Are You An NRI & Want to Buy Property in Chennai? Here’s a Free Guide

Buying property in Chennai is a lucrative option for NRIs, as the city’s realty sector is witnessing a major boom. Real estate prices in Chennai have been witnessing consistent growth over the years, a trend that is expected to continue in the future. The good news for NRIs is that the laws and regulations governing the purchase of property have been majorly simplified. If you are an NRI, you can purchaseproperty in Chennai without any hassles. Here’s a complete guide to buying property in Chennai, which will help you get started in the right direction.

What type of properties can you buy as an NRI?

As an NRI, you can purchase residential and commercial properties in Chennai. You cannot purchase other types of properties such as agricultural land, plantation property, and farmhouse. However, you may send a special request to RBI if you are interested in purchasing such properties. RBI will review your application and take a decision based on the circumstances that you may have described in your application. RBI reviews such applications on a case-to-case basis and it may or may not grant you the right to buy such properties. There have been cases in the past, where the RBI had allowed NRIs to buy agricultural land. However, there is no certainty that RBI will approve your application regarding purchase of agricultural land, plantation property, or farmhouse.

What permissions do NRIs need to buy property in Chennai?

With the simplification of applicable laws and regulations, NRIs are not required to take any special permission from RBI or any other authority to buy residential and commercial property. Earlier, FEMA (Foreign Exchange Management Act) regulations were a bottleneck for NRIs who wanted to buy property in India. But the FEMA rules and regulations have now been relaxed to make it NRI-friendly. As per a notification issued by RBI, a general permission has been granted to NRIs to purchase residential and commercial property. So, if you are buying property in Chennai, you do not have to take permission from RBI or any other authority. You are also not required to share the details of the transaction with RBI. Another significant change is that NRIs can buy as many properties as they want. There is no limit for the same.

What mode of payment is acceptable for buying property?

As an NRI, you can transfer money from abroad through banking channels to buy your property. If you have money in your NRE/NRO or FCNR account, you can use that also to buy property in Chennai. As per current rules, NRIs have to transfer money through banking channels to buy property. Other modes of payment such as foreigncurrency, traveler’s checks, etc. cannot be used by NRIs to buy residential and commercial properties. This rule has been mandated to curb the use of black money for buying properties.

Another option for NRIs is to get a home loan in Indian Rupees. The amount of home loan sanctioned, tenure, applicable rates and other terms and conditions would be at the discretion of the bank or financial institution that provides the loan. If the NRI works for an Indian employer, then the financing of the property purchase can be done through the employer also.

How to pay the home loan EMIs?


There are various options to pay the home loan EMIs. For example, you can transfer money from abroad through banking channels. You can also use money that may be there in your NRE/NRO/FCNR account. If you have let out your property and are earning rental income, you can use that also to pay the home loan EMIs. Another option could be that one of your relatives transfers money to your account to service the home loan. If you plan to use the property as your residence, you can take loan against deposits that you may have in your FCNR or NRE account. The proceeds of the loan can be used for servicing the home loan.Such loans have an upper limit of Rs 100 lakh.

Who can be the joint owner of the property?

In case of NRIs, the joint owner of the property has to be another NRI. You can buy property in your name or include a joint owner, who will be another NRI. As an NRI, you cannot include resident Indians as joint owners. Individuals who have been barred from investing in property also cannot be included as joint owners. This is applicable, irrespective of whether the individual may or may not be investing any money in buying the property.

Ownership rules for would-be NRIs

Ownership of the property remains with the NRI individual who has purchased it. In case of people who are expected to become NRIs in the future, they too retain ownership of the property they buy. Existing NRIs cannot buy agricultural, plantation and farmhouse properties, but people who are currently resident Indians and expected to become NRIs can buy such properties. They will retain their ownership of such properties even after they become an NRI.

Rent and sale of NRI-owned properties

As an NRI, you do not need any permission from RBI to let out your property on rent. You can transfer the rental income outside India, provided that you have paid all the relevant taxes. If you want to sell your residential/commercial property, you can sell it to another NRI, a person of Indian origin (PIO) or a resident Indian. You can also mortgage your property to any of the recognized financial institutions or real estate dealers. In case of agricultural, plantation and farmhouse property, you can sell it only to a resident Indian.

Recent trends indicate that there has been a significant increase in the number of properties being purchased by NRIs in Chennai. The reasons are self-explanatory, as real estate investment in booming cities like Chennai offers good returns in the medium to long term. During the last year, property price appreciation in Chennai’s fast-growing localities was in the range of 20-40 percent. This is much higher than returns normally available through other investment options such as stocks, gold, etc.

Chennai has a lot more to offer such as cosmopolitan population, plentiful job and business opportunities, well developed physical and social infrastructure and a plethora of recreation and sightseeing options. All these factors have made Chennai the preferred real estate investmentdestination for NRIs.

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