NRI Investment Guide For Indian Property Market

Published on: Jun 6, 2015 @ 18:29

The  Indian  property  market  has  always  grabs  the  attention  of  NRI  and  has  always  been a  lucrative   investment  option  for  them. NRI  investment  in  Indian  housing  sector  has  become  more  affordable  and extremely  lucrative  as  the  value  of  the  rupee  is  depreciating  against  the US  dollar  and  real  estate  offers better  returns. The  other  reason  of  investment  in  the  Indian  property  market  by  NRI  is,  buying  a  property   in  the  native  country.

The  Indian  laws,  over  the  years,  are  simplifying  the  rules  and  the  RBI  along  with  the Foreign  Exchange Management  Act  (FEMA)  has  become  lenient  in  terms  of  rules  and regulations  for  non-residents  who  want to  buy  a  property  in  India.  The  RBI  governs  such transactions  and  the  rules  for  any  such  property transaction  fall  under  the  FEMA.

If  you  are  an  overseas  Indian,  you  need  to  know  some  basic  rules  before  investing  in  a residential  or commercial  property  in  India:

An  NRI  or  Person  of  Indian  Origin (PIO)  can  own both  residential  as  well  as  commercial properties  in  India and  there  is  no  restriction  on  the number  of   properties  he/she  can  buy. RBI  permission  is  not  required  for an  NRI  to  buy  residential  or commercial property  in India. However,  an  NRI  can  not  buy  any  agricultural land,  farm  house  and plantation land  in   India. He/She  can  have  ownership  of  such  property  only  if  they have been  inherited  or  gifted.

Examine  all  the  legal  documents  before  buying  the  property.  In  some  cases,  the  residential projects  are  built on  agricultural  land  without  securing  approval  from  the  government.  In such  cases,  the  investment  will  be   deemed  illegal,  irrespective  of  who  buys  the  land. Therefore,  make  sure  to  check  the  title  deeds  of  the property  in  original,  and  that  it  is solely  in  the  name  of  the  seller.

Take  a  bank  release  in  case  it  was  at  any  point  of  time  under  mortgage  and  also  take  a  no dues  certificate from  the  seller  at  the  time  of  purchase  to  ensure  there  is  no  water, electricity or  any  other  pending  bills   with  the  authorities.

For  new  constructions,  land  title  should  be  clear  and  the  builder  should  have  taken  all approvals  and permits such  as  environment  and  municipal  clearances  and  the  authority  to transfer  the  undivided  share  of land  to each  apartment  owner  and  the  entire  plot  to  the society  upon  completion  of  the  project  from  the civic authorities.  Even  for  projects  under construction,  insist  on  these  documents  to  ensure  that  your investment is safe  and  secured.

It  would  be  advisable  to  get  the  papers  verified  by  a  lawyer  and  ensure  that  the  builder has secured  all  the necessary  approvals.

After  having  identified  the  property  and  arriving  at  a  price  at  which  the  sale  is  agreed  a sale  agreement must be  drawn.  Once  the  sale  deed  is  completed,  you  need  to  get  it registered  at  the  sub-registrar  or  Sub District Magistrate  by  paying  registration  cost  and stamp  duty.  The  stamp  duty  payable  varies  from  state  to state.

You  can  appoint  a  representative  in  India  with  a  power  of  attorney  to  act  on  your   behalf. A  power  of attorney  can  be  given  to  execute  on  your  behalf  to  complete  formalities  such  as registration,  possession, execution  of  agreement  of  sale,  any  contracts,  deeds  as  well  as mortgage,  lease  or even  sell.  So, make  sure the kind  of  authority  you  are  giving  to  the person  through  the  power  of  attorney. Just  get  it  documented properly  by  a  professional lawyer.

The  payment  of  purchase  price,  if  any  should  be  made  from  either  funds  received  in  India through  normal banking  channels  or  funds  held  in  non-resident  bank  account.  You  can  pay through  rupee  denominated  non-resident  ordinary  (NRO)  or  non-resident  external  (NRE) accounts  and  Foreign  Currency  Non-Resident (FCNR) accounts.  Financial  institutions  provide home  loans  to  eligible  NRI  and  the  repayment  can  easily  be done  by inward  remittance through  the  proper  banking  channel.

 

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