What are the things NRIs should know when buying a house in Kerala?

Since Kerala has seen an unprecedented growth in real estate many NRIs consider the option of investing in Real estate properties across the state. Generally, NRIs have a doubt in their mind as to whether they can invest in a residential house property in India by remitting funds from overseas under the current foreign exchange regulations. This article attempts to address those concerns.

Who is an NRI?

NRI refers to an Indian citizen who is residing outside India.

What type of properties they can buy?

NRI can acquire any immovable property in India other than agricultural land, plantation and farmhouse. These days a number of options are available to buy houses or residential flats of international standard with all the facilities such as clubhouse and gymnasium.

What are the funds an NRI can utilize to acquire property?

An NRI may use his own funds to acquire immovable property. He can also avail of a housing loan for this purpose. The NRI’s own funds means money received in India by way of inward remittance from overseas out of income earned overseas or personal savings outside India or funds held in non-resident external (NRE) or non-resident ordinary (NRO) or foreign currency (non-resident) (FCNR) bank account.  Many Nationalized banks and Scheduled banks are having attractive offers for NRIs to avail housing loan.  Authorized banks have been permitted to provide a housing loan to an NRI/PIO for acquisition of a residential accommodation in India. This is, however, subject to certain conditions. The quantum of loans, margin money and the period of repayment is at par with the housing loans provided to residents in India; the loan amount cannot be credited to the NRE/FCNR account; it has to be fully secured by equitable mortgage of the property proposed to be acquired, and if necessary, also by lien on the NRI’s other assets in India; the installment of loan and interest and other charges has to be paid by the NRI/PIO by remittances from outside India through normal banking channels or out of funds in the NRE/FCNR/NRO account in India. In the last case, the loan and interest can also be repaid out of the rental income of such property.