SHGB Property is Cheaper? Here's an Explanation from UMM Lecturer

Author : Humas | Saturday, June 15, 2024 07:22 WIB

Fadjar Ramdhani Setyawan, SH., MH a lecturer from Law Study Program (Photo: Special)

In Indonesia's property market, the term Sertifikat Hak Guna Bangunan (SHGB) is often mentioned by potential buyers. Although this provides the right to use the land and construct buildings on it, there are some important aspects regarding the security of SHGB properties that need to be understood.

Fadjar Ramdhani Setyawan, SH, MH, as a lecturer in the law study program at the University of Muhammadiyah Malang (UMM), stated that SHGB is a certificate that gives the holder the right to build and own buildings on land that does not belong to him for a certain period of time. Normally, it is about 30 years and can be extended. The SHGB status is different from the Sertifikat Hak Milik (SHM) (trans: Certificate of Ownership), which grants full ownership rights without any time limit.

"Therefore, the obligation of having SHGB is that we must use the building, establish, and utilize the building on the land in accordance with what is stated in our SHGB, and the sustainability of the surrounding environment must be maintained by the SHGB owner. Another obligation is that when the SHGB validity period has expired, the SHGB owner must return the SHGB to the land office," he added.

Although it is not full ownership like SHM, a property with SHGB status is still legally recognized and protected by law. SHGB holders have full rights over buildings that are built on the land during the validity period of the certificate. SHGB is regulated by Law No. 5/1960 on Basic Agrarian Regulations. This right provides legal certainty for the holder to build a building on state land or land controlled by another party.

A property with a SHGB is often sold at a more affordable price than a SHM. It makes it more appealing to investors who are looking to make a profit from the difference between the selling and buying prices or from renting out the property. However, there are some important considerations that need to be made. One of them is that the SHGB has a time limit, unlike the Certificate of Ownership (SHM), which has no time limit. SHGB owners must pay attention to the term of the building use right and extend it before it expires to avoid losing their rights to the property.

"There are several advantages that make SHGB worth considering, mainly because the price is much cheaper than buying a property with SHM. However, because the price is cheap, it is not surprising that the period of ownership is also limited. Thus, properties with SHGB are generally more suitable for those who will only live temporarily or for the purpose of building a business," he says.

However, there are also some risks that need to be considered. One of them is the uncertainty regarding the extension of building use rights. While SHGB renewals are generally possible, there may be issues, such as changes in government policy or conflicts with the original landowner. Therefore, it is important for SHGB owners to always monitor the validity period of the certificate and immediately conduct the extension process before the validity period expires.

"In my opinion, as long as the SHGB is authentic, it will be safe as it is issued by the Land Agency. It is important to check the authenticity of the SHGB with the local land agency and ensure that the SHGB issued is in accordance with the initial agreement," he said.

The latest regulation on the extension of the SHGB period states that the SHGB will automatically expire after 30 years. If it is not renewed, the right to SHGB will disappear by itself. However, if the SHGB is to be extended, an application for extension must be submitted two years before the validity period expires. "It must be reminded that if it is not extended and the validity period has expired, the building use right will return to the original owner of the land," he concluded. (bal/wil/put)

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