Property buying has gotten easier for non-resident Indian (NRI) buyers thanks to changes in real estate legislation, government efforts and policies, and rising dollar prices. They are purchasing residences in India for personal use or as an investment. According to Knight Frank Research’s Active Capital Report, real estate investments grew by 137 per cent between 2011 and 2013 and 2014 to 2016. Even though it may appear to be simple, there may be a few factors that NRI purchasers should be aware of before making a serious investment.
FEMA Rules Regulated by RBI
The Reserve Bank of India has eased the Foreign Exchange Management Act (FEMA) requirements, making it easier to invest in real estate in India and according to the rule, any NRI with a valid passport who wants to buy a commercial as well as residential property in India, except perhaps a plantation, agricultural land, or even a farmhouse, must have a valid passport. The latter properties are only available for acquisition if they are gifted or inherited by either an NRI through succession. Otherwise, they must obtain government and RBI approval before purchasing any of these restricted assets.
Citizens of Sri Lanka, Pakistan, Bangladesh, Afghanistan, Iran, China, Bhutan, or Nepal are not allowed to purchase real estate and lay NRI real estate investments in India.
Power of Attorney (PoA)
This is mandatory for NRI real estate buyers, as they may not be physically present in India at the time of the property transaction. Through PoA, NRIs have an option to transfer legal rights to their trusted friends or relatives to complete all purchase procedures on their behalf. PoA can be used for leasing, selling, mortgaging, borrowing, renting, and so on.
Home Loans
The Reserve Bank of India has allowed housing finance businesses and banks to give home loans to non-resident Indians for the purchase of a real estate in India. NRIs, like any other Indian citizen, can get a home loan up to 80% of the value of their property. The loan is granted in Indian Rupees, and the borrower is required to return the loan using Indian Rupees. It can be returned in the following ways:
- Banking channels by way of inward remittance
- NRO/NRE/or FCNR (B) account
- The rental income
- The close relative of the borrower, by crediting their account
The payment towards home loan cannot be made through travellers’ check or foreign currency notes. Also, payment made outside India will not be accepted.
