What Type of Properties NRIs Can Buy?

Exploring Real Estate Opportunities for NRIs: Eligible and Ineligible Properties

As an NRI, it’s important to understand the regulations and guidelines surrounding ownership if properties in India to make informed decisions. This guide will provide detailed information to help you navigate the process smoothly.

Types of Properties NRIs Can Buy 

Residential Properties 

NRIs are permitted to purchase residential property in India without any restrictions. This includes apartments, independent houses, villas, and plots of land for residential purposes. NRIs can purchase properties either for self-use or as an investment.

When financing the purchase of residential property, NRIs can avail of home loans from Indian banks. Many banks and financial institutions offer specific loan products tailored for NRIs. The eligibility criteria for NRI home loans may vary, but generally, NRIs must have a minimum income and a stable employment history. The loan amount, tenure, and interest rates are determined based on the NRI’s income, creditworthiness, and the property’s value.

NRIs can freely buy and sell residential properties in India. They can lease or rent out their properties for rental income. Additionally, NRIs can inherit residential properties or receive them as gifts from Indian residents or other NRIs. There is no limitation on the number of residential properties NRIs can own in India.

NRIs should consult with legal and financial experts to ensure compliance with the necessary regulations and to understand any tax implications associated with owning residential properties in India.

Commercial Properties 

NRIs are allowed to invest in commercial properties in India. This category includes office spaces, shops, retail outlets, warehouses, industrial units, and any property used for commercial purposes. NRIs can buy, sell, lease, or rent commercial properties without restrictions.

Non-Agricultural Land

NRIs can purchase non-agricultural land in India. This refers to land that is not used for agricultural purposes. NRIs can buy plots for residential or commercial development in urban and rural areas, subject to compliance with local laws and regulations.

Flats and Apartments

Flats and apartments in multi-story buildings or gated communities are permissible to buy for NRIs. These properties are common in urban areas and offer shared amenities such as swimming pools, gyms, and security services.

Townhouses and Villas

NRIs are allowed to purchase independent residential properties, such as villas and townhouses. These properties are typically larger in size, offer more privacy, and often come with gardens or exclusive amenities. 

Residential Plots

NRIs can invest in residential plots of land for the future construction of their houses. These plots are available in various sizes and locations, allowing NRIs to customise their homes according to their preferences.

Commercial Spaces

NRIs can purchase commercial spaces such as office buildings, retail outlets, shops, or warehouses. These properties can be used for business purposes or leased to generate rental income.

Types of Properties NRIs Cannot Buy 

Agricultural Land

NRIs face certain restrictions when it comes to buying agricultural land in India. According to the regulations, NRIs are generally prohibited from purchasing agricultural land, plantation properties, or farmhouses. However, there are some exceptions to this rule:

• NRIs must understand and comply with the specific requirements and documentation necessary for these exceptions. It’s advisable to consult with legal experts to navigate the complexities of acquiring agricultural land through inheritance, gifting, or joint ownership.
• It’s worth mentioning that the restrictions on agricultural land do not apply to non-agricultural land within rural areas. NRIs can freely purchase non-agricultural land in rural areas for residential or commercial purposes, subject to compliance with local laws and regulations.
• NRIs interested in agricultural investments can explore alternative avenues, such as investing in agricultural bonds, mutual funds, or agricultural-related businesses without directly owning agricultural land.

Inherited Land

NRIs can inherit agricultural land through inheritance, gift, or a formal will from an Indian resident or another NRI.

• Gifting: NRIs can receive agricultural land as a gift from an Indian resident or another NRI. 
• Joint Ownership: NRIs can acquire agricultural land by being a joint owner with a close relative who is an Indian resident.

Plantation Properties

NRIs are restricted from buying plantation properties in India. Plantation properties refer to estates used for cultivating crops like tea, coffee, rubber, palm oil, and other agricultural activities. This restriction aims to safeguard and promote the agricultural sector, ensuring that the ownership of plantation properties remains primarily in the hands of agricultural experts and residents of India.

However, NRIs can explore other investment opportunities in the agricultural sector, such as investing in agricultural businesses, companies, or agricultural-related projects, subject to the regulations and guidelines set by the government.

It’s crucial for NRIs to be aware of these restrictions and to comply with the laws pertaining to the ownership and investment in plantation properties in India.

Farmhouses

NRIs are generally prohibited from purchasing farmhouses in India, both in urban and rural areas.

Farmhouses are considered properties that serve agricultural or farming purposes. The restriction on purchasing farmhouses aligns with the regulations to preserve agricultural resources and prevent non-agricultural entities, including NRIs, from acquiring such properties.

However, it’s important to note that NRIs can still invest in residential properties resembling farmhouses or offering a rural living experience, as long as they are not designated as farmhouses or used for agricultural activities.

Resale of Properties

NRIs can freely sell any residential or commercial property in India to another NRI or an Indian resident. There are no restrictions on the resale of properties for NRIs. When selling a property, NRIs must comply with legal requirements and documentation. It’s advisable to engage the services of a reputable real estate agent or legal expert to facilitate a smooth transaction and ensure compliance with all legal obligations. The resale market in India offers opportunities for NRIs to liquidate their investments, benefit from capital appreciation, or make strategic property changes as their needs evolve.

Financing Property Purchases

NRIs can avail home loans from Indian banks to finance their property purchases in India. Several banks and financial institutions offer specific loan products designed for NRIs, commonly called NRI home loans. The eligibility criteria for NRI home loans may vary among banks but generally include the NRI’s income, employment stability, creditworthiness, and the property’s value. NRIs can apply for home loans to purchase residential or commercial properties.

FAQs