How is Saleable Area Calculated
Content
How is saleable area calculated? What is super builtup area?
You have come to a very important page of www.nripro.com. There are two main reasons why it
is absolutely important for buyers to understand areas and methods used to calculate saleable
areas: (a) Different interpretations of areas and different methods used for calculation of saleable
area can have more than 20% variation in total price tag and (b) Actual area that you get directly
depends on how saleable area is calculated.
After you are done reading this page, we strongly recommend you read another related
page at this link on our website that shows actual examples of typical construction cost in
Pune, and how much money builders make.
Carpet Area: Area between the walls. Carpet area must have permanent roof (slab) over it, at
normal height. Owner must get exclusive rights to use and resell the carpet area. Carpet area is
calculated by multiplying dimension of room, i.e. length x width. Total carpet area is calculated
by adding carpet areas of all rooms. Generally, in addition to all the rooms, varandas, passages,
area inside the main door (if not included in living room dimension), balconies are included in
carpet area. FSI is applicable to carpet area. Depending upon builder practice, carpet area may be
50% to 70% of of saleable area. It is always good to find ratio of carpet area to the saleable area,
higher the ratio, better it is. This is just to give you idea of what you actually can use, in practice
it is in interest of the buyers to find out what is carpet area and then apply loading factor on it
(and not do the other way, i.e. should not arrive at carpet by applying loading factor to saleable
area.
The example below will illustrate trick used by builders/developers, when they say you can find
carpet area by applying loading factor on the saleable area.
Saleable Area: 1200 sq ft
Loading Factor: 25% (or 1.25)
Wrong Method (favours seller):
Carpet Area: 1200 x (100-25)% = 1200 x 75% = 900 sq ft
If you apply 1.25 or 25% loading, saleable area should be 900 sq ft + 900 x 25% = 1125 sq ft
As you can see under this method builder is charging you for 1200 - 1125 = 75 sq ft more
Right Method (favours buyer):
Find carpet area first by measuring actual dimensions, and then apply loading factor
Saleable area = 900 sq ft + 900 x 25% = 1125 sq ft
Terrace: Open area without roof, attached to the main unit that buyer gets exclusive rights to use
and resell (with the main unit). Open areas with slab at least double the height of the floor are
also considered terrace area. FSI is not applicable to terrace areas.
Balcony: Open area with roof (slab at floor height), attached to the main unit that buyer has
exclusive rights to use and resell (with the main unit). Generally balcony area is added to total
carpet area. FSI is applicable to balconies.
Dry terrace or dry balcony: Area meant to dry clothes that buyer has exclusive rights to use
and resell (with main unit). If it has roof (slab) at normal height, it should be treated as balcony.
If it does not have roof (slab) at normal height, it should be treated as terrace.
Builtup Area: Carpet Area + area occupied by walls, doors of the unit. Generally builtup area is
not calculated separately, it is included into the loading factor.
Loading factor or loading or load: Loading factor is a number used for purpose of arriving at
saleable area. It is used to add constructed space not exclusively allocated to the buyer. Such area
generally includes shared areas such as lift/elevator area, staircases, clubhouse, gymnasium,
amenities area, etc. Loading factor 1.25 indicates that developer/builder is applying 25% on the
carpet area. Some builders, in addition to carpet area, include terrace and balcony areas while
applying the loading factor. If the project does not have lot of amenities, the loading factor
should be small. In most cases loading factor of 1.3 is more than sufficient. Loading factor also
includes parking space (irrespective of it is covered, open, stilt, sold separately or not).
Superbuiltup Area: Carpet area + terrace + balconies + areas occupied by walls + area occupied
by common/shared construction (e.g. lift, stairs, club house, etc). Generally builders use loading
factor on carpet area to arrive at superbuiltup area. For example, if carpet area is 500, and
loading factor is 1.3, then superbuiltup area is 500 x 1.5 = 750.
Usable Area: This is relatively new term. Technically there is no difference between Usable
Area and Superbuiltup Area. Some builders use this term to justify higher loading factor,
typically in Mumbai where land cost is extremely high.
Saleable Area: Generally superbuiltup area is saleable area.
FSI: Floor Space Index. This is ratio of land to carpet area. Generally it is 1 for residential plots
(much less for agricultural land) For example, if FSI is 1, and land area is 3000 sq ft, then total
carpet area on that land cannot exceed 3000 x 1 = 3000 sq ft. It should be noted that FSI is not
applicable to terraces, balconies. Also, this definition is provided for your information,
enforcement of FSI is taken care of by local authorities, and buyer should not worry about it
(unless there are allegations against the builder of misusing FSI).
Methods used to calculate saleable area
Builders apply different models to arrive at saleable area. The methods used by builder can result
into as high as 20% to 25% increase in the effective rate. We will try to explain different methods
(not all of them) used by developers/builders and their relative impact on saleable area, total
price, and ratio of carpet to saleable area.
In the example below, it is assumed that the rate is Rs. 4000 per sq. ft, loading factor is 1.3, and
it is a 1BHK unit with the following dimensions:
Room or area
Kitchen
Living room
Dimensions (ft)
8 x 10
10 x 15
Area (sq ft)
80
150
Bathroom
Bedroom
Total Carpet Area (C)
4x7
12 x 10
28
120
402
Dry terrace
Terrace
Total terrace area (T)
4x8
10 x 13
32
130
162
The table below lists different methods/ variations (certainly not all the variations) of arriving at
the saleable area. Please note effect of each variation on saleable area, total price, carpet to
saleable area ratio, and effective carpet rate. Please also note that calculations done manually
don't match 100% with calculations done by builders/architects because they use CAD software.
However the difference in two method should not be more than +/- 3%. Because of different
methods and variations, it is difficult to "reverse engineer" and find out what method builder has
used. It will be good to find out from the builder if terraces/balconies are charged at 50% of
100%, and is loading factor applied on those, and what is the loading factor. Most builders don't
answer these questions in written material, and may not even bother to answer even if you ask. In
that case only option for you is try different variations as given below and "figure out".
Total
Load
Load
Carpet
Terrace
Calculating Saleable price, Rs.,
Method
applied
applied
charged
charged
saleable
area (sq (rate x
#
to
to
at
at
area
ft)
saleable
carpet?
terrace?
area)
(C x 1.3) +
1
100% Yes
33%
No
576.06 23,04,240
(T x 33%)
(C x 1.3) +
2
100% Yes
50%
No
603.6
24,14,400
(T x 50%)
(C x 1.3) +
3
100% Yes
50%
Yes
(T x 50% x 627.9
25,11,600
1.3)
(C x 1.3) +
4
100% Yes
100% No
684.6
27,38,400
T
5
100% Yes
100% Yes
(C + T) 1.3 733.2
29,32,800
Carpet
to
saleable
area
ratio
Effective
carpet
rate, Rs.,
(Total
price/C)
69.78% 5,732
66.60% 6,006
64.02% 6,248
58.72% 6,812
54.83% 7,296
Method #1 in above table is legal method (because it charges terrace at 33% of the area, that is
maximum allowed for terrace). Method #2 is widely used method.
