The Difference Between SHM and SHGB: Don’t Make the Wrong Choice!
When purchasing a home, the most important thing to consider is the certificate and ownership status once the house is purchased. This certificate serves as proof of ownership and can help avoid future disputes.
Generally, there are two types of certificates used to legally establish property ownership: SHM (Ownership Rights Certificate) and SHGB (Building Use Rights Certificate). Although they may sound similar, these two certificates have different legal powers and uses. This article will discuss the differences between the two so you can choose wisely before deciding to purchase a property.
Understanding SHM
SHM stands for Ownership Rights Certificate. This certificate signifies ownership of the land and building. With this certificate, you have fully and permanently secured the land and building you purchased. SHM grants complete freedom over the land and building in terms of use, management, and even inheritance rights. Properties with a Freehold Title (SHM) generally have a simpler ownership transfer process, making it a consideration if you want to sell or inherit your property in the future.
Understanding SHGB
SHGB is an abbreviation for Building Use Rights Certificate. This certificate signifies the right to construct or use a building on land owned by the state or another party for a specified period. Typically, this certificate has a term of 30 years and can be extended for another 20 years. As the name suggests, this certificate only indicates that you have the right to use or manage the building on land owned by the state or another party. This certificate has limitations and must comply with applicable regulations and permits. This certificate is typically used for commercial buildings such as shophouses or apartments.
Differences Between SHM and SHGB
Now that you understand the meaning of SHM and SHGB, here are the differences you should consider. You can also consult a notary to check the status and completeness of the documents before purchasing your dream home.
1. Land Ownership Status
In terms of ownership, an SHM (Freehold Title) binds ownership of the land and the buildings on it. This differs from an SHGB (Holding Title), which only indicates the right to manage or use the building. This difference can be an initial consideration as to whether you will use the residence for a very long period or only for a specific period.
2. Validity Period
An SHM has an indefinite validity period or can be considered permanent. This differs from an SHGB, which typically has a validity period of 30 years and can be extended for another 20 years by mutual agreement or returned to the owner.
3. Inheritance Rights
With a potentially permanent term, property with an SHM can be inherited more easily. This differs from an SHGB, which typically must be returned to the owner after the agreement expires.
4. Use Rights
With an SHM, you have complete freedom to use and manage the land you own as long as you do not violate applicable laws. This differs from an SHGB, which typically requires compliance with specific regulations or permits related to the use of the owner’s land.
5. Selling Value
With an unlimited validity period and various flexibility options, properties with a SHM (Freehold Title) tend to command higher prices than properties with a SHGB (Shared Title). This is especially true if the SHGB property is nearing its expiration date.
If you purchase a property with an SHGB from a developer, you can convert the certificate from SHGB to SHM. The process of converting from SHGB to SHM usually doesn’t take long if you’ve completed the necessary documents and completed the administrative process at the nearest BPN office. However, if you decide to purchase a YUKARI Sawangan unit, you don’t need to worry about this process, as the SHM process is included in the purchase of the YUKARI Sawangan unit. If you’re interested, you can contact us at 0823-1133-4579 (WhatsApp), visit us via Instagram DM, or visit the official YUKARI Sawangan website here.
