An economist has criticized a recent proposal to increase taxes on landed houses (rumah tapak) as the policy could crush the housing aspirations of Indonesia’s middle- and lower-income citizens.

Achmad Nur Hidayat, an economist and public policy expert at National Development Veteran University Jakarta, responded to the idea floated by Deputy Minister of Housing and Settlements Fahri Hamzah, who suggested higher taxes on landed homes to push citizens toward living in vertical housing such as low-cost apartments (rusun). Fahri argued that such a move would promote sustainable urbanization and spatial efficiency in Indonesia’s growing cities.

“Housing is not a privilege − it’s a basic right,” Achmad said on Wednesday, June 11, 2025. “Punishing people with taxes simply because they can only afford simple landed houses, far from the city center, is not urban reform. It’s a direct assault on struggling families’ dreams.”

In Indonesia, landed houses are more than just physical structures. For millions, they are centers of family life, economic activity, and cultural tradition. Families often run small businesses from home, maintain social networks in neighborhoods, and build generational wealth through their property.

“People don’t reject apartment living because they’re against modernization,” said Achmad. “They reject it because most public housing projects are far from jobs, lack proper infrastructure, and are socially isolating. For many, landed houses are the only viable option.”

Policy targets

Achmad warned that raising taxes on landed homes would disproportionately affect the very groups that need protection,namely young families trying to buy their first home, retirees living in inherited property, and informal workers who use their homes as micro-business spaces.

Instead of closing Indonesia’s housing backlog, the proposed policy may widen it. “If citizens can’t afford landed homes and decent vertical housing doesn’t exist in enough supply, where will they go?” Achmad asked. “To slums, to cramped rental units, or worse − become homeless.”

To illustrate the policy’s flaws, Achmad offered an analogy: “Imagine someone can only afford a motorbike, and the government imposes a heavy tax on it to force them to buy an electric car. But EVs are expensive, charging stations are rare, and traffic is still a mess. That’s what this policy is like.”

Using fiscal pressure to engineer housing behavior, he said, is coercive and unfair.

Economy and equity

The housing sector is a major economic driver linked to over 100 industries − from construction materials to furniture and finance. Suppressing demand for landed housing with punitive taxes, Achmad warned, could weaken broader economic growth and reduce employment.

Instead, he called for a justice-oriented approach − Tax luxury and speculative properties, not first-time homebuyers; Use idle state land to develop decent, accessible vertical housing; and Offer incentives, not punishments, to guide urban housing trends.

Fahri Hamzah’s proposal, made in a recent urban housing seminar, suggested increasing taxes on landed houses to encourage “efficient land use and sustainable urban growth.”

He positioned it as a solution to urban sprawl and traffic congestion. While some planners support higher density housing, critics argue that Indonesia’s vertical housing efforts remain inadequate in quality, quantity, and location. Without improvements, critics like Achmad say, forcing citizens into apartments amounts to “urban punishment.”

“True justice isn’t built through tax hikes,” Achmad noted, “but through empathy, planning, and fair access.”

He asked the government to remember that behind every housing statistic are people, families, workers, and dreams worth protecting.