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Buying Property

India - Buying Property


Indian property purchases by Non-Resident Indians (NRI), Persons of Indian Origin (PIO), and international citizens are regulated by the Foreign Exchange Management Act (FEAM) 1999.

Citizens from Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan who are resident in India can only buy property in India if they have permission from the Reserve Bank of India (RBI).

All other migrants may purchase residential and commercial property in India subject to State Laws. However, no foreign person or overseas company is allowed to buy agricultural land or property built on agricultural land, such as farmhouses.

Migrants are classed as a resident if they have been living in India for at least 182 days during the preceding financial year. They must be there for employment, business or vocational reasons that suggest they will remain in India for an indeterminate time.

People who do not live in India cannot buy property or land there under any circumstances. They can, however, inherit property in India. They may also take out a property lease for up to five years without the permission of RBI.

In addition, international companies cannot purchase property in India unless they have a registered business there.

Agricultural land, plantation land and farmhouses may only be purchased by Indian citizens, or by NRI and PIO who have received permission from the RBI.

How Does A Non-Resident Indian Buy Property In India?

Indian citizens who live elsewhere are referred to as non-resident Indians (NRI). They, along with PIO, may buy any residential or commercial property of their choosing as long as it is not on agricultural land.

So, for example, an NRI living in the USA may purchase an apartment in India without special permission, but a citizen of the USA living in India must obtain permission from the RBI before purchasing an identical apartment.

An NRI must obtain permission from the RBI to buy agricultural land or farmhouses in India. They do not require permission to purchase any other type of residential or commercial property. An NRI can also buy the property in their name alone or jointly with another NRI. They cannot make a joint purchase with a resident or a non-resident foreigner.

A number of documents are required for an NRI to buy property in India. During the purchasing process, they will need to supply their passport, a recent photograph, proof of their current address and a Permanent Account Number (PAN) card.

Mortgages In India

It is not possible to purchase property located in India using foreign currency. The financial transaction can only be made in India’s official currency, the rupee.

Both migrants living in India and NRIs can apply for a mortgage. The bank that provides the loan must be registered with the National Housing Bank specifically to provide mortgages to NRI for the purposes of buying property in India.

The bank will make a number of checks and ask for a wealth of evidence about your identity and income. The interest rate on the loan may be higher than average to cover the additional element of risk that the bank has taken on by lending money to someone who is either out of the country or may leave at short notice.

The mortgage funds, paid in rupees, will be transferred to the developer’s or seller’s bank account, usually via the solicitor.

Expats living in India will pay back the loan using their Indian bank account. NRI usually run a non-resident’s ordinary account or fixed deposit foreign currency account and will make their repayment from there.

The amount of taxes you will pay in relation to your property purchase will depend on the citizenship and residential status of the person you are buying the property from. For example, stamp duty for non-residents is higher.

Property Scams

Dibakar Banerjee's Bollywood film Khosla ka Ghosla! (Khosla's Nest) tells the story of a man buying a piece of land for his dream home, only to discover he has been cheated by a con-man. There follows a comic turn of events as his sons come up with schemes to get the money back. Unfortunately, in real life, the con-man disappears and the victims are left without their life savings.

Sometimes agents convincingly sell a piece of land, reportedly on behalf of the owners. They claim the local villagers have agreed to sell a piece of common land, or that a busy or absent owner is selling land they don’t need. However, once the land has been paid for and the agent has disappeared, the real owner begins court proceedings. The Indian legal system is notoriously slow and inefficient, so land disputes take decades to work their way through each stage.

Problems can even arise over the sale of a new apartment purchased directly from the developer. Cases have been reported where a developer or another party offers to sell the property cheaply and without stamp duty in return for a cash payment. Meanwhile, the apartment’s title is sold to another buyer who has correctly followed the legal procedure.

Other buyers are left disappointed and out of pocket when a builder fails to complete a development or walks away from poor workmanship.

In October 2018, the High Court in Chennai ordered an investigation into the state of land registration documents in Registrar Offices across Tamil Nadu. The suspicion is that land mafia gangs are identifying target pieces of development land, arranging the destruction of land registry documents and having new ones issued to their benefit. The lack of digitisation and poor security of official records in a country where bribery is frequently encountered causes concern.

A Good Solicitor Should Protect Your Money

To avoid any of these scams, purchase your property through a qualified and correctly licensed firm of solicitors. The UK Foreign and Commonwealth Office (FCO) have provided a useful online list of English-speaking solicitors in India. This list includes a brief introduction to each firm’s specialisms and associations, along with contact details. There is also an FCO feedback form should anyone experience a problem with one of the listed firms.

Make sure you know what official checks your solicitor has completed and be aware of any issues they may have identified in respect to the property you are purchasing or the neighbourhood.

Never pay a cash deposit to anyone. All payments must be made via your solicitor through the client account. Reject all suggestions to avoid taxes and charges, and alert your solicitor if the scheme suggested involves a property you have agreed to buy.

Speak To Other Expats

Investing your hard-earned money into property can be a life changing experience. To find a good lawyer and ensure your purchase is legally sound, why not ask other expats in India for their recommendations?

You can start a new thread on the ExpatFocus forum for expats in India. Alternatively, if you use Facebook, join the ExpatFocus Expats In India Facebook Group and ask hundreds of other group members for their advice on your plans.


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