Summary
a) Bigger saleable area does not mean bigger carpet area
b) Lower rate does not mean good deal because it can result into higher effective rate because of
loading factor, and the way terraces are charged (at 50% or 100% or at some other %), and if
loading factor is applied on top of terraces
c) Method used by builder can cause a big swing in the total price as demonstrated in the
example above
d) Lower loading % does not necessarily mean it is better deal, one needs to look into how it is
applied on terraces, gardens and other areas that are not included in FSI
e) Per square foot rate is meaningless and misleading if not looked in light of the other
factors that influence saleable area
What is construction cost in Pune? What is builders profit
margin in Pune
If you are wondering what is construction cost in Pune? Is it better to purchase plot and build
your own house/bungalow or purchase apartment from builder? How much do builders make per
square foot? What is builders profit margin in Pune? What is minimum plot size needed to
construct bungalow? This article tries to answer these questions.
What is builder's margin? How much money builders make?
Typically builders would make anywhere between 200% to 300% margin, i.e. for every rupee
invested they will profit Rs. 2 to Rs. 3. The illustration below, builder is charging more than 3
times of their cost to end customer. Moral of the story is the margin is high. This would also
explain why generally they don't negotiate, because it takes less than third of their apartments to
break even, which they can easily do with help of investors and financial institution borrowing,
and borrowing from other sources. Managing cash-flow is key to success in construction
business. That is the reason builders rely heavily on investors and other sources, in addition to
financial institutions and banks.
A
Desired carpet area, sq. ft.
B
Load factor to builder (what they charge end user is much higher)
C = Ax B
Superbuiltup area, sq. ft.
D
Construction cost PSF
E = C x D Builder's total construction cost, Rs.
F
Plot size, assumes builder uses 100% FSI, sq. ft.
G
Plot cost, PSF, Rs.
H = F x G Total plot cost, Rs.
I=E+H
Total cost to builder, Rs.
J
Load factor (charged to end customer)
J1
Terrace, sq. ft.
K = (A x J) + Saleable area, sq.ft. (this is what you will pay for buying constructed
J1
property in market)
L
Market rate PSF, Rs.
M = K x L Market price, Rs.
N
Parking spaces, 2 x Rs. 2,00,000 each
O = M + N Agreement value, Rs.
P
Builder's total margin, Rs.
Q=I/K
Builder PSF effective cost, Rs.
R=L-Q
Builder's PSF margin, Rs.
1800
1.2
2160
1000
21,60,000
1800
900
16,20,000
37,80,000
1.4
500
3020
4,000
1,20,80,000
4,00,000
1,24,80,000
87,00,000
1,252
2,748
S=R/Q
Builder PSF margin, %
220%
What would it cost you to build your own bungalow?
The table below illustrates simple example of what if you bought plot and constructed your own
bungalow vs. bought same saleable area from builder (say apartment of same size).
A
Desired carpet area, sq. ft.
B
Carpet to builtup ratio
C = A x B Builtup area, sq. ft.
D
Construction cost PSF*, Rs.
E = C x D Total construction cost, Rs.
F
Plot size, sq. ft.
G
Plot cost, PSF**, Rs.
H = F x G Total plot cost, Rs.
I=E+H
Total cost of bungalow***, Rs.
J
Load factor****
J1
Terrace, sq. ft., (no cost to you, doesn't cost extra to build terraces)
K = (A x J) + Saleable area, sq.ft. (this is what you will pay for buying constructed
J1
property in market)
L
Market rate PSF, Rs.
M = K x L Market price, Rs.
N
Parking spaces, 2 x Rs. 200000 each
O = M + N Agreement value, Rs.
P
Difference, you save, Rs.
Q=I/K
Your bunglow's effective PSF rate, Rs.
R=L-Q
Your PSF savings, Rs.
S=R/Q
Your savings %
1800
1.15
2070
1,500
31,05,000
2500
2,300
57,50,000
88,55,000
1.4
500
3020
4,000
1,20,80,000
4,00,000
1,24,80,000
36,25,000
2,932
1,068
27%
* You can assume this cost to be Rs. 1000 PSF if you are planning to manage construction on
your own. Rs. 1000 PSF would give you high quality construction. Most probably you will hire
someone else, i.e. you will hire professional construction firm Professional construction firm will
not charge you just the construction cost but will add their maring too. So your effective PSF
construction cost can be in the range of Rs. 1200 to Rs. 1800 PSF. For this illustration, we have
assumed construction cost + margin of the construction firm be Rs. 1500 PSF.
** Assumed plot is freehold NA and in proper gated community with basic facliities (drainage,
sewage, electricity, water supply, roads).
*** Your bungalow cost will be higher than this to account for electric meter charges, water
meter charges, legal fees, club membership charges, onetime maintenance charges, service tax.
These costs are not included in this illustrations because you will incurr those irrespective of you
build your bungalow or purchase apartment from builder. Actual amounts might vary, it is not
material for purpose of this illustration.
**** Loading factor is higher at 1.4 to account for the fact that builders typically charge about
50% to 100% of terraces, and sometimes include terraces in loading.
Conclusion:
If you were to build your own bungalow, savings comes from not having to pay for loading, not
having to pay for terraces. Not only you save, but can go for layout that you like, no
compromise. From the illustrations above and our experience and observations, we have the
following recommendation.
Constructing your own bungalow vs. buying apartment from builder – key inputs for making this
decision
• Doing the calculations given above on paper and actually doing construction are two
significantly different things. Obviously, construction is highly effort intensive and stressful
activity. That is because; people just won’t get your ideas, your vision, and won’t follow you.
They won’t follow your schedule; they will find thousand excuses for not doing the work in time
and charging you more (and worst yet, there is no safe exit for you, you will feel trapped). This
makes it highly stressful and frustrating experience. So, word of caution, get into this venture
only when you are mentally prepared to handle the stress and frustration.
• This is related to the above mentioned point, make sure you can be physically present while
preparations are in progress as well as while construction is done. Unless you have not only
someone who can trust, but also someone competent, and capable to deal with architects,
construction firm, local authorities and agencies, it is recommended not to venture for your own
construction. It is good idea to buy plot, keep it idle until you can spend time and be present on
site frequently or find someone as mentioned above.
