Key points for NRIs before buying property in India

The real estate sector in India is fast emerging as an attractive investment destination, for NRIs. Therefore, it is important to be aware of Indian law and popular questions that NRIs tend to ask before they make real estate investments in India. NRIs can make up to 100% equity investment in real estate sector, all investments, except for the real estate investments, are fully repatriable. For real estate investments, the lock-in period on original investment is 3 years.

Given below are the key points to be considered before investing in Indian real Estate sector.

  • Non-Resident Indian (NRI)- that is a citizen of India resident outside India can freely purchase immovable property in India
  • The general permission, however, covers only purchase of residential and commercial property and not for purchase of agricultural land / plantation property / farm house in India. such proposals will require specific approval of Reserve Bank and the proposals are considered in consultation with the Government of India.
  • An NRI / PIO who has purchased residential / commercial property under general permission, is not required to file any documents with the Reserve Bank.
  • There are no restrictions on the number of residential / commercial properties that can be purchased
  • A foreign National of Non Indian Origin cannot be a second holder to the immovable property purchased by an NRI
  • NRI’s can freely acquire immovable property by way of gift either from
    However; the property can only be commercial or residential. Agricultural land / plantation property / farm house in India cannot be acquired by way of gift

Home loan FAQs for NRIs

For what kinds of property is a NRI eligible for Home loans?

A home loan is sanctioned to the NRIs for any of the following housing finance schemes:
a) To purchase a house that is ready-built, under construction or from a second owner
b) To fund the purchase of a plot of land allotted by a society / development authority.
c) For self-construction of a property on a plot of land
d) For renovation or improvement of an existing property in India

What is the eligibility for obtaining NRI Home Loans?

Your eligibility is calculated in the same way as it is calculated for resident Indians. More emphasis is laid on the following criteria in the appraisal of a NRI case:
a) Qualifications – the NRI applicant has to be a graduate
b) Current job profile & Past work experience
c) Probability of continuing abroad for the loan tenure
d) Probability of servicing the loan with an extended tenure in case you have to return to India.

What is the repayment period for a NRI Home Loan?

The housing finance offered to NRIs normally does not exceed 15 years. The repayment for the loan is via EMIs. The EMIs begin only after the entire loan is disbursed. In case of a part disbursement, you pay simple interest at the rate applicable on the loan amount that is disbursed to you.

How is the mode of payment for NRI home loans?

The loan towards the house has to be paid for the entire tenure of the loan through remittances from abroad through normal banking channels or from such accounts as may be permitted by RBI from time to time. As of today, the payments are done through NRO, NRE, NRNR and FCNR accounts. These accounts change on the basis of RBI permissions to each HFC.

What are the Tax Benefits applicable to Non-Resident Indians?

No tax benefits are available for NRI customers unless you file returns and thereby become eligible to avail the tax benefits as mentioned under Home Loans.

What are the documents required for obtaining Home Loans for NRIs & POIs?

NRIs are required to submit additional documents than is normally required for a resident Indian.

a) A copy of the passport

b) A copy of the works contract (also sometimes referred to as the contract card/labor card)

c) The power of attorney (POA). The POA is required because the borrower is not based in India and in such a scenario; the HFC would need a representative ‘in lieu of’ the NRI to deal with as required. Although not mandatory, the POA is usually drawn on the NRIs parents, wife or children

d) Bank Statement latest 6 months

e) Salary Slip

f) In case of POIs , a copy of the POI card