Can an Indian resident take a mortgage to buy a property in the UK or the UAE?

The short answer is no. Under RBI and FEMA regulations, resident Indians are not permitted to take overseas mortgages from any foreign bank or lender to purchase property abroad, whether that's in the UK, UAE, USA, Europe or anywhere else.

The purchase has to be self-funded. In most cases, that means using the Liberalised Remittance Scheme (LRS).

That's the core of it. The rest of this guide explains how it works.

Who counts as a resident Indian under FEMA?

Your status under FEMA has nothing to do with your passport, domicile or intent. It comes down to time.

If you have lived in India for more than 182 days during the preceding financial year (April to March), you are classified as a person resident in India under the Foreign Exchange Management Act, 1999. That classification applies regardless of whether you hold Indian citizenship or have assets outside the country.

This matters because resident Indians and NRIs operate under meaningfully different rules when it comes to overseas property and borrowing. Knowing which category you fall into is the first thing to establish before anything else.

Can a resident Indian legally buy property abroad?

Yes, Section 6(4) of FEMA explicitly permits it.

Resident Indians can acquire immovable property outside India and the purchase is funded through the Liberalised Remittance Scheme (LRS), which is the RBI's framework to allow resident individuals to remit money abroad for permitted purposes.

Numbers to know:

USD 250,000: LRS limit per individual, per financial year

USD 750,000: Combined limit for a family of three adult co-owners

S0005: RBI purpose code for overseas property purchases

How LRS works when you are actually buying

Every remittance goes through an Authorised Dealer bank.

Each adult co-owner can remit up to their individual USD 250,000 limit, which means a family of three can collectively move up to USD 750,000 in a financial year, from their own account.

Under-construction purchases, payments can be staggered across financial years, which often aligns well with the way developers structure milestone-based payment plans.

Why mortgage is not available to resident Indians buying abroad

The governing regulation here is the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 (Notification No. FEMA.3(R)/2018-RB). The general position under FEMA is that a resident Indian cannot borrow in foreign currency from a foreign institution, unless the RBI has specifically permitted it.

Purchasing overseas property through a mortgage from a UK or UAE bank does not fall within the permitted exceptions for resident individuals. The overseas mortgage route exists for NRIs in limited circumstances, but it is not a permitted route under the current framework.

In most cases, purchases are primarily funded through LRS remittances.

TCS: The cash flow impact you need to plan for before you remit

Since October 2023, remittances above INR 10 lakh per financial year for overseas property purchases are subject to Tax Collected at Source (TCS) at 20% on the amount above that threshold; confirmed under Budget 2025.

TCS is not an additional tax in the sense that you lose the money. Your bank collects it upfront, deposits it with the Income Tax Department and it appears in your Form 26AS. You get this amount back when you file your ITR.

A simple example: if you remit INR 50 lakh for a property purchase, TCS at 20% applies to INR 40 lakh, the portion above the INR 10 lakh threshold. Your bank collects INR 8 lakh before processing the transfer. That INR 8 lakh comes back to you when you file your return, but is not available to you in the meantime.

Does the buying process differ between Dubai and London?

The Indian side, FEMA, LRS, TCS, is identical regardless of whether you are buying. The annual limit, the purpose code requirement, the annual remittance limit and the TCS rules are also applicable in exactly the same way.

Where things go differently in each of the markets

In the UK, rental income from a property you own from abroad sits within a heavily regulated framework. Tenancy law, safety compliance, landlord licensing and the Non-Resident Landlord Scheme for tax purposes all need to be understood and properly set up from day one.

In Dubai, off-plan purchases are far more common, and developers typically structure payments in instalments tied to construction milestones. That happens to align well with LRS, where staggering remittances across financial years is both permitted and practical.

On transaction costs: the UK levies Stamp Duty Land Tax, with a non-resident surcharge applied on top of standard rates. Dubai levies a 4% Dubai Land Department transfer fee — broadly the equivalent function, different number.

What you are required to report in India

Owning property abroad as a resident Indian comes with annual disclosure requirements. All foreign assets, including overseas property, must be reported in Schedule FA of your Income Tax Return. Non-disclosure carries serious penalties under both FEMA and the Black Money Act. This is not an area where anything should be left vague or deferred.

Connect with Benham and Reeves India

The questions covered in this piece come up in almost every conversation we have with Indian investors buying property abroad for the first time. We've been helping Indian buyers navigate the London market since our India office opened in 2011.

If you're working through the structure and financing, we're happy to walk through the specifics with you and connect you with the right advisors.

Get in touch with our team.