SHGB
Also called: sertifikat hak guna bangunan, HGB
A certificate for land use rights for a certain period, common for developer houses.
What it means
SHGB, or the certificate of building use right, is a certificate that grants the right to build and own a building on land that is not one's own. This right applies for a certain period, generally decades, and can be extended. SHGB is widely used for houses in developer housing complexes. The land remains owned by another party, while the building belongs to the right holder.
Why it matters for families
Houses with SHGB status can still be financed with a mortgage, but families need to know the validity period of the right. If the remaining time is short, the extension incurs additional costs. The bank also assesses the collateral's eligibility from the remaining validity period. Misunderstanding this can surprise families when they have to extend the right several years later.
Example
For example, a family buys an SHGB house with a remaining validity period of 25 years. When applying for a mortgage, the bank asks about the plan to extend the right. Extension costs and document processing need to be included in the long-term cost of ownership calculation.
Common misunderstanding
Many buyers think SHGB is as strong as SHM with no time limit. In fact, SHGB has a validity period and needs to be extended for the right to remain valid.