NRIs, OCIs and Foreigners Buying Property in India
Find out how non-locals go about buying property in India...
For the purposes of purchasing property in India, there are three categories of ‘foreign’ buyer:
- NRI (Non-Resident Indian)
- OCI (Overseas Citizen of India). The former POI status (Person of Indian Origin) has been merged with the OCI card scheme.
- Foreign Nationals (with or without residency)
Note: The ownership of agricultural land, plantations or farm houses is only permitted by an Indian citizen living in India. Even then, depending on state laws, the buyer may need to prove that they are a farmer or have other strong ties to the land. This means that foreign owners (even Indian citizens living abroad) are prohibited from buying agricultural properties of any kind.
It is difficult for foreign nationals to buy property in India. A non-resident cannot buy property at all unless they are of Indian heritage. When a non-Indian potential buyer is resident in the country for 182 days or less of each year, permission must be sought from the Indian Reserve Bank for any purchase. This rule also applies for purchases made by a company owned by a foreign national or when co-purchasing with an Indian citizen. Permission to buy is granted on a case-by-case basis. The criteria are obscure and the regulations change frequently.
In essence, for a foreigner to buy property in India it must be very clear that he or she is settled in the country and intends to stay. This usually means being in possession of a long-term work permit, having stable employment or actively seeking appropriate work, and demonstrating strong local ties with a history of living in India for a minimum of 183 days in any given year. This minimum time requirement is becoming increasingly difficult to fulfil as long-term visas are now being issued that expressly forbid a foreigner staying in India for longer than 180 consecutive days.
Note: Citizens of Bangladesh, Pakistan, Bhutan , Afghanistan, Sri Lanka, China, Iran, or Nepal, who are resident in India must seek permission from the Reserve Bank to buy property regardless of how much time they spend in India each year.
It is strongly recommended that foreign potential buyers secure Indian residency and retain the services of an independent lawyer before looking for a property. Any money paid for an Indian property will be forfeited if the purchase is deemed to be illegal, even if the deal was made in good faith.
NRI (Non-Resident Indian) and OCI (Overseas Citizen of India)
Despite many incorrect rumours about the differences in the buying process between Indian locals and their overseas counterparts, the process is exactly the same. This includes the ability to secure a mortgage from a local bank. Almost all banks will extend a mortgage to NRIs and OCIs using the property as collateral. If an NRI or OCI are buying property under general permissions (i.e. not attempting to buy agricultural land) then they do not need to seek buying permission from the Reserve Bank prior to the purchase.
If an NRI or OCI prefers to buy an Indian property using funds from outside the country, they will need to open an NRI Account. This is a general term for three bank account types:
- NRE (Rupee Repatriable)
- FCNR (Dollar, Pound, Euro, Yens, Can dollars & Aus Dollars)
- NRO (Rupee Non Repatriable)
- A full description of how each NRI account types work is available on the Reserve Bank of India website
- A full summary of the law on buying property in India is also available on the Reserve Bank website