Property Management for NRIs in India

Owning property in India while living abroad can come with its share of complexities—from managing tenants to ensuring legal compliance and upkeep. A clear understanding of how to handle these responsibilities remotely can save both time and money.We offer insights on various aspects of property management for NRIs, including rent handling, property maintenance, and navigating legal documentation. By staying informed, you can make confident decisions and manage your property in India more efficiently, no matter where you are.
Under the Foreign Exchange Management Act or FEMA, NRIs are allowed to acquire residential and commercial properties in India. However, they are not permitted to acquire agricultural land or plantations. States tenancy laws bind rental agreements, and property taxes as well as utilities have to be paid on time to avoid penalties. Other requirements apply when repatriating property income or sale proceeds by NRIs.

NRIs may choose one or combination of following options to manage their properties in India:

• Self-management: Primarily sponsored by friends or family.
• Caretakers: Locals take on general oversight
• Property Management Companies: Companies provide complete service coverage including tenant screening, collection of rents, legal compliance, and minor repairs.

Best Practices for Remote Property Management

Here are some of the ways for NRIs to manage their property remotely:

Hiring a Professional Property Management Company

You can seek help from professional property management companies while managing their properties in India. For this service, you need to pay them a fixed monthly remuneration or a part of your rental income.

Typical services offered by Property Management companies:

• Tenant Screening and Selection: Finding reliable tenants and conducting thorough background checks.
• Rent Collection and Financial Management: Ensuring timely rent collection and managing financial aspects of the property.
• Property Maintenance and Repairs: Handling routine maintenance, repairs, and addressing any issues promptly.
• Legal Compliance: Ensuring adherence to local laws and regulations, including tenancy laws and property taxes.
• Online Portals: Providing online access for property owners to track performance and communicate with the property manager.
• Regular Updates: Providing regular updates on property performance, tenant matters, and any issues that arise.
• RERA Registration and Ownership Verification: For newly constructed properties, ensuring RERA registration and verifying ownership documents.

Some of Property Management Companies Serving NRIs:

• Housewise – https://housewise.in/
• Lisa Home Solutions – https://lisahomesolutions.com/
• NRIWAY – https://nriway.com/
• PropTech Solutions – https://proptechsolutions.in/

Utilising Technology for Property Oversight

You can use various property management tools to access the information about your property. There are several online portals and tools where you can access your property’s financial statements, rental agreements, maintenance details, etc. It also helps maintain clear communication with the property management company, streamlining the entire procedure smoothly.

Some of the websites that can be used for searching for the tenant are:

• Nobroker – https://www.nobroker.in/
• Magic Bricks – https://www.magicbricks.com/
• 99 Acres – https://www.99acres.com/

Regular Communication with Tenants

Another effective way for NRIs to manage their Indian properties is to maintain transparent communication with the tenants and property managers. This helps address any issues at the right time and enough room for prompt solutions. With proper communication, you can always stay updated with the property status and it helps build a reliable relationship with all the stakeholders.

Virtual Property Inspections

You can take the help of the right technology to maintain seamless communication with your tenants, service suppliers, and property managers. Clear communication facilitates successful property management even from a different country. You can handle emergencies via video conferencing, messaging, or email and maintain frequent contact with your property manager to stay updated with all property-related information.

Financial Management and Record-keeping

You can use financial management tools to track your finances and keep a record of property updates. Transparent financial reporting is essential to keep you informed about your property’s expenses and income.

Legal Considerations for NRIs

Staying updated on local rules and regulations is essential for NRIs investing in Indian properties. Hiring a legal advisor can help you deal with complex regulatory and legal issues, legal disputes, etc. Legal professionals pursue the right knowledge of local laws, including lease agreements, tenant rights, safety requirements, and property inspections.

Tax Implications for NRIs

According to the IT Act of India, any non-resident Indian buying Indian property (immovable) needs to deduct tax at Source (TDS). However, the tax implications on NRIs may change depending on the type of capital gains and the residential status of the person from whom the NRI is buying the property.For sale considerations above ₹50 lakh, TDS is deducted at a 1% rate. However, the TDS deduction rate rises to 20% when the property seller is a non-resident, and LTCG (long-term capital gains) is applicable. Again, the TDS deduction rate rises to 30% when STCG (short-term capital gains) is applicable. You get a maximum of 30 days from the date of deduction to complete the remittance of the deducted tax. Any delay in the deduction process will lead to a fine on the outstanding TDS amount at a rate of 1% per month.

Tax Benefits for NRIs

Apart from paying taxes, NRIs can avail of multiple tax benefits and subsidies for buying properties in India. Here are some of them:

• An NRI can claim tax exemptions under Sections 54EC, 54F, and 54 if his annual income in India comes only from investing in assets and already deducted TDS.
• Under Section 80C of the Income Tax Act, NRIs are allowed to claim a deduction on stamp duty, registration charges, and repayment of the principal amount.
• NRIs can claim a 30% standard deduction on property taxes and use a deduction of interest against home loans.
• If they reinvest the capital gains acquired by selling the first property into some particular bonds, tax exemption applies to it.

