Indian property segment offers immense benefits to its investors, including NRIs. Resultantly, the realty sector attracts a lot of interest from Indians based overseas as they use it for their personal use as well as for investment purposes. However, domestic properties might be a feasible option to plough in the incomes earned by the NRI but there are certain critical things they should be aware of before jumping into the realty waters. Today, we will focus on those significant aspects.
Tweaks In FEMA
The NRIs should know that the Reserve Bank of India (RBI) has cut out the unnecessary flab association with the Foreign Exchange Management Act (FEMA) to make it more investor-friendly. As a result, it has become easier to invest in Indian real estate and as per the new rule, any NRI can purchase a commercial or a residential property in India, provide he or she has a valid passport. But NRIs are not allowed to buy plantations, agricultural land, or even a farmhouse, though they can own these through gifts or inheritance. Most importantly, for the citizens of Sri Lanka, Pakistan, Bangladesh, Afghanistan, Iran, China, Bhutan, or Nepal real estate investments in India are a strict no.
Power Of Attorney Is A Must-Have
This is a very significant document for NRIs to have because they cannot make themselves present in India most of the time, especially during property transactions. With a PoA, NRIs can provide legal rights to their reliable friends or relatives to deal with property-related matters in their absence. Hence, PoA turns critical in the event of leasing, selling, mortgaging, borrowing, renting etc even if you are absent from the scene.
Now, Avail Home Loans As Well
NRIs would be glad to know that RBI has permitted housing finance businesses and banks to offer home loans to them for buying real estate in India. So, NRIs, similar to Indian residents, can avail of a home loan of up to 80% of the value of their property. The loan is disbursed in Indian Rupees, and the borrowed amount has to be given back in the same currency as well. It can be paid back through:
- Banking ways through inward remittance
- NRO/NRE/or FCNR (B) account
- The rental income
- A close relative of the borrower, by crediting the amount in their bank account
Fluctuating Forex Rate & Its Effect On EMIs
For anyone, not just NRIs, one of the ideal ways to return the debt is through EMIs. However, the NRI borrower should keep a tab on foreign exchange rates as the value of currency keeps changing all the time and the same impacts the EMIs as well. So, it is in their best interest to pay via rentals.
Real estate in India is a good option for NRIs to invest in, but they should be mindful of these important factors prior to making a serious investment. After all, being cautious is not such a bad thing these days, so invest wisely.