India is one of the most attractive real estate investment destinations, especially for the Non Resident Indian (NRI) popula­tion. According to a report by Square Yards, a real estate investment advisory firm, the total NRI investment in primary Indian real estate in top 8 major cities is expected to reach around USD 11.5 billion in 2017. Thanks to the progressive regulatory reforms and ease of NRI investment process in India, the NRI investment sentiments have improved considerably. While market scenario is favourvable for a real estate purchase, it is advisable for NRIs to understand the prevailing policies, reforms and laws governing their investment. To help them with the process, we have listed below some of the key laws that one should keep in mind: Ease of Buying: RBI has eased the rules of owning a property by NRIs under the Foreign Exchange Management Act (FEMA). As opposed to earlier, they are no longer required to go through an approval process with Foreign Investment Paper Board. Now, buying a property in the country is an Indian passport away. Property Type: An NRI can purchase both residential and commercial properties in India. What’s more, there is no cap on the number of properties that an NRI can buy in India. However, they are not allowed to buy any agricultural land, farm house or plantations. These can be owned only if it is inherited or given as a gift. Power of Attorney: Now, physical presence of an NRI is not mandatory for making a real estate transactions. A power of attorney (POA) is only required to simplify the investment procedure. In case of an under-construction property, a developer may require you to give POA that authorizes them for ease of documentation. Alternatively, NRIs can issue a POA to a relative or a known Indian resident for executing all real estate dealings on your behalf, including registration, sale etc. However, care should be taken to get the POA vetted or prepared by a legal expert to avoid any misuse. Loans/Funding: To secure funding for real estate transactions in India, an NRI must ensure all the paperwork is up to date, proper and in line with the laws. Additionally, NRIs must have an account with an authorised Indian bank and must be make all the transactions in Indian rupees. Several financial institutions in India offer various home loan schemes for NRIs. As per the norms laid down by RBI for securing funding, NRIs must ensure that at least 20 percent of the value of the property comes from personal resources and the remaining 80 percent can be financed through a bank or other financial institution. Besides this, one must keep in mind that these dealings have to be executed through Indian banking channel using NRO/NRE account for inward remittances. Alternatively, one can also opt for post-dated cheques or ECS from the NRE, NRO or Foreign Currency Non Resident (FCNR) account for the transaction. Selling: A NRI can sell any of his/her property – commercial or residential – to anyone. Somewhat similar to buying laws, while selling an agricultural land, farm house or plantations, NRIs have to ensure that the buyer is an Indian resident or they can gift it to anyone, including an NRI. Tax Benefits: When buying a home in India, NRIs are entitled to tax benefits that are similar to the ones enjoyed by the citizens. They can claim up to INR 1 lakh of deduction under Section 80C of the Income Tax Act, 1961. Similarly, NRIs are eligible for deduction on stamp duty, registration, municipal taxes, and a 30% deduction on rent. These are some of the benefits enjoyed by a resident as well. NRIs, however, have to pay TDS for a property over INR 50 lakh at 1 %. A capital gain tax is also levied while selling the property.

