INDIA FAQ'S
Q. Can a Foreigner own property in India?
A. Yes.
With the rapid emergence of the economy over the last five years, the Indian Government has long recognised the need to attract foreign investment. Consequently, from a position, of not allowing foreign investment in property, Non-Resident Indians (NRIs’) or People of Indian Origin (PIOs’) have general permission issued by the Reserve Bank of India to purchase and own property. A Foreigner of non Indian origin can only own property in India by first applying and receiving permission from the Reserve Bank of India.
General permission has also been granted by the Reserve Bank of India for a foreigner of non Indian origin to purchase a property on a five year lease basis. Within the lease, it is stated that the lease can be renewed at the option of the purchaser, as long as they wish to do so, and the developer is bound by that. This way the lease is renewed every five years, just by submitting a written notice of renewal before the current period of five years expires.
Other options include setting up an Indian company or through a Mauritius Special Purpose Vehicle (SPV). This only has to be done on completion and registration of Title Deeds. You do not have to decide which option to take until approximately 6 months from completion. Once you choose, we through our lawyers and accountants will complete all these processes for you.
Q. Isn’t India meant to be a bureaucratic nightmare?
A. It is no surprise that the rapid rise and growth of the Indian economy has coincided with a significant overhaul of various aspects of government legislation and control at all levels. A major influence behind this has been the demand of domestic and foreign businesses on government to help, support and protect their interests not to mention the interests of their employees.
Consequently, the emergence of an increasingly affluent middle and working class has required that the sometimes confused area of property ownership has now been tidied up to establish clear title and rights for the owner. It should be great comfort therefore that not only have these important improvements been made but that they are also contained in a legal system that is based on English law.
Finally, and most importantly, one of the major features of the developer is that the price of every property includes a start to finish buying process with local legal expertise involved in every stage of the purchase. The developer therefore offers clients a simple and clear solution but with the added peace of mind that our local representatives are on hand to address any questions you might have throughout the process.
Q. How can I be sure my property exists?
A. New Indian laws have clarified things. All properties from the developer come with security and proof of title.
Q. What is the process to reserve property?
A. Once you’ve made your choice and want to reserve a property, you simply send your reservation form with your first payment. Once this is received, we will take the property of the market and initiate the formal purchase process.
Q. Do I need to insure my property when I take possession?
A. Yes, we will provide you with a quotation just before completion.
Q. What extra costs are involved in Completion?
A. The only extra costs not detailed in the Payment Options (dependent on Ownership Option chosen) are the following, should you decide;
Formation of an Indian Company £250.00
(This is a one off payment to include all legal and accountancy works)
Filing of Annual Accounts, Company Fees, etc. £200.00 (approx per annum) For the Indian Company
Mauritius Special Purpose Vehicle (SPV) £120.00 p.a. (A tax efficient property management and holding company)
Q. Am I liable for Capital Gains Tax, what the Rate (%) is and how will I Pay it?
A. When you decide to sell your property, the Capital Gains will be taxed at a current rate of approximately 20% and the Income Tax Rate on Rental Income is approximately 20% p.a. This will all be handled by our Accountants on your behalf. Obviously you will be able to off set all costs to minimise the amount taxable.
Q. Do you offer financial investment advice?
A. We are not legally qualified to offer any financial investment advice. We only offer current property opportunities, which we have extensively researched and approved. We prefer to work with legal and financial experts who would be happy to assist you.
Q. What Charges are there when I sell the property, either before or after Completion?
A. In the event of the property being sold through the Developer’s “resale pool”, either before or upon completion, no charge will be incurred by you. If, on the other hand, the property is sold through a local agency, a 2% Agency fee will be charged by them. You may of course decide to sell the property through anyone of your own choice.
Q. What are the Legal Issues surrounding Completion?
A. The legal process is very similar to the U.K. All searches are done on the property to ensure clear and good Title. Contracts of Purchase/Sale and Registration of Title Deeds are duly stamped and notarised.
Q. Do I have to travel to India to complete all Documents?
A. No. You can either give Power of Attorney to your lawyer in India to complete on your behalf, or all documentation can be completed here in the U.K., signed by the Purchaser and notarised. The developer will handle the whole process from start to finish on behalf of the Purchaser.
Q. When do I have to finalise choice of Lawyers, how I will pay my Balance, method of Purchase, etc.
A. Up until 2/3 months prior to completion all decisions and options can be changed with regard to the completion process. Obviously, once professionals have been instructed and have commenced work, should the Purchaser decide to change their options then extra costs will be incurred.
Q. Who will organise my mortgage if I require one?
A. The mortgage will be from a Bank based in India. It can be organised by the developer, The bank takes a charge over the property as if it where in the UK. This hopefully will soon be the case but at the moment there are no mortgages available in India.
Q. Are there any hidden costs besides those that have been stated within the literature?
A. No
Q. Is there a limit to how many properties I can buy?
A. No.
Q. Which is better, “Buy to let” or “Buy to sell”?
A. The choice is entirely yours.
Buy to Let:- The most common investment strategy for off plan purchasers. On completion the property is rented to recover most of the cost of its mortgage. The investor receives the benefit of the property’s capital growth but has someone else funding the mortgage. Experience has shown that many investors build a portfolio of properties to let, thereby benefiting from growth on the total property value. This compound interest means that if a property value grows at just 5% per annum, it will double in value in approx. 14 years.
Buy to Sell:- In this scenario the investor acquires the off plan unit and sells it shortly before the build is finished. They do not complete on the deal but in this case takes advantage of the capital appreciation over the period of construction.
Q. How soon can I sell my property after registration?
A. We can start remarketing your property through the developer re-sale pool immediately, should that be the requirement. But really, one has to let the price appreciate when seeking a sale and should allow 6 -12 months from registration as a minimum.
Q. If I keep the apartment for a longer period of time, after the rental guarantee who will manage it on my behalf?
A. The developer will recommend a reputable management company.
Q. Is it possible for me to visit and do a site visit?
A. Of course, if you let your agent know of your travel plans, the developer will arrange to meet you and give you a tour of the development.
*We have an extensive document with in depth information about India, ranging from the people to economics to festivals. We will send a copy on request as it is too large to put on the site.
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