Dealing With Emergencies and Repairs

Handling emergencies such as urgent repairs and maintenance while sitting in a different country can be challenging. They can build a strong network with local vendors who offer reliable services regarding the maintenance and repair of property. Maintaining clear and transparent communication with these vendors is necessary along with timely payments. This helps make arrangements for repairing works such as plumbing, electricity issues, etc., at an early stage, securing potential damages.

Some companies offering these maintenance services are:

• Urban Clap – https://www.urbancompany.com/
• Nobroker – https://www.nobroker.in/

Land Records

You may be interested in buying Land in India. Here are important document you need to be looking for before finalising the deal.

What are Land Records?

Land records are legal documents that prove the ownership of a person over a property or grant the right to a person to reside or stay on a property. Any person with the land records that prove he/she owns a property has the legal right to develop, demolish, rent, lease, mortgage or sell the property. They are also crucial to establishing and verifying property rights, resolving disputes, assessing land values, and supporting urban planning and infrastructure development initiatives.
Land records contain comprehensive information about the land, such as the owner’s name, property location, boundaries of the property, and historical transactions. These records are maintained by state or local government agencies operating under the Department of Revenue or Land Administration Departments.

Different Types of Land Records in India:

• Sale deed: This document formally records the transfer of ownership from the seller to the buyer.
• Gift deed: This document that facilitates the transfer of property from one person (the donor) to another (the donee) without any monetary consideration. It’s a voluntary transfer of ownership, ensuring the gift is legally recognized.
• Lease agreement: a legally binding contract outlining the terms under which a tenant (lessee) can occupy and use a property owned by a landlord (lessor) for a specified period. It details the duration of the lease, rent amount, and the rights and responsibilities of both parties.
• Rental agreement: a legally binding contract between a landlord and a tenant outlining the terms and conditions of renting a property. It clarifies the rights and responsibilities of both parties, including rent, security deposit, term of the agreement.
• Mortgage deed: a legal document that formalizes the agreement between a borrower and a lender, securing a loan against the borrower’s property. It outlines the terms of the loan, including the amount, interest rate, and repayment schedule, and grants the lender the right to foreclose on the property if the borrower defaults.
• Mutation certificate: This document legally records the transfer of ownership in the revenue records after a purchase, inheritance, or transfer.
• Encumbrance Certificate: This certificate verifies that there are no legal or financial encumbrances on the property, like outstanding loans or disputes.
• Survey and Land Records: Check for the presence of survey numbers and other land records.
• Property tax receipts: These are the document that verifies the payment of property tax to the local authorities. These receipts serve as proof that you have fulfilled your financial obligations related to property ownership. They detail the amount paid, the date of payment, and the period for which the tax was paid.
• Record of Rights: this is a legal document that details the ownership, usage, and liabilities associated with a piece of land. It serves as a comprehensive record of who owns the land, how it’s being used, and any pending dues or legal claims. Essentially, it’s a snapshot of the property’s current ownership, tenancy, and taxation details.
• Partition deed: a legal document that formally divides jointly owned property among its co-owners, establishing individual ownership of specific portions of the property. It ensures a clear division of property, clarifying each owner’s share and preventing future disputes.
• 7/12 Extracts (for state of Maharashtra): In Maharashtra, the 7/12 extract is a key document providing information about land ownership and other details, which can be found online.
• Records establishing land ownership of legal heirs:
  • Will or Probate certificate.
  • Succession certificate.
  • Legal heir certificate.

Where to Get Land Records?

In India, land records can be obtained from the following persons or entities:

• Sellers:The person selling the property, whether an individual seller, developer, or builder, will have the original property records with them. Sometimes, they might have submitted the land records to the bank for loan purposes. In such cases, you can visit the bank and request to view the land records to verify their correctness.
• Register office:The sub-register office where the land is registered will maintain the land records relating to that property. People can visit the sub-register office and apply for a certified copy of the land records.
• Land record website:States have their own land records websites, such as Bhoomi, Bhulekh, e-Rekha, etc., where anyone can visit and view the land records of a property. Certain land records can also be downloaded from these websites.

Why do we need of Land Records?

