Call Us
Enquire Now



NRI Corner

Information and Guidelines to Assist NRI Investment

Document Needed by NRI to buy the Property

One of the most important things for an NRI to do before buying any kind of property is running background checks and examining relevant documents. You must check the following documents thoroughly to get clarity on the title of the property.

Title Deed
The title deed is a legal document proving a person’s right to property. As a buyer, you need to check the title deed properly to ensure the authenticity of the transaction. Things you need to check for:
· The seller should provide you with the original title deed for verification purpose and not a photocopy.
· The title deed needs to be in the name of the seller. You can ask for identification proof as well from the seller to ensure that he is the person who he claims to be.
· Check whether he is the sole owner of the property or not. In case of joint ownership, you will need proper legal approval of all the co-owners of the property.
It is advisable to get the current, as well as previous title deeds properly scrutinized by your lawyer to ensure that there are no loopholes.

Encumbrance Certificate
The encumbrance certificate is important because it will prove whether the property you are interested in buying is under any kind of loan or mortgage or not. It is best to get the certificate properly scrutinized by your lawyer to ensure smooth functioning. It is available at the office of the sub-registrar where the land has been registered.

Release Certificate
In some cases, the seller had previously pledged the land as a mortgage for taking a loan. You should ask the seller to get the ‘release certificate’ from the bank stating that there is no pending debt on the land. You should then get this certificate looked over by your lawyer to be sure that the land is indeed debt free.

Approved Plan of the Building
In case you are buying a flat, you should go over the approved building plan drawings. The Floor Space Index (FSI), which is the ratio of building area to land area, generally lies in the range of 1 to 2. You should also check whether the total number of apartments in the plan match with the number approved in the permit.

Building Bylaws
Local authorities issue a set of basic standards, called building bylaws that need to be followed in the building construction. For example, there are always setbacks (minimum distance between the building and the road) to be kept in mind. You should find out all such bylaws and make sure that the building sticks to them. This will avoid problems in the future with the local authorities.

NOC for Urban Land Ceiling and Regulation Act
The Urban Land Ceiling and Regulation Act (ULCRA) prevents excessive land hoarding in urban areas. In some states the seller will need to obtain a No Objection Certificate (NOC) before selling the property. You should ask for this NOC and verify it with your lawyer.

Zoning Laws
It is important to keep the zoning laws in mind. This means that you cannot buy land reserved for residential purpose and build a business on it. There are strict zoning laws according to the Master Plan of the city. A land zoned for a particular purpose cannot be used in any other way.

Occupancy Certificate
The Occupancy Certificate (OC) of a property is necessary if you intend to take a loan from the bank. It is the certificate that claims that the building is complete and ready- to-be- occupied. In case of a bank loan taken for buying an under-construction property, you must remember to get the OC after the building is completed; otherwise, you will face difficulties in selling it in the future. The occupancy certificate will not be issued to you in case of illegal construction or violation of building, society and civic bylaws. Hence, it is also a proof that your property has followed all the necessary rules and regulations properly.

Receipt of Payment of Stamp Duty
You should have a proof that you have paid the stamp duty, either an online receipt or a stamp paper of the same value as the stamp duty amount.

Joint ownership of the Property in India

Like any other Indian resident, an NRI can also jointly own a property. As a co-owner, he/she can transfer his own share in the property to any other person.

It must be understood that joint ownership entails certain rights and obligations. A co-owner has the following rights:
· Right to possession of the property
· Right to use the property and
· Right to sell the property

The property can either be purchased in single name or jointly with any other NRI. However, an Indian resident or a person who is not allowed to invest in the property in India cannot be made as a joint owner in the property.

Power of Attorney

As an NRI, you can delegate someone in India to act on your behalf in your property transactions. By the Power of Attorney (PoA), you are bestowing upon your chosen agent, the right to make property transactions in your name. Therefore, you should properly measure your options and only entrust someone reliable with this responsibility.

