Recently, RBI has permitted non-residents of India to invest in agricultural or plantation land and a farmhouse. This is an addition to the rights for NRI who want to buy a property here. Earlier, they were able to purchase a residential or commercial property only.
Governing Law
A few years ago, investing in real estate in India was no less than an uphill battle. But over the years, the legal reforms have made NRI property management and buying way easier. This process is now hassle-free.
Thanks to some specific legal reforms the Reserve Bank of India (RBI) in the Foreign Exchange Management Act (or FEMA)!
- Sole Acquisition of Property
Its actual beneficiary is an NRI. A non-resident (NRI) is one who has spent more than 182 days in India but living abroad as a temporary resident. They can now buy agricultural land under the 1999 FEMA.
However, the NRI can acquire any immovable property in India as a gift from a resident of India or an Overseas Citizen of India (OCI). The Companies Act, 2013 allows it.
- Joint Acquisition of Property
A person resident who lives outside India is considered an NRI or an OCI. He may acquire a piece of immovable property, which should not be agricultural land/ farmhouse/ plantation property. He can jointly acquire it and the acquirer can be his/her NRI spouse. Here, a condition is applied. This joint acquisition is possible if the consideration for transfer shall be made from the following method:
- It can be funds sent through inward remittance in India from any place, except India, using any banking channel.
- Funds transferred or maintained in any non-resident account to comply with the provisions of the FEMA and different regulations regulated by the RBI.
- Transaction Guidelines
The Act states that a traveler’s cheque or foreign currency notes shall not be accepted to pay for any transfer of immovable property. Any mode other than those specifically permitted can be the following:
- Through a marriage that has been registered for a minimum of two years immediately preceding the acquisition
- furthermore is that the NRI spouse is not otherwise prohibited from such acquisition.
How to Pay?
For the payment against the property in India, it is a must to transact in Indian currency. Non-residents may use their NRI account of an authorised Indian bank. This is compulsory to use Non-Resident Ordinary Account (NRO), Non-Resident External (NRE), or Foreign Currency Non-Resident account (FCNR).
There is also a provision for loans. The RBI allows them to lend money for investing in property in India. In this case, EMIs can be paid in these ways:
- Remit the amount from NRIs foreign bank account by using a regular banking channel
- Issue post-dated cheques or use NRE, NRO, or FCNR account’s electronic clearance service (ECS). Alternatively, you may pay through rental income.
Power of Attorney
Power of Attorney empowers a solicitor or any other person to undertake transactions for immovable property in different places in India. It’s legally valid and compulsory to have a registered version of a Power of Attorney. This legal document authorizes another person to carry out transactions, or attend the registration or documentation procurement related to the sale or purchase of a property on behalf of the actual buyer.
It is legitimate to provide a special or specific power of attorney to any trustworthy adult Indian native. This option helps the authorised person to complete the necessary paperwork or intended formalities on behalf of the NRI when he is not physically present here to sign the deal.
Verify the Real-Estate Project & Company
Take into account that an under-construction property should be bought if it’s a part of a project registered with the Real Estate Regulatory Authority. Also, find out if the National Banks for loans have pre-approved the project. It ensures that the due diligence about that real-estate project and the construction company has already been executed.