• Assuming you are gone past the above mentioned words of caution, next criteria would be
carpet area you are interested in. If you are looking for smaller carpet areas, say less than 1000 sq
ft, it is not advisable to go for your own plot and construct. You will be better off purchasing
apartment or row house in the market. If your net PSF rate for constructing bungalow is higher
than what is going rate in the market, it might not be worth going for your own plot and
bungalow, more so if the land is not freehold. If the land is freehold, it may still be worth,
because you own the land and have flexibility to reconstruct. The benefit is you own land and
that is what appreciates more.
• We recommend plot size in the range of 2000 to 2500 sq ft – this is because carpet area is
directly proportionate to the plot size (FST=1), generally 2000 sq ft carpet area is more than
sufficient for a spacious bungalow. We don’t recommend bigger sized plots because it just adds
to the cost of the land. Even if you buy 5000 sq ft plot, you are not going to use all FSI and
construct bungalow with 5000 sq ft of carpet area. In short, most of the times it will be waste to
go for bigger plots. It can be individual preference, because some do like bigger plots.
ome Buying FAQs
Buying a home is one of the single most important decisions that a person makes. And therefore,
it is important to know pertinent details and processes that are involved before, during and after a
home purchase. In addition to buying, selling tips, some equally important guidelines that can
help you with the various legal, tax and other technicalities for buying a home in India.
Some important guidelines for Buying a Home
Making the decision to buy a home, identifying the desired location and property is just the first
and most simple step in your home buying journey. The real efforts start after this point. Let's
find out more about the key aspects that need to be covered during a home purchase.
What are the important documents to be checked before buying a home/property?
Once you have zeroed in on the home of your choice it is necessary to check up on some
important documents closely before proceeding further. Carry out a thorough search and check
out the approved layout plan, the building plan, ownership documents, etc. It is advisable to get
professional legal help to help you verify the validity of the documents.
What precautions need to be taken while buying an under construction flat?
Opting to buy an under construction flat has its advantages as you obviously pay less than for a
ready possession one. But be vigilant and ask the builder to furnish all the relevant papers and
permissions to ascertain the genuineness of the project.
Approved plan of the building along with the number of floors; make sure that the floor
where you have booked your flat has been approved.
Check if the land on which the builder is building is his or he has undertaken an
agreement with a landlord. If so, check that the title of land ownership is free and clear.
Check the building byelaws as applicable in the area to make sure that there are no
violations of front setback, side setbacks, height, etc.
Check specifications given in the agreement to sell to ascertain whether the builder is
providing the same as promised.
Conduct a thorough background check of the builder and his reputation.
Ensure that NOCs for
Ensure that urban land ceiling NOC (if applicable) as well as NOCs from the electricity,
water and lift authorities has been obtained.
What exactly is built up area, super built up area, and carpet area and what is the difference
between them?
Carpet Area is the area of the flat which does not include the area of the walls.
Built up Area includes the area of the walls
Super Built up Area is generally applicable in multi storied units and includes the built
up area along with the area under common spaces such as the lobby, lifts, stairs, etc.
Now this is a crucial point to be covered before deciding to buy the flat. Often only the super
built up area is mentioned so that the flat area seems larger than it actually is. It is prudent to
know the exact carpet area to get the true size of your flat.
What is meant by the market value of the property?
Market value means the price at which you can buy a home/property in the open market on the
specified date of execution.
Where can you find the true prevailing market value of the property?
The Sub-Registrar of the area, in whose jurisdiction the property is located, is the person most
apt to for finding the market value of the property.
Who should pay Stamp Duty - the buyer or the seller?
The buyer, as the liability of paying stamp duty is that of the buyer, unless there is an agreement
to the contrary. Section 30, of Bombay Stamp Act, 1958 states the liability for payment of stamp
duty.
Is Stamp Duty payable on the market value of the property or on consideration as stated in the
agreement?
The Stamp Duty is payable on the agreement value of the property or the market value which
ever is higher.
On what legal documents is a stamp duty levied?
Significant legal documents required in property transactions such as Agreement to Sell,
Conveyance Deed, Exchange of property, Gift Deed, Partition Deed, Power of Attorney,
settlement and Deed and Transfer of lease attract Stamp Duty calculated as per the market value
of the property.
Important Legal Documents necessary for property transactions
Owning your own house is more than just a financial decision, it's also an emotional one. So,
don't rush your decisions, be careful, vigilant and get yourself updated on the various
technicalities while conducting your property search, while identifying your choice of a home
and even while finalizing the deal. Importantly make sure that the legal status of the home is
clear and without conflict. This cautiousness will help you avoid a lot of unnecessary legal
hassles in the future. Let us find out more about all the various legal documents necessary for
home buying transactions.
What is a Title Deed?
A title deed is an investigation into the title of the land, over a period of 30 years, to ascertain
whether the property is unencumbered and has a clear and marketable title.
Always insist on checking the original title deed instead of just a photocopy.
Confirm that the seller is indeed the owner of the property.
Ideally you should get the title deed verified from legal experts to be on the safer side.
If the title deed is not clear and marketable, getting finance from recognized financial institutions
will become extremely difficult; get in touch with a financial institution to check if they would
provide a loan for that particular property.
What documents are necessary while buying an under construction home?
While buying an under construction home an allotment letter and development agreement are the
vital documents.
The allotment letter contains details regarding the agreed price, payment and construction
schedule, house plans, delivery date and builder's liability in case of late completion or
problems after possession. It is issued to the buyer upon payment of the 15% of the
property value to the developer.
The development agreement is inked between the builder and the landowner and contains
details regarding the terms and conditions on which the landowner has permitted
development of his property.
What documents are necessary while buying a constructed home?
While purchasing an already constructed property it is important to check that the seller has the
title and possession of the property as well as the right to transfer the property.
Also check
That the property adheres to municipal, planning authority requirements
That there are no tenant and that the property is not mortgaged
Whether property tax, society tax, electricity, water bills etc have been paid in full
That you are in possession of original documents of all the necessary documents allotment letter, completion certificate, occupation certificate and all other documents,
given by the original builder
What is Stamp Duty and Sale Deed?
Stamp duty is usually a percentage of the transaction value levied by the state government, on
every registered sale. The agreement to sell clearly states the stamp duty, which is usually paid
by the buyer, and he gets his name registered in the land revenue records. The final sale deed
should be stamped and registered at the appropriate local area office. Both the developer/seller
and the purchaser need to be present at the sub-registrars office, for registering the agreement.
Home Loan Processing
When you decide to buy a home, the first question that comes to mind is how to finance it? After
all purchasing a house is a major financial consideration. Surely one does not buy a house by
making the entire payment at one go. There are multiple home loan options that are available to a
buyer. Of course, acquiring a home loan is a long process involving many stages. So let's
acquaint with the various steps involved in the home loan procedure.
