** NRI Buyers Guide


1. Who is a non-resident Indian (NRI)?

An Indian Citizen who stays abroad for employment/carrying on business or vacation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U. N. Organizations and officials deputed abroad by Central/state Government and Public Sector undertakings on temporary assignments are also treated as non-residents). Non-resident foreign citizen of Indian Origin are treated on par with non-residential Indian Citizen (NRI’s) for the purpose of certain facilities.

2. Who is a person of Indian Origin?

For the purpose of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India.

A foreign citizen (other than a citizen of Pakistan or Bangladesh) is deemed to be of Indian Origin, if, he, at any time, held and Indian Passport, or he or either of his parents or any of his grand parents was citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1955).

Note: A spouse (not being citizen of Pakistan or Bangladesh) of and Indian citizen or of a person if Indian Origin is also treated as a person of Indian origin for the above purposes provided the bank accounts are opened or investments in shares/securities in India are made by such persons only jointly with their NRI spouses.

For investments in immovable properties.
A foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal), is deemed to be of the Indian Origin if he held and Indian Passport at any time, or he or his father or parental grand-father was a citizen of India by virtue of the (Constitution of India or the Citizenship Act, 1955(57 of 1955).

3. Do non-resident Indian citizen require permission of Reserve Bank to acquire residential/commercial property in India?

No.

4. Do foreign citizens of Indian Origin require permission of Reserve Bank to purchase immovable property in India for their residential purpose?

Reserve Bank has granted general permission to foreign citizens of Indian Origin, whether resident in India or abroad, to purchase immovable property in India for their bonafide residential purpose. They ate, therefore, not required to obtain permission of Reserve Bank.

5. In what manner the purchase consideration for the residential immovable property should be paid by foreign citizen of Indian Origin under the general permission?

The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India.

6. What are the formalities required to be completed by foreign citizen of Indian Origin for purchasing 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 document evidencing the transactions and bank certificate regarding the consideration paid.

7. Does such property can be sold without the permission of Reserve Bank?

Yes, Reserve Bank has granted general permission for sale of such property. However whether the property is purchased by another foreign citizen of Indian Origin, funds towards the purchase consideration should either be remitted to India or paid out of balance in NRE/FCNR accounts.

8. Can sale proceeds of such property if and when sold be remitted out of India?

In respect of residential properties purchased on or after 26th May 1993, Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties. The balance amount of sale proceeds if any or sale proceeds in respect of properties purchased prior to 26th May 1993, will have to be credited to the ordinary non-resident rupee account of the owner of the property.

9. Are any conditions required to be fulfilled if repatriation of sale proceeds is desired?

Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed from the date of payment of final installment of consideration amount, whichever is later.

10. What is the procedure for seeking such repatriation?

Applications for necessary permission for remittabnce of sale proceeds should be made inform IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property.

11. Can foreign citizen of Indian Origin acquire or dispose of residential property by way of gift?

Yes. Reserve Bank has granted general permission to foreign citizen of Indian Origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian Citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.

12. Can immovable property held in India, be transferred by way of gift to relatives/registered charitable trusts/organizations in India?

Yes. General permission has been granted by Reserve Bank to non-resident persons(foreign citizen) of Indian Origin to transfer by way of gift immovable property held by them in India to relatives and charitable trust/organizations subject to the conditions that the provisions of any other law, including Foreign Contribution (Regulation) Act, 1976, as applicable, are duly complied with.

13. Can foreign citizen of Indian Origin acquire commercial properties in India?

Yes. Under the general permission granted by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizen of Indian Origin provided the purchase consideration is met either out of inward remittance in foreign exchange through normal banking channels or out of funds from the purchaser's NRE/FCNR accounts maitained with banks in India and a declaration is 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.

14. Can they dispose of such property?

Yes.

15. Can sale proceeds of such property be remitted out of India?

Yes. Repatriation of original investment in respect of properties purchased by foreign citizen of Indian Origin on or after 26th May 1993 will be allowed to 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, whichever is later. Application for the purpose are acquired to be made to the Central Office of Reserve Bank within 90 days of the sales of property in Form IPI 8.

16. Can the properties(residential/commercial) be given on rent if not required for immediate use?

Yes. Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income are eligible for repatriation.

17. Can NRI’s obtain loans for acquisition of house/flat for residential purpose from authorized dealers/financial institutions providing housing finance?

Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., and authorized dealers to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation subject to certain conditions. The purpose of the loan, margin money and the quantum of loan will be at par with those applicable to housing loans to residents. Repayment of loan should be made within a period not exceeding 15 years out of inward remittance or out of funds held in the investor's NRE/FCNR/NRO accounts.

