The Indian real estate scenario is experiencing an abrupt surge in the overall demand for high-end homes. Amid the exclusive aspects following this surge in demand is the increasing number of NRIs returning, first generation industrialists who are booming in their new set-ups, startup organizations and multinational companies employing emigrants for their growth in the country. Contrasting the previous scenarios, it is the buyers who are controlling the real estate sector now.
The demand mainly is around parts of the country where vast piece of land area is available thus making it promising for builders to provide an all-inclusive array of amenities that have not been heard about in any such housing project.
The demand from corporates for accommodation for emigrant employees has also called for the requirement for high-end homes constructed with international standards which these expatriate are used to. Apart from this, the corporates are also eager to pay lofty rentals for such properties to offer the precise ambience for such employees during their tenure in the country.
The boost in demand for such homes is majorly coming from the IT sector because of the improved connectivity levels and the accessibility of high-end homes in parts nearer to MNCs. In Bangalore, quite lot of villa projects are speeding up the construction process which are estimated to be around the price range of Rs 1.5 crores and a few more are coming up in proximity to Whitefield and Old Madras Road which is another indicator to the spurt in demand for high-end projects.
One of the biggest reasons behind this spurge is the keen interest of the investors who are keeping a tab on the rise in demand for high-end homes and the resulting rentals. Wherever enhanced connectivity options are visible and the vicinity is good enough, the demand keeps on increasing for such homes in the country.
Developers who are developing high-end homes state that most of the queries they get are from businessmen, senior corporate executives and high net worth individuals. Some of them are even keen to invest in a second home. Expatriates are also interested in buying such homes but due strict documentation laws, they normally choose to go for a lease rather than out-and-out buy.
As per the ruling of the Foreign Exchange Management Act (FEMA), nationals of foreign origin who are residing in India can invest in only one residential property once they get sanctions agreed upon by the concern authorities like the State government.
Foreign diplomats can buy and sell any property other than agricultural land, plantation property and farmhouse in the country with aforementioned approval from the Government of India. The payment should be made only through foreign inward remittances by the means of normal banking channels.
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Home Loan Pre-conditions for purchasing a land to build for residential purpose
Majority of financial institutions lend home loan to borrowers who are planning to buy a patch of land to build their dream home. Banks grant land loans to salaried and self-employed people and even to NRIs. These loans empower you to buy a residential piece of land.
WHAT KIND OF LAND CAN BE BOUGHT?
Banks do not offer land loans on an agricultural land. As per the guidelines laid down by the Reserve Bank of India, a land loan is specifically given for buying lands for residential means only. Few lenders have fixed set of norms under which the land should be located within certain municipal limits. Apart from this some financial institutions add on a number of restrictive clauses that demand the purchaser to start the construction process on the purchased land within a duration of six months to a year.
IS IT FITTING FOR YOU?
There are a lot of factors that affect a person’s choice of building his dream home on his own. One such factor is the price. Buying a piece of land and then constructing the house on it can some time turn out to be a less costly affair. Also, one can set the pace of construction as per wish to suit his financial conditions. Constructing the home oneself facilitates the owner to put into action his all creative ideas in design and color schemes. Apart from this one also has a liberty to put off main operating cost, enhancements and addition to a future date.
HOW DIFFERENT IS A LAND LOAN FROM A HOME LOAN?
The interest rate for a land loan is on a par as compared with the interest rate of a home loan. One cannot ask for income tax deductions on the interest rate paid for a land loan. But if a borrower converts the land loan into a home loan to get financial support for the construction purpose of the residential property, then surely he can get all the tax benefits available under the Income Tax Act. Apart from this, once a completion certificate is obtained from the appropriate authority, the interest rate paid on the loan is entitled for IT benefits.
DOWN PAYMENT
Borrowers who are looking forward to get a land loan have to pay a higher down payment amount. The loan-to-value ratio for land loan in the case of down payment often goes as high as 70%. Normally, an individual who opts to take a home loan has to pay for only 20% of the cost of property.
DOCUMENTS REQUIRED
It is always advisable to appoint a legal expert to check and verify all the legal documents of the plot in concern. Apart from this, one should also verify the layout drawing of the site as approved by the town planning authority, and no encumbrance certificate of the land. Other property documents that need to be validated comprise of original documents pertaining to ownership of land, revenue receipts, land records and tax receipts.
DOCUMENTS REQUIRED WHILE APPLYING FOR A LAND LOAN
Before the borrower applies for the land loan, he should have some documents in place which include original site ownership documents, tax receipts for taxes paid by the owner, layout drawing, revenue receipts , no objection certificate from society for sale and transfer of land, and no encumbrance certificate for the land.
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Laws that make it simple for NRIs to buy property in India
Property in India has always offered best returns on investments made by non-resident Indians (NRIs) and persons of Indian origin (PIOs). The Indian Government permits NRIs to buy or sell property in India.
The property acquisition or transfer by NRIs should be in accordance with the guidelines laid down by the Foreign Exchange Management Act (FEMA). NRIs should always purchase a property through a registered sale or conveyance deed. Laws also permit that they can buy a property on a power of attorney. In the second condition, an agreement to sell and a power of attorney are transferred by the seller in the name of the buyer.
PERMISSION FROM RBI NOT REQUIRED
As per the current legislative system, NRIs do not need to seek permission of the Reserve Bank of India (RBI) to buy any residential or commercial property in the country. RBI has stated in its ruling that foreign citizens of Indian origin, whether resident in India or abroad, have a general permission to buy property in the country for their bona fide residential purposes. The bank has also regulated the payment options which can either be made through inward remittances in foreign exchange through normal banking channels or out of funds in a NRE or FCNR account maintained with a bank in the country.
DECLARATION COMPULSORY
NRIs who purchase any residential property in India as per the general permission are bound to file a declaration with the central office of the RBI at Mumbai. This declaration should be made within 90 days from the date of purchase of the property or final payment of amount. It should consist of a certified copy of the document as a proof of the transaction and a bank certificate concerning the money disbursed.
SALE ALLOWED
The RBI has also stated that the property bought by NRIs can be sold without its permission. Although in case of a NRI, the amount raised from the purchase should either be remitted to India or paid out of the balance in a NRE or FCNR account.
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Spreading awareness in global NRI communities for Indian Real Estate
A few days back we posted the growing penetration of atOnePlace.com with the global communitites (NRIs).
Here’s a latest Google Heat Map which shows our rising customer base and spread. Thanks to our customers and we look for your feedback always.
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Nimisha Sinha
Blog at One Place 