Formal loan application
The primary step is to fill out a loan application form for the financial institution/bank that you
have chosen to get the loan from. The application form requires basic information regarding
personal, residential, income, professional, educational details. It also includes details about the
house, estimated costs as well as your means of financing the property.
In addition, the banks will require adequate proof in the form of valid documents such as income
proof, address proof, identity proof, bank statements, education qualifications, property details
etc. to support your loan request. The banks ask for such detailed documentation to basically
ascertain your suitability financially and your ability to repay the loan amount.
Processing fees
All banks that offer home loan facilities charge processing fees which are generally nonrefundable. The fees may vary from bank to bank but it is normally 0.25%-0.5% of the loan
amount applied for. The fees are used by banks to start and maintain the home loan process
including completing the various formalities during the entire period.
Evaluation & verification of the applicant
Upon successful application for a home loan and submitting the processing fees, your application
is evaluated by the bank. During an evaluation the bank will request a personal meeting with the
applicant to ascertain his financial health and repayment capacity.
On through evaluation, the loan application moves to the verification stage where the bank cross
checks all the facts provided by you in the application including a field investigation process by
the bank loan executives for re-checking the facts to confirm their validity.
Repayment verification
The most important part of any home loan process, the verification of the applicant's repayment
capacity is checked thoroughly. The final outcome of your getting a home loan rests on this
stage. If the bank finds that you might be unable to repay the loan they may reject your
application altogether. On the other hand, if the bank, based on their evaluation, finds that your
financial health is sound enough, it may sanction the loan. However,, the loan may be a
conditional sanction or an unconditional sanction based on the bank's evaluation of your
financial strength. If the sanction is conditional, you'll have to fulfill the conditions imposed
before the loan is disbursed.
Offer letter for home loan from the Bank
Your loan processing is on its way. The bank issues an offer letter which contains all the
pertinent details about your home loan including loan amount sanctioned, interest rates
applicable, type of interest - floating or fixed, loan period, repayment mode, as well as all the
terms and conditions associated with a home loan.
If the terms stated by the bank and all the other details are acceptable to you, you send in an
acceptance copy to the bank, which is maintained in their records. If the bank charges any
Administrative fee, it will have to be submitted at this stage.
Property verification
Think you are home free? Not quite... after thoroughly evaluating you, the bank will verify the
property. The reason is that a home loan is a secured loan where the property is used as
collateral. The bank will keep all the original documents related to the property, title, NOC etc.
with them until the loan is repaid. The banks then conduct a legal check of the property to ensure
that it has a clear title. Banks don't lend in cases of disputed properties and unclear title deeds.
In addition banks also conduct a technical evaluation of the property by sending in qualified
valuators who assess the property on various parameters.
Home loan disbursement
After going through the lengthy period of application, evaluation and verification your loan
request is at last in the final stage. On completion of bank formalities, the registration process
begins. The legal documents are prepared on stamp papers approved by the bank. The applicant
signs the agreement and submits post dated cheques for the agreed term. Once the agreement is
complete the home laon is disbursed as per the agreed mode of disbursal (lump sum or in stages).
Tax Benefits
Purchasing a home is a big financial decision. Let's find out if there are any tax benefits that can
be availed of against buying a house.
Are there any income tax benefits for property purchase?
If you are getting your house purchase financed via a bank or a financial institution then as per
Section 88 of the income tax you can claim benefit for the principle repayment, interest on loan
is deductible u/s 24 from income from House Property. But these benefits are available only for
residential properties and not for commercial properties.
Should I pay tax if I sell off any residential or commercial property?
Yes, you are liable to pay Capital gains tax on profit arising from sale of a house property.
Can I claim tax exemption on capital gain?
In fact you can. The Income Tax act has made provision u/s 54 & 54A--G of the act whereby you
can claim exemption from tax on capital gains.
NRI Home Buying Guide
With a lot of well settled NRIs looking to have a home or an investment in real estate back in
their country of birth, the volumes of NRI inquiries for home purchases in India have been on a
upswing. Some vital tips for Non Resident Indians for purchasing property in India.
What is the eligibility for Indian Citizens, Foreign Passport Holder or PIO Card Holders for
buying property in India?
Persons of Indian Origin and holding an Indian Passport are entitled to buy any property in India.
People holding overseas passports, such as British or American, need to apply for a PIO Card
(Person of Indian Origin) at the Indian Embassy or consulate in their country of residence, before
purchasing property in India.
Are any specific government permissions required before buying property in India?
Persons of Indian Origin do not need any approval by the Government of India to buy
immovable properties.
Click here to read about Foreign Exchange Facilities for Residents
Repatriation
Non Resident Indian buying a property through their NRE (Non-resident External) Accounts can
repatriate sale proceeds and rental income to their foreign account after deduction of Income Tax
and Capital Gains on the Sale proceeds as applicable.
Click here to view FEMA notifications
NRE/NRO Accounts
Non Resident Indian need to have an operational NRE and NRO (NRO Non resident Ordinary
Rupee Account) Bank accounts set up. NRE accounts are used for pay outs whereas the NRO
accounts can be used for depositing funds which can be transferred to the NRE for repatriation as
required.
Home Buying Processes for NRIs
If you are an NRI, while conducting property buying transactions for, it is advisable to remit
funds from your bank in your country of residence to the Indian bank where the NRE account is
set up. If you buy the property through the NRE account, then the source of funds is not required
to be disclosed usually to any one as this is your inwards remittance. It is also advisable to remit
a certain percentage of the property amount in your Indian bank account prior to leaving India,
which can be a down payment with the builder or property owner.
Power of Attorney (POA)
Non Resident Indian who come to India once in few years, need to give power f attorney to a
person living in India so that required home buying processes such as registration, possession,
execution of agreement for sale, agreement of leave and license etc, can be taken care of with
ease.
NRI Home Loans
Non Resident Indians (NRIs) can buy property in India with a home loan. Normally they can get
a loan of around 85-90% of the property amount. Personal documents required for the home loan
pre-approval only. Loan disbursement happens only when the property is purchased.
Documents needed to be submitted by salaried Non Resident Indian for home loans
Loan application form duly filled and signed
Two photographs of both the applicant and the co-applicant with signature on front and
back
Copy of passport - Along with latest visa stamp and date of entry stamp
Proof of residence in India - Electricity bill, Telephone bill, Ration card, Driving License
etc
Copy of credit card - Last six months bank statements of all the NRE / NRO account in
India
Last six months bank statements of bank account held abroad where salary is credited Copy of Contract / Employment Certificate Copy of Annual Salary Certificate specifying
the mode of payment (If payment is fully or partly received in cash) Salary Slips for the
immediately past 6 months.
Documents relating to income/ salary need to be attested as true by the employer
Copies of Sanction Letter of Loans availed in India and abroad
Self Declaration of Residential Status
All documents in foreign language to be translated in English.