You have devoted a lot of time and efforts to pick your dream property. You have also estimated your budget – from the initial down payment to the equated monthly installments (EMI). Now after approaching the bank for home loan, your loan application gets rejected. Wondering how and where things went wrong? There might be several reasons. It is imperative to have a checklist and ensure it is in place in order to be better off next time around. Let us now discuss the possibility of where things might have gone wrong. Non-eligibility of the Applicant – Banks are very skeptical of individuals whose credit score is low. Applicant’s credit score is a numerical representation derived by the CBIL (Credit Information Bureau Ltd) based on your credit history; this basically reflects your financial health.Your pending dues, other loans and debts will act as deterrents to loan sanction. Unpaid dues reflect bad repayment ability of applicant and existing loan portfolio may deter the bank from further lending. You may not consider this important but banks do believe in job stability and base worthiness of applicant on this factor. So if you have hopped too many jobs in a short span of time, you may find it difficult to obtain the loan. Sometimes loan sanction also depends on the future stability of the company you work for. If you are close to retirement or have retired, banks have a reason to doubt your capacity to repay the loan. If you had problems/rejections with your previous loans for any reason, chances are that your home loan may get rejected. Moreover, any discrepancy or improper documentation can lead to buyer’s disqualification by bank. Poor track record of the builder – If the builder poor track record and has been in the news, it will make the banks skeptical. Therefore it is advisable to go for a reputed developer. It is highly probable that banks may decide not to fund the project (the one you have chosen). Sometimes, though the project gets funded the floor which houses your unit, may not! This could possibly due to absence of Commencement Certificate for that particular floor. Every bank draws a credit limit beyond which it stops lending even if all your documents are in order and credit score is acceptable. Limitations of the Bank – Each bank defines its own geography based on its area assessment and risk appetite. Some banks prefer not to lend for constructing projects located on the city out skirts. In such cases it is advisable to approach those banks who are liberal in that sense. In all likelihood purchasing a house is the biggest purchase of one’s life. That is why every step must be taken with extreme care towards buying a house-whether for living or investing. Therefore, do keep in mind all the above discussed criteria for a smooth and hassle free home loan approval.

The Non Resident Indian (NRI) popula­tion, estimated to be over 12 million, has been growing rapidly over the past decades. Better social infrastructure, improved standard of living, and higher currency valuation in countries such as US, Europe, Middle East etc. are some of the points of attraction. After significant years of savings, NRIs invest back in India as they find real estate to be the safest and best choice for many reasons. Government’s Initiatives Generally, NRIs prefer to remain in touch with their roots and it makes a prudent business sense for them to invest in Indian real estate market. Experts esti­mate the market to stand at $180 billion by 2020, owing to rapid urbanization, necessitating robust urban infrastruc­ture buildup. Government has allocated about US$15 billion for urban develop­ment under Smart Cities Mission and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). Moreover, pri­vate participation is being encouraged to boost the investment in infrastructure. It is a well-known fact that improving infra­structure augurs well with the economic growth, enhancing the quality of life and appreciating property prices. Considering the commitment shown by the new government towards the eco­nomic push, Real Estate (Regulation and Development)  is likely to be implemented across the country soon., In addition, the Urban Development ministry is actively working towards a single window clearance mechanism and has assured its implementation in the current calen­dar year. Corporate Real Estate funding issues have largely been addressed through eased FDI norms and tax simpli­fications in REIT. These important policies would bring down the time period in get­ting all the necessary statutory clearanc­es, ease the funding, and warrant timely project delivery without cost overruns. Attractive Return on Investment (ROI) Real estate market is on its way to revival after seeing sluggishness over the past couple of years. There has been an over­all price correction across the country and fall in interest rate. There is enough supply in the market. According to CREDAI, part of the total units launched, 25-30 % are still unsold. We believe that the prices have bottomed out and the time is ideal to invest. Moreover, any rupee weakening as is the case, makes it a low investment and high return proposition. The Cabinet has approved 20 major amendments to the Real Estate Regulatory Act (RERA) that seeks to protect home buyers’ interest and at the same time  boost investments in the real estate sector.. We can easily assume that as the demand starts picking up in the coming months, developers would look to increase the prices. Therefore, it is  advisable to invest at the present prices for an attractive ROI. Benefits to NRIs NRIs can benefit from various Income Tax exemptions on all the transactions. A 3-year time horizon for holding the property would not only see decent price appreciation, but also avoid short-term capital gain tax. If the objective is to let out the property, the rentals are tax deductible towards maintenance and repairs of the property. RBI doesn’t differentiate NRIs with resident Indians, which means absence of any special investment restriction as long as FEMA and Income Tax laws are not violated. They are free to purchase any number of properties, both residential and commercial. Besides, RBI allows financial institutions to fund up to 80% of the property value at low interest rate. Information on other benefits provisioned in the rule book can be availed by hiring broker/consultant, or directly contacting the developers. A Word of Caution Indian real estate offers varied luxury and ultra-luxury projects, at par with international standards. Developers have also come up with attractive financing schemes to boost demand. It becomes imperative to understand the real definition of luxury and approach the right developers. Equally important is to make sure that the property is in prime loca­tion, offers great view, with ultra-modern amenities and is of top –of-the-line quality. Last but not the least, these projects should be 100% safe and secure. The Bottom Line We believe that the prices have bottomed out and this is the right time to invest in the market, to gain substantial property price appreciation. Various factors that make real estate an attractive investment avenue are rupee weakening, prevailing low property prices, a reviving market, NRI friendly regulations and taxes, and a wide range of property options.

