Time to Implement the Condominium Law
    Category: Column By : Eddy Leks Read : 651 Date : Thursday, January 04, 2018 - 14:54:21

    The condominium law was promulgated in late 2011, but it has yet to be fully implemented. Lawmakers have already laid down the basis for the construction of affordable condominiums (legally “public condominium”) intended for the low-income community. The intent was noble—but left wanting in reality.

    A new instrument was formed specifically under this law. In addition to the normal evidentiary ownership for condominiums—a certificate of right of ownership on the unit (Sertifikat Hak Milik Atas Satuan Rumah Susun – SHMSRS), there is another evidentiary ownership that was formed, the ownership certificate on the building (Sertifikat Kepemilikan Bangunan Gedung – SKBG).

    The SHMSRS consists of joint land, joint equipment, and joint facility of the condominium, but the SKBG consists of joint equipment and joint facility of condominiums, without joint land. In other words, the SKBG holder does not own the land where the condominium is built. They only have—jointly with the other SKBG holders—the facilities and equipment of the building, such as parking spaces, fitness centers, the roof and so on.

    Many central and local governments have under-utilized real estate assets, which are ideal for SKBG. Under the condominium law, those assets can be used for affordable condominiums, with a lease (normally 60 years), and the government doesn’t have to sell its land. The lease tariff can keep the sale price affordable.

    This provision gives flexibility to the real estate owners. Since SKBG is evidentiary ownership not covering land title, it should mean a lower sale price. The SKBG’s sale price will include leased costs, building costs and profit for the developer. The central or local government can sign such agreements with a SOE, local government-owned enterprise, or private entities. Their counterparts will be called as real estate developers. Since SKBG is legally protected, they can pre-sell this SKBG after fulfilling inter alia 20% construction of the condominium. The SKBG is a legitimate instrument to be marketed and sold to the low-income community.

    Similar to the SHMSRS title, the SKBG will consist of the copy of the book of the building (in contrast to a book of the land), land lease agreement, layout of the condominium, and title of division (pertelaan) on the joint rights of equipment and facility. This SKBG title is issued at the regency or city level responsible for the building.

    The intent is noble, but so far just a dream, since the government is yet to promulgate implementing SKBG regulation. One important feature needed for the SKBG is the formation of an implementing agent, who can help speed up the construction of affordable condominiums, and ensure they are only owned and occupied by low-income community. Without this, the SKBG cannot be implemented.

    Jakarta land is getting pricy, even for the middle-class. Based Central Bureau Statistics figures, the largest housing backlog in Indonesia is in Jakarta. Moving people or forcing them to live outside Jakarta is not feasible, especially without transportation options. The law provides the solution—and the government must immediately implement it!