You have come to a very important page of www.nripro.com. There are two main reasons why it
is absolutely important for buyers to understand areas and methods used to calculate saleable
areas: (a) Different interpretations of areas and different methods used for calculation of saleable
area can have more than 20% variation in total price tag and (b) Actual area that you get directly
depends on how saleable area is calculated.
After you are done reading this page, we strongly recommend you read another related
page at this link on our website that shows actual examples of typical construction cost in
Pune, and how much money builders make.
Carpet Area: Area between the walls. Carpet area must have permanent roof (slab) over it, at
normal height. Owner must get exclusive rights to use and resell the carpet area. Carpet area is
calculated by multiplying dimension of room, i.e. length x width. Total carpet area is calculated
by adding carpet areas of all rooms. Generally, in addition to all the rooms, varandas, passages,
area inside the main door (if not included in living room dimension), balconies are included in
carpet area. FSI is applicable to carpet area. Depending upon builder practice, carpet area may be
50% to 70% of of saleable area. It is always good to find ratio of carpet area to the saleable area,
higher the ratio, better it is. This is just to give you idea of what you actually can use, in practice
it is in interest of the buyers to find out what is carpet area and then apply loading factor on it
(and not do the other way, i.e. should not arrive at carpet by applying loading factor to saleable
area.
The example below will illustrate trick used by builders/developers, when they say you can find
carpet area by applying loading factor on the saleable area.
Saleable Area: 1200 sq ft
Loading Factor: 25% (or 1.25)
Wrong Method (favours seller):
Carpet Area: 1200 x (100-25)% = 1200 x 75% = 900 sq ft
If you apply 1.25 or 25% loading, saleable area should be 900 sq ft + 900 x 25% = 1125 sq ft
As you can see under this method builder is charging you for 1200 - 1125 = 75 sq ft more
Right Method (favours buyer):
Find carpet area first by measuring actual dimensions, and then apply loading factor
Saleable area = 900 sq ft + 900 x 25% = 1125 sq ft
Terrace: Open area without roof, attached to the main unit that buyer gets exclusive rights to use
and resell (with the main unit). Open areas with slab at least double the height of the floor are
also considered terrace area. FSI is not applicable to terrace areas.
Balcony: Open area with roof (slab at floor height), attached to the main unit that buyer has
exclusive rights to use and resell (with the main unit). Generally balcony area is added to total
carpet area. FSI is applicable to balconies.
Dry terrace or dry balcony: Area meant to dry clothes that buyer has exclusive rights to use
and resell (with main unit). If it has roof (slab) at normal height, it should be treated as balcony.
If it does not have roof (slab) at normal height, it should be treated as terrace.
Builtup Area: Carpet Area + area occupied by walls, doors of the unit. Generally builtup area is
not calculated separately, it is included into the loading factor.
Loading factor or loading or load: Loading factor is a number used for purpose of arriving at
saleable area. It is used to add constructed space not exclusively allocated to the buyer. Such area
generally includes shared areas such as lift/elevator area, staircases, clubhouse, gymnasium,
amenities area, etc. Loading factor 1.25 indicates that developer/builder is applying 25% on the
carpet area. Some builders, in addition to carpet area, include terrace and balcony areas while
applying the loading factor. If the project does not have lot of amenities, the loading factor
should be small. In most cases loading factor of 1.3 is more than sufficient. Loading factor also
includes parking space (irrespective of it is covered, open, stilt, sold separately or not).
Superbuiltup Area: Carpet area + terrace + balconies + areas occupied by walls + area occupied
by common/shared construction (e.g. lift, stairs, club house, etc). Generally builders use loading
factor on carpet area to arrive at superbuiltup area. For example, if carpet area is 500, and
loading factor is 1.3, then superbuiltup area is 500 x 1.5 = 750.
Usable Area: This is relatively new term. Technically there is no difference between Usable
Area and Superbuiltup Area. Some builders use this term to justify higher loading factor,
typically in Mumbai where land cost is extremely high.
Saleable Area: Generally superbuiltup area is saleable area.
FSI: Floor Space Index. This is ratio of land to carpet area. Generally it is 1 for residential plots
(much less for agricultural land) For example, if FSI is 1, and land area is 3000 sq ft, then total
carpet area on that land cannot exceed 3000 x 1 = 3000 sq ft. It should be noted that FSI is not
applicable to terraces, balconies. Also, this definition is provided for your information,
enforcement of FSI is taken care of by local authorities, and buyer should not worry about it
(unless there are allegations against the builder of misusing FSI).
Methods used to calculate saleable area
Builders apply different models to arrive at saleable area. The methods used by builder can result
into as high as 20% to 25% increase in the effective rate. We will try to explain different methods
(not all of them) used by developers/builders and their relative impact on saleable area, total
price, and ratio of carpet to saleable area.
In the example below, it is assumed that the rate is Rs. 4000 per sq. ft, loading factor is 1.3, and
it is a 1BHK unit with the following dimensions:
Room or area
Kitchen
Living room
Dimensions (ft)
8 x 10
10 x 15
Area (sq ft)
80
150
Bathroom
Bedroom
Total Carpet Area (C)
4x7
12 x 10
28
120
402
Dry terrace
Terrace
Total terrace area (T)
4x8
10 x 13
32
130
162
The table below lists different methods/ variations (certainly not all the variations) of arriving at
the saleable area. Please note effect of each variation on saleable area, total price, carpet to
saleable area ratio, and effective carpet rate. Please also note that calculations done manually
don't match 100% with calculations done by builders/architects because they use CAD software.
However the difference in two method should not be more than +/- 3%. Because of different
methods and variations, it is difficult to "reverse engineer" and find out what method builder has
used. It will be good to find out from the builder if terraces/balconies are charged at 50% of
100%, and is loading factor applied on those, and what is the loading factor. Most builders don't
answer these questions in written material, and may not even bother to answer even if you ask. In
that case only option for you is try different variations as given below and "figure out".
Total
Load
Load
Carpet
Terrace
Calculating Saleable price, Rs.,
Method
applied
applied
charged
charged
saleable
area (sq (rate x
#
to
to
at
at
area
ft)
saleable
carpet?
terrace?
area)
(C x 1.3) +
1
100% Yes
33%
No
576.06 23,04,240
(T x 33%)
(C x 1.3) +
2
100% Yes
50%
No
603.6
24,14,400
(T x 50%)
(C x 1.3) +
3
100% Yes
50%
Yes
(T x 50% x 627.9
25,11,600
1.3)
(C x 1.3) +
4
100% Yes
100% No
684.6
27,38,400
T
5
100% Yes
100% Yes
(C + T) 1.3 733.2
29,32,800
Carpet
to
saleable
area
ratio
Effective
carpet
rate, Rs.,
(Total
price/C)
69.78% 5,732
66.60% 6,006
64.02% 6,248
58.72% 6,812
54.83% 7,296
Method #1 in above table is legal method (because it charges terrace at 33% of the area, that is
maximum allowed for terrace). Method #2 is widely used method.
