What Are PBG and SLF? Why Without These Certificates, Your Villa Is Considered Illegal Construction
What Are PBG and SLF — and Why Without Them Your Villa in Indonesia May Be Deemed Unauthorized Construction
Purchasing or building property in Indonesia—especially in popular locations like Bali—attracts investors from around the world. However, behind the appealing façade lie strict construction norms and legal requirements. Failure to comply with these regulations can result in the property being declared illegal. At the core of these requirements are two essential documents: PBG (Persetujuan Bangunan Gedung) and SLF (Sertifikat Laik Fungsi).
Without these certificates, a building is considered to be in violation of the law, regardless of who owns it. Ignorance of these documents is no excuse and can lead to serious consequences—from hefty fines to criminal charges. In this article, we explain what PBG and SLF are, why they're necessary, how to obtain them, and the risks involved in not having them.
PBG: Building Construction Approval in Indonesia
What is PBG?
Persetujuan Bangunan Gedung (PBG) is the official permit for construction, renovation, or modification of a building, issued by municipal authorities. It replaced the previous IMB (Izin Mendirikan Bangunan) system following the 2021 reform and the adoption of the OSS (Online Single Submission) digital platform. The revocation of IMB is regulated by Government Regulation No. 16 of 2021.
Obtaining a PBG is mandatory in the following cases:
- Construction of a new building (including a private villa);
- Expansion, renovation, or partial demolition;
- Major repair of structural components;
- Change of building function (e.g., from residential to commercial use).
PBG is issued based on architectural documentation that complies with urban planning, technical, and legal standards. Project approval includes assessments of safety, zoning compliance, and environmental impact.
Why is PBG Necessary?
The absence of a PBG means the building has no legal permission to exist. This poses several risks:
- The structure may be declared illegal and subject to demolition;
- Denial of legal ownership registration or Hak Guna Bangunan (HGB);
- Inability to connect to state utility services;
- Fines and administrative sanctions during inspections;
- Ineligibility for obtaining an SLF.
SLF: Certificate of Building Functionality
What is SLF?
Sertifikat Laik Fungsi (SLF) is an official certificate verifying that a building meets all operational standards. It is issued after the completion of construction and only if a PBG was obtained beforehand.
Local authorities conduct a technical inspection to verify:
- Structural safety;
- Compliance of fire safety systems and evacuation routes with regulations;
- Accessibility for people with mobility impairments;
- Mechanical and utility systems (water, sewage, electricity);
- Environmental and sanitary standards.
SLF can be obtained through the OSS system by submitting a complete set of documents, followed by an engineering commission review.
Operating a Building Without an SLF is Illegal
According to Law No. 6 of 2023 on Architecture and Construction, a building cannot be used without a valid SLF. This applies to all types of real estate, regardless of purpose or ownership form.
Before obtaining the SLF, the following actions are prohibited:
- Occupying the building for living purposes;
- Renting out the property (including short-term rentals);
- Hosting tourists or running a business (hostel, boutique hotel, retreat center, etc.);
- Selling the property with a full legal documentation package.
Consequences of Non-Compliance: Liability for Missing PBG and SLF
Legal Responsibility and Sanctions
Violating construction regulations is not just a minor “bureaucratic mistake,” but in certain cases, a criminal offense—especially when the building poses a threat to the safety of occupants or visitors.
Under current law, penalties may include:
- Administrative fines up to IDR 10 billion (approximately USD 650,000);
- Suspension or prohibition of building operation;
- Official demolition order;
- Criminal investigation in cases involving injury or death.
There is a growing trend of actual imprisonment and significant penalties for owners of unauthorized buildings, particularly in tourist areas.
Step-by-Step: How to Obtain PBG and SLF
1. Obtaining PBG
- Develop an architectural plan in accordance with zoning and environmental regulations;
- Have the design and budget documentation (RSD) approved by a certified architect;
- Submit the application via the OSS portal;
- Undergo inspection and receive the permit.
2. Obtaining SLF
- Finish all construction work as outlined in the approved PBG;
- Have the building inspected by municipal engineers;
- Submit an SLF request via OSS with full documentation (PBG, blueprints, records, photos);
- Receive the SLF upon confirmation of regulatory compliance.
Processing Time: 2 to 6 months, depending on the type of building, government workload, and document readiness.
Private Villas, Hotels, Commercial Properties: Who Needs PBG and SLF?
PBG and SLF are mandatory for all types of real estate in Indonesia, including:
- Private residential homes and villas;
- Apartment hotels, guesthouses, and hotels;
- Office buildings, shops, restaurants, and cafes;
- Commercial rentals and mixed-use properties.
Even if the property is owned by a foreigner through a legal entity (such as a PMDN or PT PMA), PBG and SLF must be obtained to ensure the building’s legal status and safe usage.
How to Verify PBG and SLF When Buying Property
- Ask the seller for copies of the PBG and SLF — this is standard practice in Bali and Java real estate transactions;
- Ensure that the documents are registered in the OSS system and match the current owner's name;
- If documents are missing, request a legal assessment of steps and timeframe for legalization;
- A missing PBG often implies potential demolition or the inability to finalize a sale through a bank, notary, or real estate agent.
Side-by-Side Comparison: With vs. Without Legal Documents
| Criterion | With PBG and SLF | Without Legal Documents |
|---|---|---|
| Building Status | Legal, registered property | Unauthorized build, at risk of demolition |
| Usage Rights | Residential use, rental, business, resale | Cannot be used or rented legally |
| Public Utilities Access | Legally connected | Connection denied |
| Investment Reliability | High | Risky, low liquidity |
| Financial and Legal Risk | Minimal | High (fines, legal issues) |
Frequently Asked Questions (FAQ)
Can I obtain an SLF without a PBG?
No. The law clearly stipulates that a valid PBG must be in place before applying for an SLF. Building without legal permission is inherently considered illegal and cannot receive an operation certificate.
Can foreigners get PBG and SLF?
Not directly, if the property is owned by a foreign individual. However, through a properly established legal entity such as a PT PMA—and if the land title is held via HGB—it is possible. In such cases, all documentation is issued in the name of the company.
What if the villa is already built but has no documents?
Consult a local lawyer or agency specializing in property legalization. In many cases, it is possible to initiate a retrospective PBG application, followed by a technical inspection, which may eventually allow you to apply for an SLF.
Conclusion: Legal Compliance Is Not Optional but Essential
Legal use, investment protection, and risk mitigation are impossible without PBG and SLF. These certificates are not mere formalities but the legal foundation for your right to use property in Bali or elsewhere in Indonesia.
Before investing in a villa, existing building, or land plot, always ensure that the structure has a PBG and that its operation is covered by an SLF. It’s your key to peace of mind and safety for your guests.
