For a long time now, it’s been de rigueur for non-resident Indians (NRIs) to save money, make remittances to families back in India, or invest in properties in upscale locations in cities such as Bombay, Bangalore, etc. However, many NRIs often felt they weren’t getting a good deal, with too many middle men spoiling the broth. They were also worried about transparency issues, benami properties being sold to them (a property that is under a person’s name to whom it actually doesn’t belong), and legal complications that might arise.
Most importantly, many unscrupulous builders bent existing rules to build properties in regulated or prohibited areas, or they simply didn’t abide by construction and safety rules, opening doors to large fines, and possible legal conflicts with regulatory authorities. In addition, tax issues have always bothered NRIs though they have genuinely desired to purchase properties in India legally, thanks to the complex tax regime that existed before GST roll out.
The Real Estate Regulation and Development Act, 2016, (RERA), fills all the previous loopholes that existed until now, which discouraged NRIs from investing in properties in India. Let us take a look at the impact of RERA to NRIs making investments in luxurious properties across upscale neighborhoods of India mega cities.
1. More transparency
It was easier for unscrupulous sellers to sell properties with questionable titles and papers. The Benami Transactions (Prohibition) Amendment Act, 2016, ensures that properties that are not purchased in the intended owner’s name will be penalized. A number of time, NRIs often purchased such properties without realizing that they could be buying into something that is potentially illegal. Now, with the amendment to the original Benami Transactions Prohibition Act, NRIs can rest assured that they are protected from being sold such anonymous properties without their knowledge.
In addition, RERA requires builders to provide all details to you without withholding any information. This means, builders of luxury condos, apartments, and upscale properties will have to go a step further from mere glossy marketing brochures. They will now have to prove that they have received all necessary government approvals, mention sub-contractors’ names, information about property titles, layout plans, payment schedules, and completion time. In addition, they will also have to provide constant updates regarding the status of the project.
2. Avoid legal complications
Thanks to RERA, NRIs will no longer land in soup because of builders’ faults. There have been many instances of building skyscrapers where they are not allowed, constructing next to lakes and rivers where any kind of real estate activity is prohibited, etc. Builders will now have to prove that they have received approvals from all such authorities, including the forest department, so that you will not be held responsible for your choices sometime in the future. Many NRIs have unwittingly landed themselves in trouble after purchasing properties that didn’t comply with rules and regulations, and often have had to fight legal battles, or worse, pay fines to authorities. Post-RERA, this is not the case.
3. Easy taxation
GST roll out has made paying taxes and complying easier. Earlier, property taxes were very complex for an NRI to understand, especially with so many different taxes to pay. GST has made things less complex, and it is easier to make sure that the builder is complying with all the taxations. There is a lot more clarity on real estate dealings now with respect to tax credits, and this transparency reflects in the total amount that a buyer has to pay for his investment. Certainly, RERA and GST together have been the biggest reasons for removing complexities in real estate dealings.
4. Protection from unscrupulous builders
Before RERA, it was easy for builders to state a certain built-up area, which included common areas as well. This confused the NRI who often assumed that the reality would be as described by the builder. Unfortunately, the large and upscale mansion or apartment that the NRI would have imagined would probably be smaller in reality. Now, builders have to specify both the carpet area and the balcony area on their websites. NRIs also found it very difficult to deal with delays, something that people in India just take for granted. Now, builders will have to pay an interest to the homeowner if there are delays. Homeowners also have the option of canceling the entire transaction and requesting for a total refund of the amount paid, along with the interest.
5. Regular updates regarding projects
It can be very frustrating when you are far away from the location of your property, probably thousands of miles away, and you do not know what’s happening on the ground. Most NRIs would testify to the fact that their builder didn’t inform them when the project would be complete, what the updates are, and why delays are taking place. Now, thanks to RERA, builders are bound by law to provide regular updates to investors, no matter where they are. In addition, builders will have to update RERA as well, making your investment choice safe and secure.
6. A safer and more secure real estate ecosystem
It is not just the NRIs that benefit from RERA. The amendment ensures that we all live in a safer and cleaner environment where builders are held responsible for encroaching upon lakes, forested areas, etc. If lakes and forests are used to build projects, it is a loss for those who live in those very complexes too. After all, only when our immediate environment is healthy are we going to feel healthy. Moreover, a planned construction project that complies with all the regulatory requirements will likely provide a safer and more secure ecosystem to everyone involved, and that includes the builders themselves too.
7. Better returns on investments
With clear titles, transparent construction details, and accurate tax compliance, the NRI buyer has very little to worry about. In fact, this transparency ensures that the investment is easy to sell, if one wishes to. After all, everyone wants to purchase a property that comes without any complications. In other words, RERA ensures that the investor gets the best return on his investment. It must be kept in mind that most NRIs make investment purely from an investment point of view. For those who make investments in India from an investment point of view, RERA is a blessing in disguise.
RERA is a boon for NRIs
As you can see, RERA is a boon for NRI investors who choose to purchase properties in India. They will no longer have to deal with unscrupulous builders as everything is going to be clear and transparent. Regular updates regarding projects will be given, and tax compliance brings with it its own advantages. In addition, builders will have to specify carpet area and balcony area, so that there are no ambiguities. All this leads to a safer real estate ecosystem which helps not only the NRI investor but also builders. At the end of the day, safe investments always fetch the best ROI.