• Foreigner trying to buy residential property in India, (Not an NRI, OCI)

Sir, My boss is an American citizen but not an NRI. I would like your help to know if it is possible and if yes need your help to process it. Kindly let me know.
Asked 16 days ago in Property Law
Religion: Buddhist

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10 Answers

Yes, he can purchase. 

Yogendra Singh Rajawat
Advocate, Jaipur
23076 Answers
31 Consultations

Prior approval of Reserve Bank of India is needed by an American Citizen (Not an NRI, OCI), to buy a residential property in India.

Shashidhar S. Sastry
Advocate, Bangalore
5611 Answers
338 Consultations

Foreigner residing outside India cannot purchase immovable property in India but can acquire it through inheritance from an Indian resident. They may lease property for up to five years without RBI approval.

Ajay Sethi
Advocate, Mumbai
99678 Answers
8132 Consultations

A foreigner of non-Indian origin cannot directly buy any residential or commercial property in India.
He can apply to the Reserve Bank of India (Foreign Investment Division) for permission to purchase immovable property for residential purpose.

The RBI examines such requests case by case and generally grants permission only for specific reasons (like long-term residence, diplomatic or business purpose).

T Kalaiselvan
Advocate, Vellore
89877 Answers
2486 Consultations

Dear Client,
Under FEMA regulations, a foreign citizen who is not an NRI or OCI is not permitted to purchase residential property in India. Only NRIs and OCIs can buy residential/ commercial property. A foreign national (like your American boss) can only inherit property in India or take residential premises on long-term lease (up to 5 years), but cannot legally buy it in his name. If he wants ownership, the lawful options are: (a) obtain OCI status first, then purchase; or (b) invest through a registered Indian company for permitted real-estate/commercial projects (not simple residential acquisition). Therefore, direct purchase of a residential property in India by him is not allowed, and you should avoid any arrangement in violation of FEMA as it may attract penalties.
I hope this answer helps. For any more queries, do not hesitate to contact us.

Anik Miu
Advocate, Bangalore
10973 Answers
123 Consultations

No, it is generally not possible for a foreign national to purchase residential property in India.

The only exceptions are if the person is a Non-Resident Indian (NRI), a Person of Indian Origin (PIO), or an Overseas Citizen of India (OCI) cardholder.

Since you have explicitly stated that your boss is none of these, he falls under the category of a "Foreign National of Non-Indian Origin," and the law prohibits him from buying residential real estate.

The Legal Foundation: FEMA

The governing law for this is the Foreign Exchange Management Act (FEMA), 1999. The regulations are very clear:

  • Permitted: NRIs, PIOs, and OCIs are permitted to buy any number of residential and commercial properties in India (with a few minor restrictions on agricultural land, plantation property, and farmhouses).

  • Prohibited: Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, and Bhutan require prior approval from the Reserve Bank of India (RBI).

  • Prohibited: For all other foreign nationals (including American, British, German, Japanese, etc.), the purchase of immovable property in India is not permitted, unless they inherit it from an Indian resident.

The Only Exception: Inheritance or Gift

A foreign national of non-Indian origin can acquire residential property only if it is:

  1. Inherited from a person who was resident in India.

  2. Gifted to them by a person resident in India or by an NRI/OCI.

They cannot purchase it through a standard sale transaction.

What Are Your Boss's Alternatives?

Since a direct purchase is not an option, here are the legal alternatives your boss can consider:

1. Long-Term Lease

This is the most common and practical solution. A foreign national can lease a residential property for a long period, often up to 5, 10, or even 99 years. The lease agreement must be registered with the local authorities, just like a sale deed.

  • Advantage: It provides long-term security of tenure without violating FEMA regulations.

  • Process: A lawyer drafts a comprehensive lease deed, which is then executed and registered.

2. Incorporating a Company in India

If your boss has a genuine business interest in India, he can set up an Indian company (under the rules of the Companies Act and FDI policy).

  • This company, being an Indian legal entity, can legally purchase and own property for its business use (e.g., for housing its senior staff).

  • Important: The property must be used for the company's legitimate business activity. It cannot be used as a personal, non-business asset. This is a complex route involving company incorporation and compliance with foreign direct investment (FDI) rules.

