A Guide to Investing in Indian Real Estate

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A Guide to Investing in Indian Real Estate

August 23, 2016

 There are many British nationals of Indian origin who wish to buy cheap real estate in India. There are three reasons for wanting to look for properties for sale in India.

One, many British nationals have family and friends in India and wish to be close to them. Two, property prices in India are much cheaper compared to those in the UK.

Three, India is a fast growing economy and the property prices in the country are set to grow at a rapid clip over the next few years – so any investment made in the Indian property market right now is likely to be worth a lot in the future.

But there are certain rules to investing in Indian properties that you should know about. In the past, it wasn’t easy for overseas professionals to invest in Indian real estate because of the large scale corruption and inefficient bureaucracy.

Now, things have changed substantially for the better. The Real Estate (Regulation and Development) Bill, which has been cleared by the Indian parliament makes it much easier and safer for home seekers to buy homes and apartments in the country. The real estate sector has been made more transparent, and steps have been taken to protect consumer interest.

 If you are going to invest in Indian real estate, it is very important to make sure that you do not buy into a residential project that has been built on agricultural land. The law in India prohibits foreigners – even those of Indian origin – from buying agricultural land.

So, be very sure that any real estate development that you buy into has not been built on agricultural land or farm land.

Check all the legal documents very carefully before buying the land. You wouldn’t want to buy on any land that is deemed illegal by the government. That would cost you the whole value of the investment and you would get nothing in return.

That’s why you should ask for the title deed of the property in the original and have it examined by a real estate lawyer. The seller’s name should be clearly stated on the title deed. There shouldn’t be any confusion of any sort in this.

Also, ask for the original document, not the photocopy. If the seller presents a photocopy of the title deed, that would mean that the originals are in the custody of a bank in lieu of a loan against the property.

Make sure that the property has secured all clearances as stated by the law, such as environmental and municipal clearances. Your lawyer will investigate this for you. He will also find out if the seller has the full authority to transfer the land or the property to you. Always insist on the original documents.

Once the sale has been agreed to, your lawyer will draw up a sale agreement on a stamp paper, which would mention the final amount to be paid, the advance payment and the time in which the due amount has to be paid.

Following the completion of the sale deed, you will need to get the property registered at the Sub-District Magistrate’s office. You can appoint a power-of-attorney in India to carry out the purchase on your behalf.

You will be charged a service tax of 12.36% on 25% of the total price of the property up to 2,000 square feet and up to 30% for bigger homes or apartments.  A registration fee of 1% is charged on all property transactions.