To buy a house within a city, is for many, a dream come true. But normally one has to compromise on a few things: space for accessibility and so on. Second homes are just the opposite. The purpose of buying a second home is that they serve as bigger residence or a vacation spot for the families that own them.
Second homes have their own niche in the real estate market. It is still emerging in India. Its affordability is limited to upper middle class section and the financially well off. Normally viewed as a a sort of luxury, it is the Non Resident Indians that are mostly primary buyers of second homes.
The market for the second home is connected with the economic trends and swings both ways. People usually buy second homes to move away from the stressful life in the city and spend some quality time with their families. It is typically a property which is a few hours’ drive from the primary property. It is normally located in idyllic environs, widely contrasting with the surroundings of the city home but with all the facilities one can normally expect or ask for. Good number of options is also available for the buyers, since many realtors have realized the potential of this segment and started catering to the same in different cities.
Second homes have also become a good investment options. One can rent out the house when not in use and gain rental. It can also be used for corporate events with a high rental in mind. But rentals come with a minor risk; the property has to be observed closely otherwise it may lead to revenue loss in terms of misuse of the property. The price of the property starts at the lower end of the segment for minimalist developments and from there runs into uber-expensive high-end properties at remote locations.
The general trend is that second homes are constructed or purchased via the fully non-financed route. The property is normally bought wholly using disposable income. The race for second home is heating up. According to experts, Coimbatore and Pondicherry are where realtors feel there is demand for second homes for the Chennai based.
Buyers should ensure that all the necessary permissions are attained by the competent authority before going for the property. One has to also see that in near future, there is significant appreciation in property so that the liquidity of the property is maintained in worst case scenario.
Income tax benefits are also available when one buys a second home. But there is a catch. Even if one leaves his second home vacant, it is taxable. So best option is to rent it out when one is busy, at work or not in a situation to make use of the property.
The generally liberal policies of the Government have been very helpful for the NRI investor subject to the compliance of FEMA.
That there is no restriction on the number of properties they can purchase in India is a great advantage.
Besides, they do not require the RBI permission as is wanted in several other spheres.
Banks have been willing contributors to the NRI’s who wanted to add such an asset treating them on par with Resident Indians.
Payments for purchase can be made through funds remitted from abroad or out of balances in their NRE NRO FCNR accounts.
In case of the NRI’s inability to travel to India in the course of a sale, the facility of Power of Attorney given to a close relative is very helpful.
Stamp duty and Registrations processes are quite easy to understand and friendly.
Loan Repayments are permissible from in he NRI’s FCNR / NRO / or NRE a/c or a relative can be deputed to repay the same.
The Rental advantage is always there in that the rental returns have been steady and worthwhile.
Investment in India makes sense because of a disciplined stock market and its professional regulation.
The feel-good feeling given by the Indian economy is a shawl of security.
Stabilization of markets , earlier on , have been helpful to the cause of providing trust.
The proposed single window investment promotion council planned by the Government looks a good promise to remove the red tape.
To an NRI, a base in the homeland is an added security.
The revision in investor laws has allowed a surge of investment.
NRI‘s can set up family trusts abroad for education of his children/ maintenance of his family members. Such trusts can also be Asset Protection Trusts( including property ) where the assets held by the trust are free from attachment by the creditors.
Compared to times by-gone where the NRI was confronted from the Local Panchayat /Municipal /Corporation levels and was struggling to set foothold with property laws,income tax laws,wealth tax issues, succession legislation,land ceilings and others times have changed to welcoming the NRI’s with a red carpet and they in turn giving such an extraordinary response.
And lastly, the depreciating Indian Rupee has proved a great advantage in that the NRI gets “so much more for less”.
After a long hiatus, the scenario at the Indian Real Estate sector has slowly started to liven up. The real estate sector in India has been struggling to make an impact with the people for quite some time now after a year long period of stagnation and declining transactional activity. However, in recent months, there has been noticeable development in the real estate front. Things are looking positive in the realty market as both property investors and property developers are coming out in numbers to revive the industry.
Simultaneously, the demand for housing and commercial space in India among the NRI’s is on the rise. The growing consumer demands has made the real estate builders think fresh and innovatively. The real estate developers are working hard towards meeting the expectations of the NRI’s who return to India for settling down. They are taking into consideration their tastes and upgrading the trends for the year 2012 so as to cater to the needs of all the classes by creating global standards of living at an affordable pricing.
The Real Estate trends that will be most sought-after by NRI home buyers in the coming year 2012 will be as follows:
• NRI home buyers are going to be thinking long-term as they basically looking to settle down here. It must be noted that NRI’s home buyers are thinking advance for the 1st time in a decade ie; homeowners are simply planning on staying longer.
• Markets reveal that the prices will drop. Foreclosures increase will visible anywhere between 7-10%. Pricing competitively, yet in a reasonable manner will make the customer to take notice of the property over the gazillion other choices existing in the market.
• It is common knowledge that no matter how low the mortgage rates are, they are bound to increase over a period of time. In order for governments to recover from their own debt loads, rates will eventually start to rise up. Long term rates are expected to rise sometime around mid to late 2012. However, keeping the mortgage rates low will help both the property seller and the home buyer.
• All new construction concerns need to be as early as possible. The most common issue being housing shortages has been an impending issue since early 2011. This needs to be given due attention so as NRI’s don’t feel the pinch or any hardships while looking for a suitable luxury apartment in the coming year.