Summary
a) Bigger saleable area does not mean bigger carpet area
b) Lower rate does not mean good deal because it can result into higher effective rate because of
loading factor, and the way terraces are charged (at 50% or 100% or at some other %), and if
loading factor is applied on top of terraces
c) Method used by builder can cause a big swing in the total price as demonstrated in the
example above
d) Lower loading % does not necessarily mean it is better deal, one needs to look into how it is
applied on terraces, gardens and other areas that are not included in FSI
e) Per square foot rate is meaningless and misleading if not looked in light of the other
factors that influence saleable area
What is construction cost in Pune? What is builders profit
margin in Pune
If you are wondering what is construction cost in Pune? Is it better to purchase plot and build
your own house/bungalow or purchase apartment from builder? How much do builders make per
square foot? What is builders profit margin in Pune? What is minimum plot size needed to
construct bungalow? This article tries to answer these questions.
What is builder's margin? How much money builders make?
Typically builders would make anywhere between 200% to 300% margin, i.e. for every rupee
invested they will profit Rs. 2 to Rs. 3. The illustration below, builder is charging more than 3
times of their cost to end customer. Moral of the story is the margin is high. This would also
explain why generally they don't negotiate, because it takes less than third of their apartments to
break even, which they can easily do with help of investors and financial institution borrowing,
and borrowing from other sources. Managing cash-flow is key to success in construction
business. That is the reason builders rely heavily on investors and other sources, in addition to
financial institutions and banks.
A
Desired carpet area, sq. ft.
B
Load factor to builder (what they charge end user is much higher)
C = Ax B
Superbuiltup area, sq. ft.
D
Construction cost PSF
E = C x D Builder's total construction cost, Rs.
F
Plot size, assumes builder uses 100% FSI, sq. ft.
G
Plot cost, PSF, Rs.
H = F x G Total plot cost, Rs.
I=E+H
Total cost to builder, Rs.
J
Load factor (charged to end customer)
J1
Terrace, sq. ft.
K = (A x J) + Saleable area, sq.ft. (this is what you will pay for buying constructed
J1
property in market)
L
Market rate PSF, Rs.
M = K x L Market price, Rs.
N
Parking spaces, 2 x Rs. 2,00,000 each
O = M + N Agreement value, Rs.
P
Builder's total margin, Rs.
Q=I/K
Builder PSF effective cost, Rs.
R=L-Q
Builder's PSF margin, Rs.
1800
1.2
2160
1000
21,60,000
1800
900
16,20,000
37,80,000
1.4
500
3020
4,000
1,20,80,000
4,00,000
1,24,80,000
87,00,000
1,252
2,748
S=R/Q
Builder PSF margin, %
220%
What would it cost you to build your own bungalow?
The table below illustrates simple example of what if you bought plot and constructed your own
bungalow vs. bought same saleable area from builder (say apartment of same size).
A
Desired carpet area, sq. ft.
B
Carpet to builtup ratio
C = A x B Builtup area, sq. ft.
D
Construction cost PSF*, Rs.
E = C x D Total construction cost, Rs.
F
Plot size, sq. ft.
G
Plot cost, PSF**, Rs.
H = F x G Total plot cost, Rs.
I=E+H
Total cost of bungalow***, Rs.
J
Load factor****
J1
Terrace, sq. ft., (no cost to you, doesn't cost extra to build terraces)
K = (A x J) + Saleable area, sq.ft. (this is what you will pay for buying constructed
J1
property in market)
L
Market rate PSF, Rs.
M = K x L Market price, Rs.
N
Parking spaces, 2 x Rs. 200000 each
O = M + N Agreement value, Rs.
P
Difference, you save, Rs.
Q=I/K
Your bunglow's effective PSF rate, Rs.
R=L-Q
Your PSF savings, Rs.
S=R/Q
Your savings %
1800
1.15
2070
1,500
31,05,000
2500
2,300
57,50,000
88,55,000
1.4
500
3020
4,000
1,20,80,000
4,00,000
1,24,80,000
36,25,000
2,932
1,068
27%
* You can assume this cost to be Rs. 1000 PSF if you are planning to manage construction on
your own. Rs. 1000 PSF would give you high quality construction. Most probably you will hire
someone else, i.e. you will hire professional construction firm Professional construction firm will
not charge you just the construction cost but will add their maring too. So your effective PSF
construction cost can be in the range of Rs. 1200 to Rs. 1800 PSF. For this illustration, we have
assumed construction cost + margin of the construction firm be Rs. 1500 PSF.
** Assumed plot is freehold NA and in proper gated community with basic facliities (drainage,
sewage, electricity, water supply, roads).
*** Your bungalow cost will be higher than this to account for electric meter charges, water
meter charges, legal fees, club membership charges, onetime maintenance charges, service tax.
These costs are not included in this illustrations because you will incurr those irrespective of you
build your bungalow or purchase apartment from builder. Actual amounts might vary, it is not
material for purpose of this illustration.
**** Loading factor is higher at 1.4 to account for the fact that builders typically charge about
50% to 100% of terraces, and sometimes include terraces in loading.
Conclusion:
If you were to build your own bungalow, savings comes from not having to pay for loading, not
having to pay for terraces. Not only you save, but can go for layout that you like, no
compromise. From the illustrations above and our experience and observations, we have the
following recommendation.
Constructing your own bungalow vs. buying apartment from builder – key inputs for making this
decision
• Doing the calculations given above on paper and actually doing construction are two
significantly different things. Obviously, construction is highly effort intensive and stressful
activity. That is because; people just won’t get your ideas, your vision, and won’t follow you.
They won’t follow your schedule; they will find thousand excuses for not doing the work in time
and charging you more (and worst yet, there is no safe exit for you, you will feel trapped). This
makes it highly stressful and frustrating experience. So, word of caution, get into this venture
only when you are mentally prepared to handle the stress and frustration.
• This is related to the above mentioned point, make sure you can be physically present while
preparations are in progress as well as while construction is done. Unless you have not only
someone who can trust, but also someone competent, and capable to deal with architects,
construction firm, local authorities and agencies, it is recommended not to venture for your own
construction. It is good idea to buy plot, keep it idle until you can spend time and be present on
site frequently or find someone as mentioned above.