With the vision of changing the Indian economy to provide the basic necessity of a roof over one’s head, Prime Minister Narendra Modi launched the Pradhan Mantri Awas Yojana (PMAY) on 25th June 2015. PMAY is an ambitious project that envisions the government’s promise of ‘Housing for All’ by 2022.  This scheme comes with an objective of constructing more than two crore homes across the country to benefit citizens from across the spectrum. The government has identified as many as 2,500 cities and towns across the country under the scheme to commence the construction for the beneficiaries. To name a few, states like Rajasthan, Odisha, Madhya Pradesh, Kerala, Jharkhand, Gujarat and Chhattisgarh have been chosen under this ambitious scheme. The government’s move to confer the much-awaited infrastructure status to affordable housing will have an impact across various industries and will be largely advantageous for the real estate segment which has seen a slowdown in the recent past. With the cut in interest rates offered by the major nationalized and private banks, the affordable housing scheme would boost the real estate sector further. Experts in real estate opined that the dream of owning a house in the cities has now become a reality after the introduction of PMAY scheme besides the low EMI and interest rates of the banks. Timely initiatives of the Union as well as state governments to reform guidelines and policies pertaining to real estate have encouraged the private developers to launch affordable housing projects in metro cities. For instance, union government has announced infrastructure status for affordable housing in its recent budget for the year 2017-18. Despite such pro-real estate initiatives taken by the government, experts says, real estate sector faces considerable headwinds such as intense competition and difficulties in getting necessary clearances from the concerned regulatory institutions which, according to them are holding back the real estate giants from launching affording housing projects. To pave the way for the smooth commencement and completion of projects, the government should streamline the approval process. Currently it takes over three years for a developer to commence projects due to difficulties in getting clearances from various departments. Besides this, the experts also urge the government to provide better infrastructure facilities like road, water among others. The good news is that despite pros and cons, the scheme is receiving overwhelming response across the country. Union Minister for Urban Development Mr. Venkaiah Naidu has also recently stated that over 9 lakh applications have been received under the scheme. The credit information bureau TransUnion in its report said affordable home loans have seen a compounded annual growth of 23% over the last five years. The implementation of Pradhan Mantri Awas Yojana scheme by 2022 has been instrumental in giving millions of Indians a reason to be proud of and celebrate the move. The industry status granted to affordable housing was touted by the citizens as a step towards development, prosperity and economic spurt. Offering benefits to the realtors would induce a vast interest amongst them to expedite the process and make this vision a reality in due course of time.

