Ok take a deep breath - if you have an aversion to risk of any kind, then perhaps you should bail out now. Buying in India is not like buying the UK or even Europe. You need to face it - your going to have to make value judgements based on wether you think you can trust the guy or not.
The first thing you need to know is that the land registry system is not exactly reliable and many properties don’t have what is called here: “Clear Title”.
A reputable seller or property developer will have all the right papers to hand to show you who owned the property or land historically and how he has obtained the clear title. You can get a local agent to check this out, but the best evaluation is your judgement, if you don’t feel comfortable - walk away.
The main drawback to Indian property investment has been government policy. Real estate is one of the categories of Foreign Direct Investment (FDI) to which India is opening its doors, but it remains much easier for Non Resident Indians (NRIs) to buy property in India than for persons not of Indian descent. No western country has such racially discrimatory laws and as India opens it’s doors to outside investment it is quite likely that these rules will be relaxed.
The way round it currently is the widely used practice of setting up an India Limited company - of which you own all the shares, the company owns the property. Limited companies (as in the UK) are easy to set up and any national can own shares.
If you are buying property from another ex-pat (who has a company that owns his/her house) it may be simpler to just buy the company and get ownership like this.
As I understand it - the problems isn't so much buying as selling. If and when you want to sell your Goan house - under current regulations - you may not be able to bring home any profit you have made on the sale. However things are changing - and when the law is finally clear cut - get ready for an even more booming property market.
Basic Information you need to know.:
Stamp duty (2% of purchase price) and registration (2% of purchase price) will need to be paid to Goa government authorities at the time of registering the sale deed
Estimated maintenance charges approx. IRS 50,000 per year per villa (varies from developer and project) - about £600/ year.
Estimated rental income approx. IRS. 10,000 to 35,000 per month £120 to £420 / month.
Foreigners could purchase property by establishing a 100% owned resort management company in Goa and the freehold property will be purchased by this company. Fees to establish this company is approx. IRS 50,000 and annual fees to maintain company is approx. Rs. 5000. There are other ways but they require you to establish Indian residency which requires you to have lived in India for over six months in one year.
Important. If you are buying via the Ltd company route - you must operate your property as a business. In other words actively market it and let it out. Declare all income to the tax office. Increasingly (as in Spain and other places) the authorities are clamping down on ownership loop holes and tax avoidance.
The latest legal route that is being used is a renewable lease. Contracts are drawn whereby the property is let to you on a five year renewable lease until such a time when you have established an Indian residency - when the property is then automatically transferred to your name.
Other expenses - legal fees, water & electricity deposit would be approx. Rs. 20,000 about £240.