• Assuming you are gone past the above mentioned words of caution, next criteria would be
carpet area you are interested in. If you are looking for smaller carpet areas, say less than 1000 sq
ft, it is not advisable to go for your own plot and construct. You will be better off purchasing
apartment or row house in the market. If your net PSF rate for constructing bungalow is higher
than what is going rate in the market, it might not be worth going for your own plot and
bungalow, more so if the land is not freehold. If the land is freehold, it may still be worth,
because you own the land and have flexibility to reconstruct. The benefit is you own land and
that is what appreciates more.
• We recommend plot size in the range of 2000 to 2500 sq ft – this is because carpet area is
directly proportionate to the plot size (FST=1), generally 2000 sq ft carpet area is more than
sufficient for a spacious bungalow. We don’t recommend bigger sized plots because it just adds
to the cost of the land. Even if you buy 5000 sq ft plot, you are not going to use all FSI and
construct bungalow with 5000 sq ft of carpet area. In short, most of the times it will be waste to
go for bigger plots. It can be individual preference, because some do like bigger plots.
ome Buying FAQs
Buying a home is one of the single most important decisions that a person makes. And therefore,
it is important to know pertinent details and processes that are involved before, during and after a
home purchase. In addition to buying, selling tips, some equally important guidelines that can
help you with the various legal, tax and other technicalities for buying a home in India.
Some important guidelines for Buying a Home
Making the decision to buy a home, identifying the desired location and property is just the first
and most simple step in your home buying journey. The real efforts start after this point. Let's
find out more about the key aspects that need to be covered during a home purchase.
What are the important documents to be checked before buying a home/property?
Once you have zeroed in on the home of your choice it is necessary to check up on some
important documents closely before proceeding further. Carry out a thorough search and check
out the approved layout plan, the building plan, ownership documents, etc. It is advisable to get
professional legal help to help you verify the validity of the documents.
What precautions need to be taken while buying an under construction flat?
Opting to buy an under construction flat has its advantages as you obviously pay less than for a
ready possession one. But be vigilant and ask the builder to furnish all the relevant papers and
permissions to ascertain the genuineness of the project.
Approved plan of the building along with the number of floors; make sure that the floor
where you have booked your flat has been approved.
Check if the land on which the builder is building is his or he has undertaken an
agreement with a landlord. If so, check that the title of land ownership is free and clear.
Check the building byelaws as applicable in the area to make sure that there are no
violations of front setback, side setbacks, height, etc.
Check specifications given in the agreement to sell to ascertain whether the builder is
providing the same as promised.
Conduct a thorough background check of the builder and his reputation.
Ensure that NOCs for
Ensure that urban land ceiling NOC (if applicable) as well as NOCs from the electricity,
water and lift authorities has been obtained.
What exactly is built up area, super built up area, and carpet area and what is the difference
between them?
Carpet Area is the area of the flat which does not include the area of the walls.
Built up Area includes the area of the walls
Super Built up Area is generally applicable in multi storied units and includes the built
up area along with the area under common spaces such as the lobby, lifts, stairs, etc.
Now this is a crucial point to be covered before deciding to buy the flat. Often only the super
built up area is mentioned so that the flat area seems larger than it actually is. It is prudent to
know the exact carpet area to get the true size of your flat.
What is meant by the market value of the property?
Market value means the price at which you can buy a home/property in the open market on the
specified date of execution.
Where can you find the true prevailing market value of the property?
The Sub-Registrar of the area, in whose jurisdiction the property is located, is the person most
apt to for finding the market value of the property.
Who should pay Stamp Duty - the buyer or the seller?
The buyer, as the liability of paying stamp duty is that of the buyer, unless there is an agreement
to the contrary. Section 30, of Bombay Stamp Act, 1958 states the liability for payment of stamp
duty.
Is Stamp Duty payable on the market value of the property or on consideration as stated in the
agreement?
The Stamp Duty is payable on the agreement value of the property or the market value which
ever is higher.
On what legal documents is a stamp duty levied?
Significant legal documents required in property transactions such as Agreement to Sell,
Conveyance Deed, Exchange of property, Gift Deed, Partition Deed, Power of Attorney,
settlement and Deed and Transfer of lease attract Stamp Duty calculated as per the market value
of the property.
Important Legal Documents necessary for property transactions
Owning your own house is more than just a financial decision, it's also an emotional one. So,
don't rush your decisions, be careful, vigilant and get yourself updated on the various
technicalities while conducting your property search, while identifying your choice of a home
and even while finalizing the deal. Importantly make sure that the legal status of the home is
clear and without conflict. This cautiousness will help you avoid a lot of unnecessary legal
hassles in the future. Let us find out more about all the various legal documents necessary for
home buying transactions.
What is a Title Deed?
A title deed is an investigation into the title of the land, over a period of 30 years, to ascertain
whether the property is unencumbered and has a clear and marketable title.
Always insist on checking the original title deed instead of just a photocopy.
Confirm that the seller is indeed the owner of the property.
Ideally you should get the title deed verified from legal experts to be on the safer side.
If the title deed is not clear and marketable, getting finance from recognized financial institutions
will become extremely difficult; get in touch with a financial institution to check if they would
provide a loan for that particular property.
What documents are necessary while buying an under construction home?
While buying an under construction home an allotment letter and development agreement are the
vital documents.
The allotment letter contains details regarding the agreed price, payment and construction
schedule, house plans, delivery date and builder's liability in case of late completion or
problems after possession. It is issued to the buyer upon payment of the 15% of the
property value to the developer.
The development agreement is inked between the builder and the landowner and contains
details regarding the terms and conditions on which the landowner has permitted
development of his property.
What documents are necessary while buying a constructed home?
While purchasing an already constructed property it is important to check that the seller has the
title and possession of the property as well as the right to transfer the property.
Also check
That the property adheres to municipal, planning authority requirements
That there are no tenant and that the property is not mortgaged
Whether property tax, society tax, electricity, water bills etc have been paid in full
That you are in possession of original documents of all the necessary documents allotment letter, completion certificate, occupation certificate and all other documents,
given by the original builder
What is Stamp Duty and Sale Deed?
Stamp duty is usually a percentage of the transaction value levied by the state government, on
every registered sale. The agreement to sell clearly states the stamp duty, which is usually paid
by the buyer, and he gets his name registered in the land revenue records. The final sale deed
should be stamped and registered at the appropriate local area office. Both the developer/seller
and the purchaser need to be present at the sub-registrars office, for registering the agreement.
Home Loan Processing
When you decide to buy a home, the first question that comes to mind is how to finance it? After
all purchasing a house is a major financial consideration. Surely one does not buy a house by
making the entire payment at one go. There are multiple home loan options that are available to a
buyer. Of course, acquiring a home loan is a long process involving many stages. So let's
acquaint with the various steps involved in the home loan procedure.
Formal loan application
The primary step is to fill out a loan application form for the financial institution/bank that you
have chosen to get the loan from. The application form requires basic information regarding
personal, residential, income, professional, educational details. It also includes details about the
house, estimated costs as well as your means of financing the property.