Most lenders in India require a PoA while extending home loans to NRIs. The logic behind this requirement is that the NRI will be living in a foreign country and the lender would need someone in India to deal with. The PoA comes handy as it enables the bank to have a point of contact on home soil in case of any property or loan-related issue. Usually, lenders insist that the NRI borrowers appoint their parents, friends, or children as the PoA-holder.

FAQ's

Here are some of our frequently asked questions

NRI real estate transactions fall under the purview of the Foreign Exchange Management Act (FEMA). An NRI or person of Indian origin (PIO), as defined under FEMA, can invest in any immovable property in India, other than agricultural land/plantation property/farmhouse. However, a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, cannot acquire or transfer immovable property in India, other than lease, not exceeding five years, without prior permission of the Reserve Bank of India.

NRIs are entitled to joint ownership for properties purchased in single name or jointly with any other NRI. They can also purchase properties jointly with relatives in India. However, an NRI or a PIO cannot buy a property in India jointly with a foreign citizen.

Just like any resident Indian, NRIs are also free to invest in any number of properties in India and are also eligible to avail home loans for as many of these properties. There is no cap on the number of properties for which an NRI can avail home loan but certainly his repayment options are weighed and measured by most banks in concern. In India, most banks and non-banking financial institutions offer home loans to NRIs. However, the tenure of the home loan may vary, and the rate of interest is usually higher for NRIs.

As an NRI, you can delegate someone in India to act on your behalf in your property transactions. By the PoA, you are bestowing upon your chosen agent (usually close family member) the right to make property transactions in your name. Therefore, you should properly measure your options and only entrust someone reliable with this responsibility.

Most financial lenders in India require a PoA while extending home loans to NRIs. The PoA comes handy as it enables the bank to have a point of contact on home soil in case of any property or loan-related issue. Usually, lenders insist that the NRI borrowers appoint their parents, friends or children as the PoA-holder.

Pros of property investment
i. Low property prices: Currently, property prices are relatively lower in India and offer better returns and more value to investors. The depreciating rupee value against Dollar, Euro, Pounds etc. is an added advantage.
ii. Tax exemption: NRIs can invest in real estate in India and can still manage to save tax. They can claim tax deductions on home loans on both principal repayment and interest as well as other tax deductions such as stamp duty and registration charges etc.
iii. Steady rental income: NRIs can also invest and earn rental income from properties in India. However, similar to Indians, NRIs have to pay taxes on the rental income earned. Moreover, after deducting 30% TDS (tax deducted at source), the remaining amount can also be repatriated under FEMA rules. Similarly, proceeds earned via sale of immovable property can also be repatriated after deduction of between 20% to 30% TDS depending on its nature - long-term or short-term capital gains.

Cons of property investment
i. Legalities: The problems associated with legalities, documentation and managing properties from a distance could be cumbersome for NRIs.
ii. Low RoI: Compared to the equities market and other investment instruments like REITs, property investment in residential in recent times hasn’t given good return on investment. Even the rental yields in residential have remained low as compared to commercial segment.

The Reserve Bank of India has given general permission to NRIs, to purchase any number of residential or commercial properties in India. However, an NRI cannot purchase any agricultural land or plantation property in India. In order to purchase a farmhouse or plantation, he/she will have to approach the RBI for a specific permission and the RBI will consider this on a case-to-case basis.

The payment for a property purchase by an NRI can't be made in foreign currency. NRIs can make the purchase using the Indian Rupee only, through funds received in the country by means of normal banking channels. These funds have to be parked in a non-resident account under FEMA and RBI regulations.

Yes, NRIs can search and buy property online in India, provided they submit all necessary documents and pay in Indian rupee via normal banking channels. This trend has grown significantly due to the ease and comfort of the process. The online platform offers facilities such as virtual tours to simplify and facilitate the buying process for NRIs.
© 2022 Nrose. All rights reserved. Designed by Anarock Digital