Buyer's Guide:

Home loans eligibility
Documents required with loan application form: (Self-Employed cases)


Common Documents

Partnership

• Updated Bank Pass Book / Statement of accounts for last 6 months    (Xerox)
• Ration Card (Xerox)
• Business Profile: A note on business mentioning nature of business    mentioning nature of business, list of clients, suppliers, staff strength,    geographical spread, etc.

• Copy of Partnership Deed
• 3 yrs P & L a/c, B/S, Computation of income certified by CA.
• Individual Computation of Income and tax returns for last 3 yrs.

Proprietor / Professional

Pvt. Ltd. Company

• 3 yrs P & L a/c, B/S, Computation of income certified by CA
• Income Tax return file statement for 3 yrs.

• Remuneration certificate
• Board resolution for fixing remuneration.
• Company's annual report
• Individual IT returns for last 3 yrs.


Documents required with loan application form: (Employed cases)

• Latest Salary Certificate / Slip in original
• Form no.16 A (TDS Form) from Employer (Xerox)
• Certificate from Employer for any other allowances which is not reflected in salary slip (in original) 4. Updated Bank Pass Book / Statement of accounts for last 6    months (Xerox)
• Voter I.D. card or Company's I.D. or Passport (Xerox) or Ration Card (Xerox)
• Passport size Photograph of applicant & co-applicant

Home Buying Tips
Some quick questions and answers below will serve as essential tips when you buy a home:

Q : Which documents should I verify before buying a property?
Before you purchase a property, you have to have a title and document search conducted by a competent advocate. You cannot do it yourself. You must use the services of a competent advocate. It is a professional job to be done with professional assistance.

Q : What is the difference between built up area, super built up area, and carpet area?
Carpet Area: This is the area of the apartment/building, which does not include the area of the walls. Built up Area: This includes the area of the walls also.
Super Built up Area: This includes the built up area, along with the area under common spaces such as the lobby, lifts, stairs, etc. This term is only applicable to multi-dwelling units.

Q : What are the important documents one should check before buying any property?
If you want to purchase a property, you must see the approved layout plan, approved building plan, ownership documents, carryout search, etc. Consult an advocate before you purchase a property so that he can advise you.

Q : Who is liable to pay Stamp Duty-the buyer or the seller?
The liability of paying stamp duty is that of the buyer unless there is an agreement to the contrary.

Q : In whose name are the Stamp Papers required to be purchased?
The stamps are required to be purchased in the name of any one of the executors to the Instrument.

Q : What is meant by the market value of the property and is Stamp Duty payable on the market value of the property or on consideration as stated in the agreement?
Market value means the price at which a property could be bought in the open market on the date of execution of such instrument. The Stamp Duty is payable on the agreement value of the property or the market value which ever is higher.

Q : Which are the instruments that attract the payment of Stamp Duty?
The instruments that attract Stamp Duty on market value of the property are:

  • Agreement to Sell
  • Conveyance Deed
  • Exchange of property
  • Gift Deed
  • Partition Deed
  • Power of Attorney settlement and Deed
  • Transfer of lease

Q : Who is the appropriate authority for knowing the market value of the property?
The Sub-Registrar of the area, in whose jurisdiction the property is located, is the appropriate authority for knowing the market value of the property.

Q : Is a POA revocable?
Yes, a POA can be either revocable or irrevocable, depending on what sort of a POA one has made.

Q : What exactly do we mean by a Free Hold property? What are the advantages and disadvantages, if any?
A freehold property (plot or a property) is one where there is a whole and sole owner(s), ownership is full and unconditional (within the provisions of the laws of the land) and there is no lessor/lessee involved.

Q : How to convert a POA property into a Free Hold?
POA cannot be converted into anything. Leasehold properties of DDA in Delhi can be converted to freehold, as per provisions.

Q : How to verify the authenticity of the various documents submitted by the seller of the property, particularly with regard to the possibility that the property has not been sold earlier to a third party?
Regarding authenticity of documents, again, you have to take the help of an advocate.

Q : I want to gift a property in a Co-op Hsg. Society. What are the legal formalities? What about stamp duty?
Gift of an immovable property is considered as a 'transfer' under the provisions of the TOP Act and you have to have the transaction registered through a Gift Deed and pay stamp duty as per provisions of the relevant State's Stamp Act depending in which state the property is situated.

Q : Upon buying a property from a builder in a building under construction, what are the permissions and papers that one should check with the builder, so as to ascertain the authenticity of the builder?
When you are buying a property from a builder in a building under construction, you have to check the following:

  • Approved plan of the building along with the number of floors.
  • Ensure that the floor that you are buying is approved.
  • Check if the land on which the builder is building is his or he has authority under an agreement with a landlord. If so, check the title of the land ownership with the help of an advocate.
  • Check the building by-laws as applicable in that area and ensure that the builder is building without any violation of front setback, side setbacks, height, etc.
  • Check specifications given in the agreement to sell of the sale brochure. Is he providing the same actually on the ground or not?
  • Check the reputation of the builder.
  • Ensure that urban land ceiling NOC (if applicable) has been obtained or not.
  • Permissions from water and electricity authorities also have to be obtained.
  • Permissions from lift authorities and other Goverment agencies as applicable.

 

Frequently Asked Questions
FAQs on acquisition of residential / commercial premises in India by Non-Resident Indians ("NRI")

1. Who is a NRI under the provisions of Foreign Exchange Management Act?
Generally, an Indian Citizen who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad or a person who is not resident in India for a period over 182 days is a non-resident Indian. Persons posted in U.N. organisations and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments are also treated as non-residents.
2. Do non-resident Indian citizens require permission of Reserve Bank to acquire residential/commercial properly in India?
No.

