Commercial lease in Indonesia: Template, Key Clauses and Local Law (2026)

What is a commercial lease in Indonesia, and when do you need one? A commercial lease in Indonesia is a contract where an owner (the lessor) lets a business use property, such as an office, shop, warehouse or land, for a term in return for rent. You need one whenever a business occupies space it does not own. In Indonesia the usual arrangement for commercial space is a lease (sewa menyewa) under the Civil Code, which gives a right to use the property for the term without transferring ownership of the land or building. The lease is governed by the Indonesian Civil Code (Kitab Undang-Undang Hukum Perdata), which sets the general rules on lease, the duties of lessor and lessee, repairs and what happens on expiry. Two local features matter most. First, land rights in Indonesia follow a tiered system: foreigners and foreign-owned companies cannot hold freehold (Hak Milik) and usually occupy commercial property through a lease or through land-use rights such as Hak Guna Bangunan held by an Indonesian company, so confirm the lessor's title before you sign. Second, the lease should be made in the Indonesian language under Law No. 24 of 2009, bilingual where English is also needed. On tax, rent of land and buildings is generally subject to a final income tax borne in the way the parties agree, so address it in the contract. This article is general guidance, not legal advice. Have an Indonesian lawyer and a notary review a commercial lease and the lessor's title before you sign. Last verified October 2026. ## Indonesia commercial lease template Copy the block below and fill the bracketed fields. Issue it in Bahasa Indonesia, or bilingual with Bahasa prevailing, and consider a notarial deed for a long term. ```

LEASE AGREEMENT / PERJANJIAN SEWA MENYEWA This Lease Agreement (the "Lease") is made on [DATE] BETWEEN: [LESSOR NAME], of [address], holding [title, e.g. HGB No.] over the property (the "Lessor") AND [LESSEE NAME], a company at [address] (the "Lessee") 1. PREMISES The Lessor leases to the Lessee the property at [full address and area] (the "Premises") for use only as [permitted use]. 2. TERM The Lease runs for [N] years from [START] to [END], with an option to renew for [N] years on terms to be agreed, exercised by [N] months written notice. 3. RENT AND PAYMENT Rent is IDR [AMOUNT] for the term / per year, payable [schedule]. Any escalation on renewal is [N]% or as agreed. 4. SECURITY DEPOSIT The Lessee pays a deposit of [amount], refundable within [N] days of expiry, less unpaid rent, charges and the cost of repairing damage beyond normal wear. 5. TAXES AND CHARGES The Lessee pays utilities and service charges. Final income tax on the rent of land and buildings is handled as agreed and remitted as the law requires. Land and building tax (PBB) on the Premises is the Lessor's. 6. USE, FIT-OUT AND REPAIRS The Lessee uses the Premises only for the permitted use, keeps them in good order, and makes no structural alteration without written consent. The Lessor handles structural repairs; the Lessee handles minor repairs from ordinary use and reinstates fit-out on exit if required. 7. LESSOR TITLE AND QUIET ENJOYMENT The Lessor warrants it holds valid title or land-use rights over the Premises and will give the Lessee quiet enjoyment for the term. 8. ASSIGNMENT AND SUBLEASE The Lessee may not assign the Lease or sublease without the Lessor's written consent. 9. INSURANCE The Lessee insures its own property and liability; the Lessor insures the building. 10. DEFAULT AND TERMINATION If a party breaches and does not cure within [N] days of notice, the other may terminate. The parties [waive / do not waive] Articles 1266 and 1267 of the Civil Code on judicial termination. 11. SURRENDER On expiry the Lessee returns the Premises in good order, normal wear excepted, and removes its property. 12. GOVERNING LAW AND LANGUAGE This Lease is governed by Indonesian law and made in the Indonesian language [and English, with the Indonesian version prevailing]. Signed [before a notary]: Lessor: __________________ Lessee: __________________ Name / title / date Name / title / date

- **Term and renewal (clause 2).** Set the term and a clear renewal mechanism. Commercial leases are commonly paid for the whole term up front or annually, so match the payment clause to what you agree.
- **Deposit (clause 4).** Say exactly how and when the deposit comes back, since deposit disputes are the most common conflict at exit.
- **Taxes (clause 5).** Rent of land and buildings carries a final income tax, and the contract should say who bears and remits it. Land and building tax (PBB) usually stays with the owner. Confirm the current rate with a tax adviser.
- **Lessor title (clause 7).** Check the lessor actually holds the title or land-use right it claims. A lessee leasing from someone without clear rights can lose the space. For foreign-owned tenants, confirm your occupation route is lawful.
- **Articles 1266 and 1267 (clause 10).** These Civil Code articles can require a court order to terminate a contract. Parties often address them expressly so termination for breach can work as the clause intends. ## Key local-law points - **Lease, not ownership.** A commercial occupier usually holds a lease or land-use right, not freehold. Foreigners and foreign-owned companies cannot hold Hak Milik, so confirm the structure and the lessor's title.
- **Language.** Law No. 24 of 2009 requires a lease with an Indonesian party to be in Bahasa Indonesia, and English-only contracts have been voided. Use a bilingual document with Bahasa prevailing.
- **Notarial deed.** A long or high-value lease is often made as a notarial deed for certainty and registration; check what your term needs.
- **Tax.** Final income tax on rent of land and buildings applies, and the contract should allocate it. Confirm the current rate with a tax adviser. ## Red flags to avoid - Not checking the lessor's title or land-use rights, so you may be leasing from someone who cannot grant what they promise.
- An English-only lease with an Indonesian party, which risks unenforceability.
- A deposit clause silent on when and how the deposit is returned.
- Ignoring the final income tax on rent, so the parties argue later about who bears it.
- Overlooking Articles 1266 and 1267, so termination for breach is harder than the clause suggests. Confirm the title, use a bilingual document, allocate the tax and set a clean deposit and termination mechanism, and the template above will hold for most Indonesian commercial tenancies. ## Where a contract workspace helps The template gives you a sound commercial lease. The ongoing burden is managing leases across a portfolio: tracking renewal and break dates so an option is not missed, keeping bilingual versions aligned, keeping deposit and tax terms consistent, and holding each lessor's title details in one place. Drafting from a standard tuned to how your company leases, having the title, renewal and tax terms flagged before you sign, and tracking every key date can sit in one AI contract workspace instead of a drawer of PDFs and a wall calendar. [Adira](https://adiralaw.com) is one such workspace. Its established depth today is in Indian corporate law, so Indonesian lease specifics are a roadmap capability and should be checked by a local adviser and notary. The idea is plain: when drafting, review and date tracking live in one place, a missed renewal or an unreturned deposit stops being the thing you discover too late.