facility (FLPP) of 120,000 units.

“The impact is not that great, as almost 60 percent of the KPR transactions of Bank Tabungan Negara are conducted in the Jadebotabek (Jakarta, Depok, Bogor, Tangerang, Bekasi) areas. As far as I know, only the Bogor regency that has yet to issue a BPHTB decree,” he said after a discussion in the BTN Property Exposition in Jakarta.

Lauren Sulistiawati, Retail Banking Director of PT Bank Permata Tbk, said that last January, their housing loan transactions are quite disrupted, because the process has become longer. Some were completed after a one month period, because in some regions, there are no references regarding the regional decree of BPHTB.

“Transactions that are problematic are mostly those which are conducted in regions with contributions of less than 50 percent to Bank Permata’s total housing loan,” she said.

Previously, Suharso Monoarfa, Minister of Public Housing, said that the central government asks that all parties including regional governments, obey the Minister of Finance Form Letter to speed up property transactions. He states that if the regional government does not have the decree of BPHTB, then they could not collect custom fee from consumers.