Tips on property buying for NRIs and PIOs

Tips on property buying for NRIs and PIOs

Tips on property buying for NRIs and PIOs

Abhishek Srivastava, an India-born software engineer working for a multi-national Information Technology firm in the US recently visited India and decided to invest in a second property. The first investment being in a delayed project has hit Mr. Srivastava hard. When he asked the developer about the delay, he was told that the project was delayed because of delayed approval from authorities. The controversy has affected around 1500 homebuyers, as the project has delayed by over a year. Meanwhile, Mr. Srivastava’s exit options are limited. He had invested in the project at the time when the project was conceptualized and the flat was available at lower rates. Thinking of the early investment at discounted rate he put in his money because a friend advised him about the project and the area.

Like Mr. Srivastava, there are several other Non-Resident Indians (NRIs) and persons of Indian origin, who would want to buy property in India. However, in the absence of any good advice and a good counsel they fall into a trap and get cheated. If you are residing overseas and do not have any knowledge of the home market, following is a list of instructions you should follow before you decide to put in your money in the home country.

Select the right developer

One may have selected for a growth corridor; however, finding the right developer may be a challenge. Checking a few things about the developer would give a clear picture about his businesses and whereabouts.

  • One should look at the developers' other projects and check for any delays in those projects.
  • Ask your friends to enquire about the developers' projects as to whether they have been delivered on time.
  • If it is a listed developer take a look at his financials through the means of business newspapers and other sources of news. This would give you an idea about the financial standing of the company. A company with sound financials will be able to deliver the projects on time.

The second phase of investigation should involve finding reasons of the delay in his past projects, if any. This would provide you a clear picture about the company. A sound developer may be completing his projects on time and ahead of others in the region.

Verification of the documents

If you have selected the developer, look for the necessary documents. There are a few documents that you, as a buyer, must insist on checking in original both at the time of booking a house as well as at the time of possession. Examples of a few documents are as follows:

  • Clear title deed in original along with history of transaction on the land.
  • Documents regarding the encumbrance certificate, which is a kind of a no-dues certificate issued by the city development authority.
  • A no-due certificate from bank, if property was mortgaged.
  • The necessary approvals over the layout of the project in order to know the exact location of the flat.
  • The developer is required to have building permissions from local municipality, which usually consist of a no-objection certificate from the department of fire services, power load sanction from the local electricity board, permission for drainage and sewerage connections, permission for water supply, approval from pollution control board and permission from the public health authorities


At the time of booking, you must sign documents and the builder-buyer agreement only when you get the receipt of all your payments either through mail or through courier. For your own safety, always opt for a construction linked payment plan. This ensures that money is disbursed only when the construction reaches a certain stage. In case the project is delayed due to an external reason your money will at least be safe.

Pre- possession steps

Before you take the possession, you need to check a few things regarding the property.

The law

It is worth mentioning that investments done by NRIs and PIOs come under the Foreign Exchange Management Act (FEMA), 1999 as well as the regulations contained in notification issued by the Reserve Bank of India namely, Notification No. FEMA. 21/2000-RB dated May 3, 2000, as amended from time to time. The notification permits an NRI or a PIO to acquire immovable property in India other than agricultural land, plantation property or farm house. However, acquisition of the immovable property would not apply if it is to be acquired by way of lease for a period not exceeding five years or where a person is deemed to be a resident in India.

Seek help from banks

To make your investment secure, contact national banks those have offshore branches in other countries. Banks have specialized cells working for NRIs and PIOs offering them help regarding their payments and booking a property.

  • A developer who has completed the construction of a project should obtain a completion certificate issued by the local municipal authority indicating compliance and suitability for occupation.
  • He should also have the possession certificate from local municipal authority indicating completion and functioning of water, sewage and electrical connections.

The developer should also form a society and set the ground rules for maintenance as prescribed by the local state rules.

Last Updated: Mon Feb 25 2013

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