NRIs Permitted to buy and sell properties in india

 
Source :: Ashish Gupta, TNN

Non-resident Indians (NRIs) are permitted to buy and sell property in India. The acquisition and transfer of immovable property by NRIs should be in accordance with the Foreign Exchange Management Act (FEMA).

The property should be purchased through a registered conveyance deed. In case the property is purchased on the basis of a Power of Attorney, an agreement to sell and the Power of Attorney should be executed by the seller in favour of the buyer.

However, they are not formally registered with the office of the registrar. As such, no stamp duty is to be paid for the purchase.

The Reserve Bank of India (RBI) has granted permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase property in India for residential or commercial purposes.


NRIs can easily purchase & transfer property in India

The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with a bank in India.

Foreign citizens of Indian origin, purchasing residential property in India under the general permission are required to file a declaration with the central office of the RBI at Mumbai within a period of 90 days from the date of purchase of the property or final payment of purchase consideration along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.

The RBI has granted general permission for such a sale. However, where the property is purchased by another foreign citizen of Indian origin, funds towards the purchase consideration should either be remitted to India or paid out of a NRE/FCNR account.

NRIs can easily purchase & transfer property in India


The RBI has granted general permission to let out a property in India. The rental income is eligible for repatriation .

The RBI has also granted general permission to certain financial institutions providing housing finance and authorised dealers to grant housing loans to NRIs for acquisition of a house for self-occupation subject to certain conditions.

The purpose of the loan, margin money and the quantum of loan will be at par with those applicable to housing loans for residents.

Repayment of the loan should be made within a period not exceeding 15 years out of inward remittances or out of funds held in a NRE, FCNR or NRO account.

NRIs can easily purchase & transfer property in India

In addition to these, properties other than agricultural land, farm houses, an plantations can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds in a NRE or FCNR account maintained with a bank in India.

A declaration is to be submitted to the central office of the RBI within a period of 90 days from the date of purchase of the property or final payment of purchase consideration . They can also dispose off such properties.

The RBI has also granted general permission to foreign citizens of Indian origin to acquire or dispose off properties - up to two houses - as gift from or to a relative who may be an Indian citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.

The RBI also permits non-resident persons (foreign citizens ) of Indian origin to transfer as gift property held by them in India to relatives and charitable organisations subject to the condition that the provisions of any other law, including the Foreign Contribution (Regulation) Act 1976 are complied with.

NHB bullish on reverse mortgage loans

Source :BS Reporter / Chennai/ Bangalore May 22, 2010, 0:56 IST

With its new reverse mortgage loan-enabled annuity scheme (RMLeA) offering senior citizens assured lifetime payments instead of the earlier cap of 20 years, National Housing Bank (NHB) is expecting more takers for the product. It is in talks with banks and insurance companies to expand its pool of RML facilitators.

In the first four-and-a-half months since its launch, RMLeA is learnt to have got 40 loan sanctions so far totaling an estimated Rs 100 crore. While the concept of RMLeA itself has been a slow starter in India, NHB feels the new offering is more attractive to borrowers in terms of higher payments and better risk mitigation.


“Annuity link provides comfort to participants. The original RML format has seen fairly good response. However, senior citizens were apprehensive about the scheme because of the cap on 20 years on payments. We should see a much bigger offtake in the coming days,” said RV Verma, executive director, NHB.

NHB, which is the principal agency to promote housing finance institutions, launched the scheme in India in 2007. Reverse mortgage seeks to monetise the owner’s equity in the house. This involves senior citizen borrowers mortgaging their house to a lender, who then makes periodic payments to the borrower during the latter’s lifetime. The borrower need not repay the principal and interest to the lender during their lifetime.

On the borrower’s death or on borrower leaving the house permanently, the loan along with accumulated interest is settled through sale of the house. The borrower’s heir can also repay or pre-pay the loan with interest and release the mortgage without sale of property.

An average individual in India invests nearly 30-40 per cent of his total lifetime income in constructing a house. Around 23 banks took up the RML scheme, which include State Bank of India, Punjab National Bank, Bank of India and Indian Bank. According to NHB, as of March 31, 2010, around 7,000 RMLs of Rs 1,400 crore have been sanctioned.

According to lenders, there were some limitations for the original scheme which includes the cap of 20 years on payments to senior citizens as well as low quantum of payments. Higher the interest rate, lower was the payment. To counter this, NHB came out with the annuity-linked plan, which assures lifetime payments even after the completion of the fixed term of 20 years and also promises nearly 1.5 times higher annuity as compared with the earlier one.

The RMLeA scheme has been launched by Central Bank of India in collaboration with Star Union Dai-ichi Life Insurance Co. Verma said talks were on to bring major banks and insurance players into the scheme.

