PURCHASE/BUYING PROPERTY IN INDIA
For anyone, the motherland is always sweet. In many cases, NRIs sell all of their personal and ancestral property in order to relocate abroad. However, as time passes, their feelings for their motherland become stronger, and a nostalgic emotion leads them to purchase a property in India, which they use as a home when they return to India for a vacation every two or three years. Another motivation is to purchase a home and provide a decent living space for other family members or parents who are still in India.
Definition of Non-Resident India
According to the Foreign Exchange Management Act (FEMA), a non-resident Indian (NRI) is a person who has lived outside of India for more than 182 days. A Person of Indian Origin is a citizen of another nation whose father or grandfather was an Indian citizen, but not of Pakistan, China, Afghanistan, Bangladesh, Sri Lanka, Iran, Nepal, or Bhutan, and who is not considered a PIO or who has ever carried an Indian passport. A foreigner who is a resident of India can also buy and sell property in India without obtaining prior authorization from the Reserve Bank of India. The Foreign Exchange Management Act (FEMA), which is overseen by the Reserve Bank of India, governs the purchase and acquisition of immovable assets in India by non-resident Indians.
Reasons for NRIs’ Increased Interest in Property in India
For the following reasons, NRIs have increased their interest in Indian properties:
- With the implementation of RERA, consumers’ risks have been significantly reduced, as have buyer sentiments.
- With renewed interest and a GST-free environment, it gives investors more confidence and comfort.
- Consumer sentiment is expected to gradually improve as GST, RERA, and revised insolvency and bankruptcy provisions transform real estate into a consumer-friendly sector.
- Following the implementation of RERA and GST, which increased transparency and improved buyer sentiment, more inquiries and bookings were received in 2017.
- The affordable housing sector has received a renewed boost, not only as a result of price reductions but also as a result of the government’s rollout of various incentives and measures for first-time home buyers.
There are a number of other reasons why an NRI should invest in India. A few of the advantages are having lower home prices when compared to the prices in their home country or other developing countries. Furthermore, the rate of increase in real estate prices in India has always been higher than in developed countries. This ensures a higher return on investment. Furthermore, a fall in the value of the rupee against the respective currency would always help them gain more, which is an added advantage. If NRIs buy a house in India, they will always have the option of returning, and the reverse mortgage facility will enable senior NRIs to maintain a safe retirement because the money borrowed from banks through a reverse mortgage is not taxable.
Properties in which an NRI can invest
Non-resident Indians with an Indian passport who reside outside of India do not need to seek authorization from the RBI before investing in real estate in India. The laws and regulations imposed under the Foreign Exchange Management Act would apply to NRI real estate transactions (FEMA). NRIs and PIOs are permitted to make unlimited investments in residential, commercial, and industrial real estate. The RBI places no restrictions on the quantity or number of properties that can be purchased. An NRI is allowed to acquire any residential or commercial property by way of a gift from any of his NRI, OCI, or resident relatives. An example isThe Foreign Exchange Management Act, 1999 (FEMA) and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations prohibit an NRI from purchasing agricultural land, plantation property, or a farmhouse in India via the automated method. Although an NRI is not permitted to purchase agricultural land in India, he is permitted to inherit such property from any Indian resident. Inheritance can be received by a will from a non-relative or through personal law from a relative if a valid will is not formed. Furthermore, an NRI may inherit any immovable property in India from another NRI if the NRI acquired the property under the permissible laws in effect at the time of acquisition.
To buy a property in India, an NRI, PIO, or OCI must have the following documents:
- OCI Card
- Obtaining a passport (for an NRI)
- PAN Card (Permanent Account Number)
- Photographs in Passport Size
The Confederation of Real Estate Developers Associations of India (CREDAI) hosts regular displays for NRIs to bring them up to date on investment prospects in India. Before investing, NRIs should insist that the developer or builder they choose is a member of CREDAI and properly investigate their services.
The NRI must either pay through banking channels by remittance from overseas or use the balance in his NRE/NRO or FCNR account to purchase allowed immovable properties in India. Payment cannot be made in the form of traveler’s cheques or foreign cash in India since the money for purchasing immovable property must come through only authorized methods, including banking systems. NRIs are even permitted to use an Indian rupee home loan to finance the acquisition of a residential property. For the purpose of financing the property, the house loan can be issued by the NRI employee’s Indian employer, a housing finance firm, or a bank. NRIs should ensure that the property’s title is clear, as certified by a lawyer, and that if the property is jointly owned, the title is cleared first, with no outstanding dues or bills with any authorities.
After demonetization, the cost of residential apartments fell dramatically, and regulatory measures such as GST and RERA have made the market more consumer-friendly and egalitarian, bringing greater transparency, security, and accountability. The REIT (Real Estate Investment Trust) would allow investors to invest in commercial buildings similar to stocks.
Legal Help NRI has an exclusive and dedicated team looking after the purchase of property by NRI. Our teams work across India, providing assistance to clients in purchasing a property. The firm is capable of addressing a wide range of real estate property concerns while maintaining a keen understanding of the most competitive expenses and fees associated with a transaction. Our professionals are constantly striving to come up with realistic, constructive, and innovative solutions to any property-related concerns.