NRIs, here's how to invest in real estate in India
Given the rupee's depreciation over the past few months, NRIs have been flocking to India's real estate market, even as local buyers shy away.
Non-resident Indians (NRIs) are a lucky bunch right now. While they earn in foreign currency, they can invest back home in rupees, which during a time of currency weakness can give them more bang for the buck.
Given the rupee's depreciation over the past few months, NRIs have been flocking to India's real estate market, even as local buyers shy away. Typically, NRI investors tend to be of two kinds - those who want to earn good returns on their investment and those who purchase property for their family in India.
According to property consultant Jones Lang Lasalle, here's a list of the things that NRIs have to keep in mind while buying property in India
•First, NRIs have no restrictions on how many commercial or residential properties they can own in India. However, there are restrictions on the repatriation of sale proceeds, which is limited to two units. Effectively, this means that while they face no restriction when investing in commercial or residential real estate in India, repatriation of sale proceeds can only be done for two units.
•NRIs can invest in real estate by remitting funds to India through normal banking channels, or by investing in funds in NRE/FCNR/NRO accounts maintained in India. They cannot make payment via travelers' cheque or foreign currency notes. They are also restricted from making any payments outside India or settling payments through exchange of funds outside the country.
•NRIs can take a home loan from an Indian institution approved by the NHB, and loan repayment can be done either through inward remittances, debit to a NRE/FCNR/NRO account, via rental income earned in India or by borrowing from close relatives residing in India. NRIs can also avail of home loans from the employer in India, provided specific terms and conditions listed by the central bank are met.
•NRIs can mortgage residential property in India with an Indian financial institution without any approval from the central bank. They can also mortgage it with a foreign financial institution with prior approval from the Reserve Bank of India (RBI).
•NRIs can lease their residential property without prior approval of the RBI in India. Rent received can be credited to NRO/NRE account or remitted abroad, subject to the fulfillment of tax obligations.