3. Investing in Commercial Real Estate

The prohibition is primarily on residential property. The rules for commercial real estate (office spaces, shops, warehouses) are more liberal.

  • Under the automatic route (without needing RBI approval), a foreign national can invest in and purchase commercial property in India.

Actionable Steps & How You Can Help

Given the legal restrictions, here’s how you can assist your boss:

  1. Clearly Communicate the Legal Barrier: The first step is to ensure he understands that a direct purchase is prohibited by Indian law. This will save him from futile property searches and potential legal issues.

  2. Pivot to the Lease Option:

    • Explain the long-term lease as the standard and accepted alternative.

    • Help him find a suitable residential property where the owner is willing to enter into a long-term lease agreement.

    • Crucially, engage a competent local property lawyer. The lawyer will:

      • Conduct due diligence on the property title.

      • Draft a robust and legally sound lease agreement.

      • Handle the registration process with the local sub-registrar office.

  3. If for Business, Explore the Company Route:

    • If this is linked to a business expansion, consult with a corporate law firm to understand the feasibility and process of setting up an Indian company that can own the property.

Summary Table for Clarity

 

 

Person Category

Can Buy Residential Property?

Key Condition

Indian Citizen

Yes

No restrictions.

NRI / OCI

Yes

Cannot buy agricultural land, plantation, or farmhouse without special permission.

Foreign National (e.g., American)

No

Can only acquire through inheritance or gift from a resident. Cannot purchase.

Foreign Company

Yes (Commercial)

Can buy commercial property for its business under the automatic route.

Final Recommendation: Guide your boss towards the long-term lease option. It is the most straightforward and legally compliant way for him to secure a residence in India.

I strongly recommend you consult with a reputable property lawyer in the city where your boss intends to reside to execute this properly.

Lalit Saxena
Advocate, Sonbhadra
55 Answers

A foreign citizen who is not an NRI (Non-Resident Indian) or OCI (Overseas Citizen of India) generally cannot buy residential property in India unless they have resided in India for at least 182 days in the preceding financial year under a valid visa and obtain prior approval from the Reserve Bank of India

Prashant Nayak
Advocate, Mumbai
34436 Answers
248 Consultations

NO, cannot buy residential property. Foreign nationals (non-NRI/OCI) are NOT eligible.

Key Rules:

  • Foreign national resident OUTSIDE India: Absolutely prohibited from buying any immovable property​

  • Only exception: Inheritance with RBI approval​

  • Cannot lease for >5 years either without RBI permission​

What CAN be done:

  1. Apply for OCI status (if eligible as person of Indian origin) → Then can buy​

  2. Lease property for <5 years​

  3. Buy commercial property with RBI case-by-case approval​

If Boss Becomes Resident in India:

  • Must stay >182 days in preceding financial year with intent to stay for uncertain period​

  • Then can buy residential property on state government approval (varies)​

Bottom Line: Your American boss cannot proceed unless he obtains OCI status or becomes a resident of India for 182+ days. Residential property purchase by foreign nationals is legally restricted under FEMA.​

Shubham Goyal
Advocate, Delhi
2000 Answers
12 Consultations

- Since , he is neither and NRI nor OCI , then he cannot purchase the property in India. 

- However, he can apply before RBI for the approval to buy the same. 

Mohammed Shahzad
Advocate, Delhi
15749 Answers
241 Consultations

Dear Sir,

If your boss wants to buy a house or apartment, he can apply to RBI under Regulation 4 of the above FEMA regulations.

RBI will consider:

  • Purpose (self-occupation, not investment)

  • Duration and nature of stay in India (e.g., if on long-term employment visa)

  • Source of funds (must be from foreign inward remittance through banking channels, not local borrowings)

Applications are made through:

The Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Central Office, Mumbai.

The form is a simple letter with supporting documents:

  • Passport copy, visa details, address proof

  • Employment or business reason for stay

  • Proposed property details

  • Proof of foreign inward remittance

Kishan Dutt Kalaskar
Advocate, Bangalore
6226 Answers
498 Consultations

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