The real estate market boom in India attracts more and more foreign investors. However, India is only slowly opening its real estate market to foreign investments and many regulations – most of them on state and community levels – make property purchases a nerve-stretching and uncertain process.
Many property sales to foreigners in India are done in legal grey areas. This might be much more convenient and quicker while it might only be a little more expensive. However, we still recommend legal advice in India as your contract might otherwise simply be declared invalid and you might lose your entire investment.
To purchase property in India you need a residence permit. Foreigner without a residence permit are not permitted to purchase property in India, not even through their own company registered in India or through co-operations with people that qualify to buy property.
If you have a residence permit but stay in India less than 183 days per year you need to get permission from the Reserve Bank of India to purchase property. With requirements constantly changing it is wise to allow several months to obtain this permission. An exception to this rule are Overseas Citizen of India (OCI) and Person of Indian Origin (PIO). They can purchase property in India without special permission from the Reserve Bank of India.
If you are resident and spend more than 182 days per year in India you can purchase property without permission of the Reserve Bank. You will still need the approval of local authorities, but they are much easier to get. There are, again, differences in prerequisites for approval among regions in India and especially regions that seek foreign investments try to be unbureaucratic – as far as that is possible in India.
Keep in mind that as private individual you can only buy residential property in India. If you want to buy office space or let residential space you need to establish your own company in India. Rental income gained from property in India cannot be transferred back to your home country but only to a rupee bank account in India.
You will find more information on legal issues concerning property purchases in India at www.femaonline.com .