In addition, the banks will require adequate proof in the form of valid documents such as income
proof, address proof, identity proof, bank statements, education qualifications, property details
etc. to support your loan request. The banks ask for such detailed documentation to basically
ascertain your suitability financially and your ability to repay the loan amount.
Processing fees
All banks that offer home loan facilities charge processing fees which are generally nonrefundable. The fees may vary from bank to bank but it is normally 0.25%-0.5% of the loan
amount applied for. The fees are used by banks to start and maintain the home loan process
including completing the various formalities during the entire period.
Evaluation & verification of the applicant
Upon successful application for a home loan and submitting the processing fees, your application
is evaluated by the bank. During an evaluation the bank will request a personal meeting with the
applicant to ascertain his financial health and repayment capacity.
On through evaluation, the loan application moves to the verification stage where the bank cross
checks all the facts provided by you in the application including a field investigation process by
the bank loan executives for re-checking the facts to confirm their validity.
Repayment verification
The most important part of any home loan process, the verification of the applicant's repayment
capacity is checked thoroughly. The final outcome of your getting a home loan rests on this
stage. If the bank finds that you might be unable to repay the loan they may reject your
application altogether. On the other hand, if the bank, based on their evaluation, finds that your
financial health is sound enough, it may sanction the loan. However,, the loan may be a
conditional sanction or an unconditional sanction based on the bank's evaluation of your
financial strength. If the sanction is conditional, you'll have to fulfill the conditions imposed
before the loan is disbursed.
Offer letter for home loan from the Bank
Your loan processing is on its way. The bank issues an offer letter which contains all the
pertinent details about your home loan including loan amount sanctioned, interest rates
applicable, type of interest - floating or fixed, loan period, repayment mode, as well as all the
terms and conditions associated with a home loan.
If the terms stated by the bank and all the other details are acceptable to you, you send in an
acceptance copy to the bank, which is maintained in their records. If the bank charges any
Administrative fee, it will have to be submitted at this stage.
Property verification
Think you are home free? Not quite... after thoroughly evaluating you, the bank will verify the
property. The reason is that a home loan is a secured loan where the property is used as
collateral. The bank will keep all the original documents related to the property, title, NOC etc.
with them until the loan is repaid. The banks then conduct a legal check of the property to ensure
that it has a clear title. Banks don't lend in cases of disputed properties and unclear title deeds.
In addition banks also conduct a technical evaluation of the property by sending in qualified
valuators who assess the property on various parameters.
Home loan disbursement
After going through the lengthy period of application, evaluation and verification your loan
request is at last in the final stage. On completion of bank formalities, the registration process
begins. The legal documents are prepared on stamp papers approved by the bank. The applicant
signs the agreement and submits post dated cheques for the agreed term. Once the agreement is
complete the home laon is disbursed as per the agreed mode of disbursal (lump sum or in stages).
Tax Benefits
Purchasing a home is a big financial decision. Let's find out if there are any tax benefits that can
be availed of against buying a house.
Are there any income tax benefits for property purchase?
If you are getting your house purchase financed via a bank or a financial institution then as per
Section 88 of the income tax you can claim benefit for the principle repayment, interest on loan
is deductible u/s 24 from income from House Property. But these benefits are available only for
residential properties and not for commercial properties.
Should I pay tax if I sell off any residential or commercial property?
Yes, you are liable to pay Capital gains tax on profit arising from sale of a house property.
Can I claim tax exemption on capital gain?
In fact you can. The Income Tax act has made provision u/s 54 & 54A--G of the act whereby you
can claim exemption from tax on capital gains.
NRI Home Buying Guide
With a lot of well settled NRIs looking to have a home or an investment in real estate back in
their country of birth, the volumes of NRI inquiries for home purchases in India have been on a
upswing. Some vital tips for Non Resident Indians for purchasing property in India.
What is the eligibility for Indian Citizens, Foreign Passport Holder or PIO Card Holders for
buying property in India?
Persons of Indian Origin and holding an Indian Passport are entitled to buy any property in India.
People holding overseas passports, such as British or American, need to apply for a PIO Card
(Person of Indian Origin) at the Indian Embassy or consulate in their country of residence, before
purchasing property in India.
Are any specific government permissions required before buying property in India?
Persons of Indian Origin do not need any approval by the Government of India to buy
immovable properties.
Click here to read about Foreign Exchange Facilities for Residents
Repatriation
Non Resident Indian buying a property through their NRE (Non-resident External) Accounts can
repatriate sale proceeds and rental income to their foreign account after deduction of Income Tax
and Capital Gains on the Sale proceeds as applicable.
Click here to view FEMA notifications
NRE/NRO Accounts
Non Resident Indian need to have an operational NRE and NRO (NRO Non resident Ordinary
Rupee Account) Bank accounts set up. NRE accounts are used for pay outs whereas the NRO
accounts can be used for depositing funds which can be transferred to the NRE for repatriation as
required.
Home Buying Processes for NRIs
If you are an NRI, while conducting property buying transactions for, it is advisable to remit
funds from your bank in your country of residence to the Indian bank where the NRE account is
set up. If you buy the property through the NRE account, then the source of funds is not required
to be disclosed usually to any one as this is your inwards remittance. It is also advisable to remit
a certain percentage of the property amount in your Indian bank account prior to leaving India,
which can be a down payment with the builder or property owner.
Power of Attorney (POA)
Non Resident Indian who come to India once in few years, need to give power f attorney to a
person living in India so that required home buying processes such as registration, possession,
execution of agreement for sale, agreement of leave and license etc, can be taken care of with
ease.
NRI Home Loans
Non Resident Indians (NRIs) can buy property in India with a home loan. Normally they can get
a loan of around 85-90% of the property amount. Personal documents required for the home loan
pre-approval only. Loan disbursement happens only when the property is purchased.
Documents needed to be submitted by salaried Non Resident Indian for home loans
Loan application form duly filled and signed
Two photographs of both the applicant and the co-applicant with signature on front and
back
Copy of passport - Along with latest visa stamp and date of entry stamp
Proof of residence in India - Electricity bill, Telephone bill, Ration card, Driving License
etc
Copy of credit card - Last six months bank statements of all the NRE / NRO account in
India
Last six months bank statements of bank account held abroad where salary is credited Copy of Contract / Employment Certificate Copy of Annual Salary Certificate specifying
the mode of payment (If payment is fully or partly received in cash) Salary Slips for the
immediately past 6 months.
Documents relating to income/ salary need to be attested as true by the employer
Copies of Sanction Letter of Loans availed in India and abroad
Self Declaration of Residential Status
All documents in foreign language to be translated in English.
