Real Estate Investments

Real Estate in India has seen a brisk growth in recent years, which has attracted a large number of foreign investors in the form of builders, buyers and finance companies. New policies of the government have definitely helped in attracting foreign direct investment in the sector. Current boom has also given a chance to banks and finance companies to cash on this particular scenario where people who wish to buy a property can easily procure home loans and finance depending upon their eligibility.

The growth in the sector has also given opportunities to NRIs living in different parts of the world to come back to India and make investment in property, which is far more rewarding than any other form of investing. Easy availability of home loans in India has made it easier for people to buy a home. Investment in real estate has seen such a remarkable growth that in the last one year, values of Residental spaces have increased by up to 45% just because of the demand from IT and ITES sectors in India.

FAQ

Do non-resident Indian citizens require permission of The Reserve Bank to acquire residential/commercial property in India?
No. All Indian citizens living abroad are entitled to buy property in India, irrespective of their residential status.

Do foreign citizens of Indian origin require permission of the Reserve Bank to purchase immovable property in India for their residential use?
Yes. However, the RBI has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are, therefore, not required to obtain separate permission.

Who is a foreign citizen of Indian Origin?
A foreign citizen is deemed to be of Indian Origin if : i) he held an Indian Passport at any time or ii) he or his father or paternal grand father was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955. However this does not apply to citizens of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal)

How should the purchase of residential immovable property be paid for by foreign citizens of India origin under the general permission?
The purchase consideration should be met either out of inward remittance in foreign exchange through normal banking channels, or out of funds from NRE/FCNR accounts maintained with banks in India.

What formalities have to be completed by foreign citizens of Indian origin to purchase residential immovable property in India under the general permission?
They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the documentary evidence for the transaction and bank certificate for the money paid.

Can immoveable property held in India be transferred by way of gift to in India?
General permission has been granted by Reserve Bank to non-resident persons (foreign citizen) of Indian Origin to transfer, by way of gift, immoveable property held by them in India to relatives and charitable trusts / organisations subject to the condition that the provisions of all other laws, as applicable are complied with.

Can foreign citizens of Indian origin acquire commercial properties in India?
Properties other than agricultural land/farm house/plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maintained with banks in India. A declaration has to be submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.

Can they dispose of such properties?
Yes.

Can sale proceeds of such property be remitted out of India?
Yes. Repatriation of original investment in respect of properties purchased by foreign citizens of Indian origin on or after 26 May 1993 can be remitted up to the consideration amount originally remitted from abroad provided the property is sold after a period of three years from the date of the final purchase deed or from the date of payment of final instalment of consideration amount, which ever is later. Applications for the purpose are required to be made to the Central Office of Reserve Bank within 90 days of the sale of property in form IPI 8.

Can NRIs obtain loans for acquisition of a house/flat for residential purpose from financial institutions providing housing finance?
The Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC and authorised dealers to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation, subject to certain conditions. Criteria regarding the purpose of the loan, margin money and the quantum of loan will be at par with those applicable to resident Indians. Repayment of the loan should be made within a period not exceeding 15 years, out of inward remittance through banking channels or out of funds held in the investors' NRE/FCNR/NRO accounts.

Can Indian companies grant loans to their NRI staff?
The Reserve Bank permits Indian firms to grant housing loans to their employees deputed abroad and holding Indian passport subject to certain conditions.

Can an authorised dealer grant a housing loan to non-residents of Indian nationality where the NRI is the principal borrower with his resident close relative as a co-obligant / guarantor or where the land is owned jointly by such NRI borrower with his resident close relative?
Yes. However in such cases the payment of margin money and repayment of loan instalments should be made by the NRI borrower.

In what way the Non-resident Indian can finance the flat?
The purchase of the flats can be financed from the fresh remittance through the normal banking channels or from payment from original non-resident account or from Non-resident (External) Accounts. Non-resident Indians who are citizens of India (India Passport holders) are eligible for housing finance for the acquisition of an immovable property or construction of a new house, or a flat for their occupation or for that of their family in India. But the HDFC also considers granting of loans to non-resident Indians even if they are abroad, provided a family member of his or her in India is made a co-borrower and a power of attorney is given to his representative in India

Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?
The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.) These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.

Can such residential property be given on rent if not required for immediate residential use?
YES

Can the rental income from such property be remitted outside India?
No. Such income cannot be remitted abroad and will have to be credited to the ordinary non-resident rupee account of the owner of the property.

Non-resident Indians are staying abroad can the property be purchased through the agent or through the Power of Attorney?
The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or Developer, drafting and signing of agreements, taking possession, etc.) These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.

Are there any formalities to be completed by foreign nationals of Indian origin for purchasing residential immovable property in India?
They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Bombay within a period of 90 days from the date of purchase of immovable property.