How to buy property in India
Practical advice to consider when purchasing a property in India.
Overview
If you are considering buying a property in India you will need to bear in mind that the legal system and steps to follow are different from those you may have experienced in the UK. It is important to note that while many British nationals enjoy visiting India on holiday, the requirements foreign nationals have to meet to be eligible to buy property are complicated. A number of British nationals who have bought property in Goa in the last ten years have faced difficulties with completing the registration procedures and with gaining long stay visas to enable them to stay in their homes.
If you intend to purchase a property in India, you are strongly advised to engage an independent local lawyer. Neither the Foreign, Commonwealth & Development Office or British High Commissions in India can give legal advice on buying property.
Disclaimer
While we hope that this information is useful, please be aware that it is not intended to be the only guidance for prospective buyers to follow when considering making a purchase. In addition, we make no representation as to the quality or accuracy of the information which is available at the web addresses listed in this guide, nor can we accept any responsibility for the content that is hosted on them. We strongly recommend that prospective buyers of property in India seek independent legal and financial advice at all stages of their purchase.
Residency requirements for foreign nationals
To legally purchase property in India as an individual without the permission of the Reserve Bank of India (RBI), a foreigner has to qualify as a ‘person resident in India’ under Section 2(v) of the Foreign Exchange Management Act (FEMA). According to the RBI website:
“A foreign national who is a ‘person resident in India’ within the meaning of Section 2(v) of FEMA, 1999 can purchase immovable property in India, but the person concerned would have to obtain the approvals and fulfil the requirements, if any, prescribed by other authorities, such as, the State Government concerned, etc. The onus to prove his/her residential status is on the individual as per the extant FEMA provisions, if required by any authority.”
A foreigner would also have to meet the requirements set out by the RBI for Foreign Nationals and those of non-Indian origin: Reserve Bank of India Property Regulations also see Master Circular July 2013.
If you intend to purchase property the visa you enter India on is important as the type of visa should clearly indicate the intention to stay in India for an uncertain period to determine residential status.
A foreigner who meets all of the conditions and acquires resident status under FEMA is then able to purchase immovable property in India though there are restrictions on purchasing agricultural land, farmhouses and plantations. So you should ensure you have checked your right to legally acquire such land. It is our view that unless you have an employment / business visa or otherwise meet the requirements for residency as a foreigner you cannot legally purchase property in India.
A foreigner who has purchased property in India without meeting all of the Government of India requirements (irrespective of whether the purchase was made in good faith) could face an investigation into the purchase and legal ownership of the property, which could in extreme circumstances lead to the property being confiscated and returned to the Government of India and a monetary penalty imposed.
Bank accounts
Many foreigners who intend to buy property open Indian bank accounts. Before doing so please consult the RBI guidelines and FAQs .
Timeshares
Timeshare ownership has slowly developed in India with the arrival of known and respected companies, agents and resorts operating legally, fairly and successfully. However there are equally many unscrupulous companies in operation, some of which claim to provide various incentives (including stock market investments and discounts on airfares and accommodation) when exchanging existing timeshare ownership or taking out membership of holiday clubs. More often than not such inducements do not materialise once a deal has been signed and sealed. If you are approached by agents operating such schemes you should treat the approaches with the utmost caution.
Top tips for buying a property in India
- Use the services of a reputable independent local lawyer. Avoid lawyers suggested or provided by the seller. Only an independent lawyer will know all of the checks that should be made before parting with money. If in doubt seek a second opinion.
- Remember that you will have to use the services of a Public Notary. The Notary is not acting for you and will not give advice. He/she is an official of the State whose job it is to ensure that all transactions are in the proper form. Parties to a sale and purchase should appear in person before the Notary at the same time. Alternatively they can give power of attorney to their lawyer (or anyone else) to represent them.
- Use a reliable and established estate agent or a recommended builder.
- Unless you speak fluent Hindi or the state language (Gujarati, Punjabi, Urdu etc) always have documents translated e.g. title deeds, so that you understand fully what the original documents say.
- Ask your lawyer to confirm with you in writing that there is no mortgage or other charge or encumbrance registered on the property you are intending to buy; that it is registered in the name of the seller; and there are no outstanding local taxes or capital gains tax. Make sure that all community payments are up to date.
- Consult a lawyer and the RBI before making an “Agreement of Sale” purchase as you may experience difficulties in registering the property.
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Transfer money into India through normal banking channels as you may need to prove how the money entered the country before the purchase can be registered. Check the RBI regulations before transferring any money as you may need to seek permission / notify them if you are transferring large sums.
- Do not think you can buy property without taking independent professional advice. If you do you could end up with no property and no money and face a fine.
- Do not part with any money unless you are absolutely sure what you are getting for it and have received professional confirmation that everything is in order.
- Do not buy under pressure and never pay in cash.
Legal advice
British citizens affected by property problems should take independent legal advice from local lawyers. The British High Commission is unable to get involved in individual property problems or legal disputes. The British High Commission maintains the following list of Lawyers.
Local police
If you believe that you have been subject to a property crime, you should make a statement to the local police. Remember to obtain a copy of the statement and ask for the incident number. Please note, there may be a time restriction between the time of the alleged crime and the time within which you make your complaint.
Further support
British nationals who have already bought property in Goa have set-up a Goa Property Working Group and would be happy to answer questions on Goa property concerns.