Challenges faced by NRIs when investing in Real Estate
Many people who travel abroad have a number of blind spots that must be addressed. NRIs, for example, face difficulties keeping up with local legal rights, market developments, and finding the ideal tenant for their property.
While there are several issues and obstacles, we’d like to highlight five that many people face. This blog will provide you with information on:
- NRIs have legal rights when investing in real estate.
- Land encroachment is a problem that needs to be addressed.
- Builders with a Questionable Track Record
- Verification procedures cause delays.
- As an NRI, getting the right expert advice on how to manage your property is crucial.
Lack of understanding of one's legal rights:
The lack of clarity on the rights accessible to them is one of the most common challenges experienced not just by NRIs, but by everyone who chooses to invest in real estate in India. While a local citizen may be able to navigate their way through using local resources, it can be difficult for NRIs to keep up with changes in Indian regulations.
To begin with, keep in mind that the Foreign Exchange Management Act regulates all real estate transactions involving NRIs (FEMA). NRIs can only buy/invest in residential or commercial properties, according to the rules. An NRI or a person of Indian descent cannot buy any agricultural land, including farmland or any type of plantation property.
If an NRI hires a freelance broker to manage their property in an unhappy situation or out of desperation, the broker may take advantage of the lack of information and deceive NRIs when selling properties. A broker may claim an incredible property deal in order to dupe investors into purchasing agricultural properties.
To avoid being a victim of such scam as an NRI, we recommend that you only deal with certified real estate brokers who have been confirmed by the Real Estate Regulatory Authority (RERA). Another option for an investor is to hire a property manager who will oversee the entire property management process.
Illegal possession:
You may not be able to visit your property as often as you would like or keep a close check on it while you are away. This frequently results in unlawful possession as well as gatecrashers. While you may have entrusted your property to a trusted family member or friend, periods like Covid-19 make managing your property difficult even for them.
Furthermore, regardless of who you ask to care after your property, you must have legal papers signed with that person before handing over custody or decision-making authority over the property to that individual. In the event of illegal possession, an NRI has the option of contacting the – NRI cells at a police station to initiate the required legal action.
Developers with a shady track record:
Many NRIs lose a lot of money owing to project delays, which might affect the quality of the investment. There was no opportunity to review or gain insight into the builder’s track record just a few years ago (it was based on word of mouth). Buyers can now verify the track record of builders on the RERA websites of their individual states, thanks to the implementation of RERA. RERA makes projects more transparent in India’s unorganized real estate sector, however it is merely a platform that allows all information to be accessed. The investors’ due diligence is still their duty.
Property owners now have access to a variety of online platforms, forums such as Quora, and other social media pages where they can read reviews and obtain more information about the developer and the projects. It’s crucial to remember that, while a quick Google search for the developer or property of interest may appear simple, keeping up with the research can be a time-consuming effort.
Delay in the procedure:
When it comes to investing, many NRIs have difficulties due to extensive background checks, which cause service delays and time loss. When it comes to investing money in their Non-Resident External (NRE), Non-Resident Ordinary (NRO), or Foreign Currency Non-Resident (FCNR) accounts, an NRI may run into problems. As a result, NRIs should use the banking services of a company that has a simple approach and is well-known in the market.
Lack of professional advice:
Many NRIs confront challenges when it comes to making the greatest decision for their property, not just the right one. When it comes to investing in real estate and renting it out, there are a few things to keep in mind. If an investor is considering investing from abroad or if an NRI already owns property that has to be occupied, they must keep in mind that there are a number of vital activities to complete.
If an NRI wishes to invest in a new property, they must choose a trustworthy person/broker who is not dishonest and does not take advantage of them. If a person currently owns property, they must ensure that it is maintained and given the attention it requires to ensure that its worth does not degrade.
A property management service is one option to explore because they have a team of in-house experts who handle everything from legal documentation to protect you and your home to keeping vacancies low and upkeep. A few small efforts in the proper approach can help you protect your future and reap the advantages of your investment in a foreign shore sooner and more easily.