People buying a property must look into the land records or title deeds to ensure that the sellers, developers, or builders have the legal right to sell it. Similarly, people in the real estate sector must maintain land records as they act as proof of ownership of the property.Even if an individual is not planning to sell his/her property, it is essential to keep the land records as they prove that he/she is the property owner and safeguard against the claim of ownership over the property by a third party, if any. Up-to-date land records help the owner to resolve property disputes or boundary conflicts. They provide a legal framework for establishing and verifying property rights and ensuring transparency in land transactions.Land records also enable property owners to mortgage, rent or lease their properties and earn money from it. Proper land records encourage investments in real estate by providing confidence among lenders, buyers and developers about the legality and security of property transactions.Land records facilitate accountability, transparency, and efficiency in land transactions. They are easy to obtain, especially after the digitisation and modernisation of land record management systems in India. Land records are significant for making informed decisions in the real estate sector and ensuring effective land governance.

Property records

You may be interested in purchasing an under construction flat in India. Here are important document you need to be looking for before finalising the deal.

Typical documents required for purchasing an under construction flat include:

• Title Deed: This document will tell you whether the builder owns the property being sold and has the right to sell the property and the freedom to transfer ownership. Insist on seeing the original, and not a copy of the title deed. It will also tell you whether everything is legal or if there is litigation in progress regarding the property. A purchaser should check the original deed and confirm that the land is in the name of the developer, and that no one else has the right to sell it. It is advisable to get the title reviewed by a lawyer.
• Intimation Of Disapproval (IOD):This is a set of permissions which must be obtained by a developer at various stages of construction. This would involve acquiring approvals and a No Objection Certificate (NOC) from various departments such as the Storm Water and Drain Department, Sewage Departments, Forest Department, Environment Department, Traffic and Coordination Department, Chief Fire Officer, Airport Authority and Pollution Board, among others. It is called a letter of disapproval because the letter is drafted only in the event of a disapproval. If the plans and construction project is approved, then the regulatory authority will simply issue a certificate of no-objection.
• Commencement Certificate (CC):This is a document which must be issued by the local authorities and legally allows a builder to start the actual construction work. This is important as any construction without procuring a CC is illegal.
• Encumbrance Certificate:This can be obtained from the office of the registration authority (the sub registrar’s office) and tells you whether the property carries any legal or monetary liabilities or has any litigation pending. It can go as far back as 30 years.
• Approved Layout Plans:The layout plans must be approved by the appropriate planning authorities. Home purchasers need to exercise caution as there have been cases where developers deviated from the approved layouts, by adding extra floors or reducing open areas.
• Purchase Agreement:You should go through this document carefully to make sure it includes everything you were promised. You can only hold a builder or promoter legally accountable for what is in the purchase agreement, not what has been verbally promised to you. The agreement should contain all major details of the construction project such as the project specification, apartments, payment terms, completion deadlines and the type and amount of penalty, should any party default. The agreement should also contain a clause to transfer the common areas to the society. This ensures the plot remains with the original owners and that the developer cannot engage in further construction on this land.
• Occupancy Certificate:Issued by local authorities, this certificate states that the property has been constructed in compliance with the provided permissions. At this stage the developer would have completed all necessary water, sewage and electrical connections.

Typical legal services offered by Property Purchase/Sell companies:

• Property search
• Property verification – Extracting and verifying all the land / property records to ensure that that all compliances are met
• Drafting of deed
• Facilitating the deed registration and compliance to local authorities
• Facilitating transfer of property to buyer like change of name in records with local authorities, Property tax, Utilities etc.

Some of the companies providing these services are:

• Regakwhiz – https://regalwhiz.com/
• Nobroker – https://www.nobroker.in/

Inhering property in India

NRIs can inherit and manage ancestral property in India, with rights similar to resident Indians, subject to FEMA regulations. They can retain ownership, rent, sell, or gift the inherited property, and can appoint a power of attorney for property management.

Here’s a more detailed breakdown:

Rights and Responsibilities of NRIs in Ancestral Property:

• Inheritance Rights:NRIs have the same rights as resident Indians when inheriting property in India, including ancestral property. The time limit to claim ancestral property in India is typically around 12 years, but courts may consider valid reasons for delays.
• Ownership and Management:They can own, manage, and transfer ancestral properties in India.
• No Restrictions on Inheritance:There are no limitations on the types of property an NRI can inherit, including agricultural land and farmhouses, subject to FEMA regulations.
• FEMA Compliance:All property transactions, including inheritance, must comply with the Foreign Exchange Management Act (FEMA).
• Power of Attorney:NRIs can appoint a power of attorney (PoA) to manage the property on their behalf.
• Partition of Property:NRIs can seek the partition of ancestral property through a civil suit in an Indian court, even if they are not physically present in India, with representation through a PoA.
• Legal Assistance:
  Navigating Indian property laws can be complex, so seeking legal advice is recommended.
  Managing ancestral Property as an NRI:
  • Retain Ownership: You can retain ownership of the inherited property in your name.
  • Rent Out: You can rent out the property and repatriate the rental income as per FEMA regulations.
  • Sell the Property: You can sell the property, but sales are governed by FEMA rules.
  • Gift or Donate: You can gift or donate the inherited property, but be aware of the tax implications.

FAQs