Housing continues to be the one of most important and popular investment channels for people in India. It is also an investment that has aspirational and sentimental value attached. However, finding the right home can be tough, as affordability can become a hindrance, especially for the mid-income buyers. Recognising this need to increase affordability, the Government has given a major thrust on the affordable housing segment in the last few years. Staring with the ‘Housing for all by 2022’ scheme in 2015, there have been several policy initiatives such as granting of infrastructure status; rationalisation of Goods and Services Tax (GST) to 8% for affordable houses purchased using Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana (PMAY) and creation of a separate affordable housing fund with National Housing bank. These steps have transformed affordable housing into the next big opportunity for Indian developers and have laid the foundation for revival of housing demand in India. In fact, there has been a significant surge in the number of affordable housing projects across the country. Many players who were traditionally in the luxury or high-end segment are also eyeing this market. According to several reports, affordable housing projects supply in the Bengaluru, Mumbai, Delhi-NCR, Chennai, Hyderabad and Kolkata accounted for than 60% of overall projects in this segment during the first half of 2017. It estimated that the affordable housing has grown by 6% year-on-year basis. What does it translate into for homebuyers? While the developers have increased their focus on affordable housing projects, the home buyers are also demanding such houses.  This is because of the incentives linked to this segment. The most important being cheaper home loans. Under the CLSS scheme of PMAY, a first time homebuyer can avail a benefit of INR 2.7 lakh for purchasing a house of 1,615 sq.ft. of carpet area if the family income is up to INR 18 lakh. Additionally, a subsidy of 6.5% subsidy is applicable on home loans up to INR 6 lakh. This is for a period of 15 years. Similarly, for home loan of INR 9 lakh, an interest subsidy of 4% is available and for loan amount worth INR 12 lakh, an interest subsidy of 3% is available.  The home buyers can avail these from any bank or housing finance companies. Besides these benefits, the Government had also amended the carpet area of Middle Income Group (MIG) I from 90 sq. m. to 120 sq. m. and in case of MIG II, it was increased from 110 sq. m to 150 sq. m. With a large population migrating to cities for better opportunities, the demand for affordable housing has also increased manifold. And the implementation of policies such as Real Estate (Regulation and Development) Act, 2016 (RERA) have brought transparency and credibility in the sector, improving customer sentiments. This will enable the real estate market grow on a sustainable basis and help drive the Indian economy.

Are you often confused with the real estate terminology used by developers and real estate agents? If the answer yes, let us help you understand some of the frequently used terms in the realty space. Guideline Value/Circle Rate: It is the minimum rate at which a property can be registered in a particular area. This rate is applicable to all residential and commercial properties and is the value determined by the government for the land in a particular area. Carpet Area: It is the net usable floor area and the area covered by internal partition walls in a housing unit, excluding the area covered by external walls, services shafts, balconies or veranda, open terrace and common areas such as play area, lift, corridor, gymnasium and swimming pool among others. It is commonly known as the area on which a carpet can be laid. Built-Up Area: It is the overall area of a housing unit, comprising the carpet area and the thickness of the inner walls and outer walls along with the area of the balcony. Super Built-up Area/Saleable Area: It is also known as the saleable area and includes the (i) the carpet area of the housing unit, (ii) thickness of the external walls, (iii) balconies, (iv) terraces and a proportionate share of the common areas such as lobby, lift, children play area and gymnasium among others. These common areas are usually distributed among all the housing units uniformly. Floor Space Index (FSI)/ Floor Area Ratio (FAR): It is also known as Floor Area Ratio (FAR). FSI is the proportion of the built-up area allowed on a given plot vis-a-vis the overall area of a plot. This number depends on the area, plot size and road width. For instance, if the total constructed area is 10,000 sq. ft. and the total land area 20,000 sq. ft., the FSI will be (10,000/20,000) 0.5. Occupancy Certificate (OC): Also known as the Completion Certificate. It confirms/certifies that the construction of the Block/Project conforms to the approved Plans and the local regulations or laws. This certificate is issued by the local municipal corporation/Planning Authority who has sanctioned the plan, to the owner of the project. Loading Factor: It is equal to the carpet area plus wall area of a given unit plus common areas (Loading fact. These common areas include staircase, elevators, lobbies, service shafts, common corridors, service rooms, drivers and domestic help common restrooms, security cabin and club house area and any other common facility provided. It could also be calculated using super built area and carpet area. For instance, if the super built-up area of a unit is 1200 sq. ft. and the carpet area is 1000 sq. ft., the loading factor will be (1200-1000) 200 sq. ft. The loading percentage can be calculated by multiplying the loading factor x100 divided by carpet area. Therefore, in this case, the loading percentage is (200×100/1000) 20% OSR (Open Space Ratio): OSR or parks and open spaces means a certain percentage of space is to be earmarked for parks as specified by the local approving authorities. This is in most cases 10% of total land available for development, excluding the building foot print.