3. Do foreign citizens of Indian origin require permission of Reserve Bank to purchase immovable property in India for their residential use?
Yes. However, Reserve Bank has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are, therefore, not required to obtain separate permission of Reserve Bank.

4. In what manner the purchase consideration for the residential immovable property should be paid by foreign citizens of Indian origin under the general permission?
The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NTE/FCNR accounts maintained with banks in India.

5. What are the formalities required to be completed by foreign citizens of Indian origin for purchasing residential immovable property in India under the general permission.
They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.

6. Can such property be sold without the permission of Reserve Bank?

Yes. Reserve Bank has granted general permission for sale of such property. However, where another foreign citizen of Indian origin, funds towards the purchase consideration purchase the property should either be remitted to India or paid out of balances in NRE/FCNR accounts.

7. Can sale proceeds of such property if and when sold be remitted out of India?
In respect of residential properties purchased on or after 26th May, 1993 Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties. The balance amount of sale proceeds if any or sale proceeds in respect of properties purchased prior to 26th May, 1993, will have to be credited to the ordinary non-resident rupee account of the owner of the property.

8. Are any conditions required to be fulfilled if repatriation of sale proceeds is desired?
Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final installment of consideration amount, whichever is later.

9. What is the procedure for seeking such repatriation?
Applications for necessary permission for remittance of sale proceeds should be made in form IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property.

10. Can foreign citizens of Indian origin acquire or dispose of residential property by way of gift?
Yes. Reserve Bank has granted general permission to foreign citizens of Indian origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin whether resident in India or not, provided gift tax has been paid.

11. Can foreign citizens of Indian origin acquire commercial properties in India?
Yes. Under the general permission granted by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchasers' NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.

12. Can they dispose of such properties?
Yes.

13. Can sale proceeds of such property be remitted out of India?
Yes. Repatriation of original investment in respect of properties purchased by foreign citizens of Indian origin on or after 26th May 1993 will be allowed to be remitted up to the consideration amount originally remitted from abroad provided the property is sold after a period of three years from the date of the final purchase deed or from the date of payment of final installment of consideration amount, whichever is later. Applications for the purpose are required to be made to the Central Office of Reserve Bank within 90 days of the sale of property in form IPI 8.

14. Can the properties (residential/commercial) be given on rent if not required for immediate use?
Yes. Reserve Bank has granted general permission for letting out of any immovable property in India. The rental income or proceeds of any investment of such income have to be credited to NRO account.

15. Can NRIs obtain loans for acquisition of a house/flat for residential purpose from financial institutions providing housing finance?
Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC,LIC Housing Finance Ltd., etc. to grant housing loans to non-resident Indian nationals for acquisition of houses/flats for self-occupation subject to certain conditions.

16. Can authorized dealer grant loans to NRIs for acquisition of a flat/house for residential purposes?
Authorized dealers have been granted permission to grant loans up to non-resident Indian nationals for acquisition of house/flat for self-occupation on their return to India subject to certain conditions. Repayment of the loan should be made within a period not exceeding 15 years out of inward remittance through banking channels or out of funds held in the investments' NRE/FCNR accounts.

17. Can Indian companies grant loans to their NRI staff?
Reserve Bank permits Indian firms/companies to grant housing loans to their employees deputed abroad and holding Indian passport subject to certain conditions.
Source: Reserve Bank of India

18. While purchasing real estate most developers demand a Power of Attorney in their favor, is there a way to avoid it?
One can choose not to grant the Power of Attorney (POA) to the developers. However this will mandate the mailing of all documents to your foreign residence and associated time delays. A good compromise is to grant the POA to the builder only for specific necessary items.

Finance

Financial facilities from Government as well as private sectors banks are available for all Venus Group projects

Home loans FAQs for NRIs

1. For what kinds of property is a NRI eligible for Home loans?
A home loan is sanctioned to the NRIs for any of the following housing finance schemes:

a) To purchase a house that is ready-built, under construction or from a second owner
b) To fund the purchase of a plot of land allotted by a society / development authority.
c) For self-construction of a property on a plot of land. d) For renovation or improvement of an existing property in India.
2. What is the eligibility for obtaining NRI Home Loans?
Your eligibility is calculated in the same way as it is calculated for resident Indians. More emphasis is laid on the following criteria in the appraisal of a NRI case:

a) Qualifications - the NRI applicant has to be a graduate
b) Current job profile & Past work experience
c) Probability of continuing abroad for the loan tenure
d) Probability of servicing the loan with an extended tenure in case you have to return to India.

3. What is the repayment period for a NRI Home Loan?
The housing finance offered to NRIs normally does not exceed 5 years. However, some HFCs offer loans for a term of 7 years. The repayment for the loan is via EMIs. The EMIs begin only after the entire loan is disbursed. In case of a part disbursement, you pay simple interest at the rate applicable on the loan amount that is disbursed to you.

4. How is the mode of payment for NRI home loans?
The loan towards the house has to be paid for the entire tenure of the loan through remittances from abroad through normal banking channels or from such accounts as may be permitted by RBI from time to time. As of today, the payments are done through NRO, NRE, NRNR and FCNR accounts. These accounts change on the basis of RBI permissions to each HFC.

5. What are the Tax Benefits applicable to Non-Resident Indians?
No tax benefits are available for NRI customers unless you file returns and thereby become eligible to avail the tax benefits as mentioned under Home Loans.

6. What are the documents required for obtaining NRI Home Loans?
NRIs are required to submit additional documents than is normally required for a resident Indian.
a) A copy of the passport
b) A copy of the works contract (also sometimes referred to as the contract card/labor card)
c) The power of attorney (POA). The POA is required because the borrower is not based in India and in such a scenario; the HFC would need a representative 'in lieu of' the NRI to deal with as required. Although not mandatory, the POA is usually drawn on the NRI's parents, wife or children.