He added NHB was seeking a tax exemption for annuities provided to senior citizens under its RMLeA scheme with the Central Board of Direct Taxes. To address the issue of lack of information for RMLeA in India, NHB has set up counselling centres in various cities like Delhi, Mumbai, Bangalore, Chennai and Hyderabad.

Solar systems likely to be installed in buildings

Source :Nidhi Singhi , TNN, May 17, 2010, 10.00pm IST



LUDHIANA: To conserve energy, the Punjab Energy Development Agency (PEDA) is mulling to make it compulsory to install solar systems in newly constructed buildings in major cities. This is being done in view of increasing number of malls and commercial buildings.

To speed up the process, PEDA officials have also forwarded a proposal to chief minister Parkash Singh Badal to install solar systems in all commercial buildings for preservation of energy.

According to information, PEDA has to generate energy up to 300 MW by the end 2010. As such, it has decided to increase it up to 360 MW by 2012, while around 50 MW is being currently generated from various renewable sources. The energy generated by PEDA is further used by POWERCOM to fulfil the needs of consumers.

Talking to TOI on Monday, PEDA chairman Manjeet Singh said, “We have proposed to the state government that they should install solar systems in commercial buildings so that more energy can be generated. The state is already reeling under acute power shortage and it is time we adopted preventive measures.”

However, PEDA has started around 16 projects in the state, including biomass and solar project, and wants to generate up to 360 MW from these. A PEDA official said they were providing 50% subsidy on solar systems for the convenience of residents and hence, people should come forward for installing these. However, this subsidy was sanctioned recently as earlier there was no subsidy for domestic consumers.

The official also informed that they would install solar systems in the state assembly, Rajpal Bhawan, Harimandir Sahib and Parliament. “There is a huge gap between demand and supply as the demand has touched 1,230 lakh units while the supply is only 1,100 lakh units. This is resulting in power cuts and so we need to generate energy from other sources,” he added.

Cluster development sounds good on paper, but where is the space in Mumbai?

 Source:ML:Pallabika Ganguly:May19,2010

Does Mumbai have enough space to accommodate incentive FSI development granted by the government for cluster developments? The numbers just don’t add up

The government of Maharashtra has granted different percentages of incentive floor space index (FSI) for various ranges of amalgamated plots that will be used for cluster development. Cluster development allows redevelopment of old cessed buildings which have been constructed prior to 30 September 1969 and which have a built-up area of up to 2,000 sq mt. There’s an FSI of 4 for cluster development of amalgamated plots.

According to Section 37(2) of the Maharashtra Regional & Town Planning Act, 1966, these incentive FSI numbers will be granted for cluster development for the following size of amalgamated plots:
• Where the total area of amalgamated plot is between 4,000 sq mt-8,000 sq mt, the incentive FSI admissible will be 55%
• Where the total area of amalgamated plot is between 8,001 sq mt-12,000 sq mt, the incentive FSI admissible will be 65%
• Where the total area of amalgamated plot is between 12,001 sq mt-16,000 sq mt, the incentive FSI admissible will be 70%
• Where the total area of amalgamated plot is between 16,001 sq mt-20,000 sq mt, the incentive FSI admissible will be 55%
• Where the total area of amalgamated plot is more than 20,000 sq mt, the incentive FSI admissible will be 80%.
There are 16,000 cessed buildings in Mumbai and the government is targeting 20 years to complete the re-development of these structures. “You have to develop 800 buildings per year to meet the target. Each re-development takes at least three years-four years for completion. Around 2,500 buildings have to be re-developed at one time which will create chaos,” said Pranay Vakil, chairman, Knight Frank (India) Pvt Ltd.

Most of these cessed buildings which have been earmarked for re-development are located in the congested southern part of the city where there is hardly any place to park an automobile. The government has allowed incentive FSI in those areas which are already crowded—like Bhuleshwar and Kalbadevi in south Mumbai.

RBI asks NBFCs to insist on disclosures by developers

 Source:Moneylife:May19,2010

Before sanctioning a loan, NBFCs should make sure that the developer should publicly disclose the name of the entity to whom the property is mortgaged. The rule is to create awareness among flat buyers

The Reserve Bank of India (RBI) has asked non-banking finance companies (NBFCs) to insist on disclosures by developers, builders, owners and companies while granting loan for housing or development projects. This is expected to bring greater transparency in the construction industry and create awareness among potential flat buyers.

Before sanctioning the loan, NBFCs should make sure that the developer, builder, owners and company should disclose the name of the entity to which the property is mortgaged, in all pamphlets, brochures and advertisements. Similarly, these entities should also indicate that if required they would provide a no-objection certificate (NOC) or permission of the mortgagee for sale of flats or property.

RBI's new guidelines for NBFCs are similar to those followed by banks. Earlier, in a case, the Bombay High Court observed that the bank granting finance for housing projects should insist on disclosure of the charge or any other liability on the plot in question or development project being duly made in the brochure or pamphlet etc which may be published by the developer or owner inviting the public at large to purchase flats and properties. The Court also added that this obviously would be part of the terms and conditions on which the loan may be sanctioned by the bank.