18. Can Indian companies grant loans to their NRI staff?

Reserve Bank permits Indian Firms/Companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions.

19. Can authorized dealer grant housing loan to non-residents of Indian nationality where he is a principal borrower with his resident close relative as a co-obligator/ guarantor or where the land is owned jointly by such NRI borrower with his resident close relatives?

Yes. However, in such cases the payment of margin money and repayment of the loan installment should be made by the NRI

Q.20 How to start a search for property?

Ans First of all, you write down your specification what you really want, in which area you want and what is your budget for it.
a. Than ask your friends, neighbour, colleagues, if they themselves know about any such property or they might know some one who can guide you in your property search.
b. You can also search for professional realtors in yellowpages, newspapers, advertisements, who can assist you in a professional manner in searching and finalizing the property deal for you.
c. You can go to web sites as estatesmall.com etc.

Q.21 There are lots of realtors and property dealers, and I have heard that they are out to rob you of the last penny. I am confused, how can I trust them?

Ans a. First check up from your friends, relatives, if they know some realtor with whom they have dealt with and whether realtor acted as he was supposed to act.
b. Meet your prospective real estate agent and ask about his background, references etc.
c. Look for professional Estate agents through web sites mentioned above.

Q.22 How to verify if the property I am buying is worth the investment or I am buying a headache and pain for myself ?

Ans. a. You must get the papers of the property verified from a Competent Solicitor.
b. Ask if the property can be transferred on your name or will it be on Power of Attorney.
c. You can write down your own checkpoints or refer to the points mentioned below.
d. Approach professional Estate agents.

Q.23 How the monetary transaction takes places?

Ans. First a token amount is paid; thereafter payment stages are fixed during which seller as well as buyer have to fulfil certain statutory obligations. Once both the sides meet these obligations, part payment can be made. Third and final stage of payment is at the time of possession of property and execution of documents in favour of purchaser.

Q.24 Once the property has been registered and possession has taken what has to be done?

Ans. The property has to be mutated in your name in the books of relevant local authorities. We take care of all legal documentation aspects.

CHECK POINTS

Important information that you must gather before you finalize any property deal.

1. Go to professional Estate agents ask him to fulfill all legal formalities.
2. Get the papers of the property examined by a solicitor
3. Verify from neighbours, agents, about the credential of the other party.
4. If buying from a builder, verify his track records; check if he had obtained all the requisite permission from the local authorities.
5. Has the builder constructed the apartments, within the permissible parameters or he has gone over the board and flouted some building bye-laws.
6. Has the property got legal authorized power, electricity and water connection.
7. Has their been any mortgage, lien or any interest of any third party on the property that you are contemplating to purchase.
8. How is the neighbourhood.
9. Is there any outstanding payments against the property in house tax, or to any other local bodies.
10. How is the location.
11. Is the area underdeveloped, developed or is bursting as it seems.
12. Is there any hidden/untapped potential in the area, where you are planing to invest.
13. What kind of the quality of the living you envisage immediately and in future, is it commensurating with your plans.
14. Is the price quoted to you a reasonable figure, applicable to a similar property in the same neighbourhood.
15. Is the price within your budget.
16. Have you taken in to consideration about the other expenses that are associated with the purchase of the property i.e., Stamp Duty, Agent brokerage, cost of renovation/improving the property, cost of furnishing the property, future house tax payments.

FRAUDS IN REAL ESTATE

Frauds in Real Estate business broadly falls under following categories. Therefore one should watch out before becoming a prey to a predator.


1. Best Bargain Price: Builder or developer promises you attractive lower price than his competitor! Check out his track record, credentials and market reputation.
2. False or Defective Titles: Check up the records and cross verify them from concerned Government authorities.
3. Delay in giving possession of the property: Builders keep rotating your money from one project to another in making a quick buck, and your money gets struck.
4. Misrepresentation of facts, concealment of actual specification: Another common tactics to extract more money from you, than you should pay.
5. Paying you attractive price and excellent payment terms: Watch out for this, if you are selling or leasing your property. Because of your greed to extract the maximum from a prospective purchaser or a tenant. You get hooked. Best is to go for a reasonable and market price.
6. If you pay peanuts you will get monkeys: Pay your broker his commission and due charges as per the market practice to take care of your interest & everlasting relationship. If you bargain or pay less, they are smarter than you in extracting through other methodologies, which you may not be even aware off.
7. Certain dealers promise you Property management facilities after sale services.