Many times, a buyer has found out that the property on which he bought his residential apartment is in fact mortgaged to some financial institution and he was kept in the dark by the developer. Although the RBI has made it mandatory for banks to make sure that the bank's name is mentioned as the mortgagee in the publicity material issued by the developer, the same rule was not applicable for NBFCs.

Property rates are zooming, but realty firms don’t seem to be raking it in

Source:ML: May 18, 2010 05:43 PM

Developers claim that they are reporting good sales across the country. What do their financial results indicate?

Property prices are shooting up in almost all realty projects across Mumbai, Delhi and Bengaluru, but are the properties actually selling at such high prices? After the March 2010 quarter results, most listed developers were quoted in media reports claiming that they were satisfied with the annual sales growth over the past fiscal.
However, the numbers portray a mixed bag of results. If we compare the operating profit of FY09-10 versus FY08-09, of a few listed real-estate companies, this is the picture that emerges. DLF Ltd has reported a fall of 36% in operating profit (FY10 was at Rs1,109.61 crore; FY09 at Rs1,721.58 crore), Sobha Developers Ltd has reported a drop of 6% in operating profit (FY10: Rs254.5 crore; FY09: Rs269.7crore), Parsvnath Developers Ltd reported 5% annual growth (FY10: Rs233.31 crore ; FY09: Rs221.24 crore).
Only Orbit Corporation Ltd has bucked the trend and reported 71% growth in operating profit (FY10: Rs154.87 crore; FY09: Rs90.43 crore).
Unitech Ltd and Omaxe Ltd have not declared their annual results for the last fiscal ended March 2010. We decided to compare their results of FY08-09 with the performance for the first nine months of the last fiscal, ending December 2009.
Unitech Ltd reported a drop in operating profit of 23% (FY08-09: Rs1,047.41 crore; annualised performance for nine months ended December 2009 at Rs808.08 crore) while Omaxe Ltd reported a growth of 42% (FY08-09: Rs135.65 crore; annualised nine months: Rs192.51 crore).
“One of the major reasons for de-growth is that developers are initiating new construction when the corresponding sales are not happening. Developers are failing to report incremental sales. They are just holding on to high prices without being bothered about sales,” said Aditya Bansal, vice president (finance), Liases Foras.

There have been a few places in metros like Mumbai and Delhi, where a few residential properties have been sold for almost Rs50,000 per sq ft. However, this does not indicate that consumers are buying property at these hugely inflated rates—Moneylife has consistently reported on how developers are not being able to sell real estate at current rates.
“As for the quarter ended March 2010, prices have gone up further by 15%-20% and we are estimating sales to be down further by 25%-30%. Property prices are (now) indicating the rise of another asset bubble,” said Pankaj Kapoor, founder, Liases Foras.

DLF plans to sell non-core assets to reduce debt

Source : :17 May 2010, 0057 hrs IST,PTI


NEW DELHI: Realty giant DLF plans to raise Rs 2,700 crore this fiscal year through sale of non-core assets to reduce its debt of over Rs 16,421 crore by about one-third.

The country’s largest realty firm plans to cut its debt by Rs 5,000 crore, of which it plans to raise Rs 2,700 crore from sale of non-core assets and the rest from internal accruals. DLF had decided to raise Rs 5,500 crore last fiscal via sale of non-core assets, but was able to raise only Rs 1,800 crore.

“We are not only confident of managing our liabilities during the fiscal. We will also reduce our debt very comfortably,” DLF executive director (finance) Saurabh Chawla said.

... The debt will come down by about Rs 5,000 crore from the current level,” DLF executive director (finance) Saurabh Chawla said. Half of the planned repayment will come from non-core asset sales, while the rest will be funded through revenues from operations, he added.

DLF has to repay Rs 2,500-2,700 crore in debt this fiscal and an additional Rs 1,800 crore as interest. “Divestment of non-core assets as a strategy is to focus more on the core business operations and not merely as a means to reduce debt.

However, all-cash flows from this process will be utilised to bring down debt,” the presentation made to analysts said. DLF repaid about Rs 5,600 crore of debt in the last fiscal against a mandatory debt repayment of Rs 3,549 crore.

Mr Chawala said the current debt equity ratio stands at 0.53:1, which will increase to about 0.75:1 in this quarter, but come down during the fiscal. DLF’s net profit declined by 61% to Rs 1,730 crore in 2009-10 against Rs 4,469 crore.

The total revenue during fiscal 2009-10 fell by 25% to Rs 7,855 crore from Rs 10,431 crore in fiscal 2008-09.
In the last fiscal, the company had sold 12.55 million sq ft area across different locations. 

 Source : :http://bankfinanceindia.blogspot.com/