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FACE THE FACTS
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Face the Facts
Transcript : Face the Facts - 18 July 2008
THIS TRANSCRIPT WAS TYPED FROM A RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT. BECAUSE OF THE RISK OF MISHEARING AND THE DIFFICULTY IN SOME CASES OF IDENTIFYING INDIVIDUAL SPEAKERS THE BBC CANNOT VOUCH FOR ITS COMPLETE ACCURACY.

Face the Facts: Property Law in Goa

Presenter: John Waite

TRANSMISSION: Friday 18th July 2008 1230-1300 BBC RADIO 4
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Waite
This is Candolim Beach in Goa, in southern India. It's the middle of the monsoon season here so it's relatively deserted today and it's very blowy - as you can hear - but it's a warm wind that's whipping around me. Looking across though this beach's wide expanse of white sand beyond the fringe of glistening emerald palm trees to a white baroque church in the distance it's easy to see why thousands of Britons who've visited Goa have fallen in love with the place.

Vox pops of Britons
Beautiful beaches, lovely people, super food, lovely temperatures - everything was just spot on and then we fell in love with it.

It was sunset. And on the ferry there were boys selling hot nuts in paper cones - it's an image that I will always remember. And the next morning came out on to the front, there was an expanse of beach as far as you could see, it was just absolutely beautiful. I remember doing a postcard to my wife and saying I think I've discovered paradise.

Waite
Some typical memories from two of the 400,000 foreign visitors who choose Goa as their holiday destination each year. Many become so entranced with this tiny state on India's southwest coast that they come back to settle. The biggest group of migrants being from the UK. Today on Face the Facts we reveal how this British ex-pat community face having those homes confiscated and may have to do legal battle to retain the properties they bought in good faith. Because, as we discover, the ownership of those properties appears to rest on the tortuous legal interpretation of one word in Indian law.

Vox pops of Britons
We really have lived rather boring straightforward lives - working, working, paying our mortgage. And for us to find ourselves now on the wrong side of what is apparently the law or the interpretation of the law is soul destroying.

For me I feel it a lot, okay for me it literally interferes with my sleep on a nightly basis. I find it difficult getting it out of my head you know.

You don't know from one day to the next, I mean as far as we're concerned this is it, we're here, we're stable but you just don't know, it's always this what if. What happens if we've got to pack our sticks up and go? We don't have a home in the UK, people say are you going back home, we say we are home.

Waite
Later in the programme we'll reveal how more Britons may find themselves in the same predicament as those who've already bought their homes but now find they may not own them. I've been undercover to find out what advice estate agents are currently offering to Britons about the problems they face.

I paid a visit to a couple that we're calling Ron and Jean, not their real names like all the ex-pat Goa residents in this programme they asked us to withhold their identity for fear the publicity would jeopardise their already delicate legal position.

They came to Goa on holiday five years ago and loved the place.

Ron
Within three months we'd come back, had another holiday, started the thing rolling and we started to pack up everything in the UK to move here.

Waite
Ron and Jean paid £80,000 to buy land and have a three bedroom house built in Candolim in the northern part of the Goan coast, an area popular with British settlers. The house has a large workroom for Ron to do any repairs about the place, an ample freezer stocked with the fish he catches, even his own private market garden.

Ron
Well all this was built purely and simply to grow vegetables because I used to have a little allotment when I was in London. Well coming out here of course everything just seems to come out the ground. So we built this like a small allotment to grow pineapples and lemon grass, we've got basil, papaya and these are pumpkins and melons.

Waite
Before buying the home Ron and Jean say they were careful to follow all proper procedures.

Ron
Well we did our research, you don't commit that amount of money in a foreign country without doing your homework. And we went to a builder, then we went to an advocate.

Waite
I mean having bought all this though and spent all this money do you have the deeds to this place?

Ron
No.

Waite
Well why not?

Ron
They won't give them to us.

Waite
We'll come back to why Ron and Jean can't get their deeds in a moment.

Wendy, again not her real name, and her husband are in an identical situation. They retired to Goa three years ago to a two bedroom seafront apartment which they bought for £25,000, at least they thought they'd bought it.

What brought you to Goa?

Wendy
Well we'd come here regularly on holiday for quite a few years and we loved it and we took a decision to take early retirement and decided that this was the ideal spot for living the rest of our lives in a calm and peaceful manner and to get away from the hassle and stress that we've had at work all our working lives. And probably why Goa - well it is a democracy, India, people do speak English, it's got a very good infrastructure, there isn't a war, so it's a nice safe place.

Waite
Like Ron and Jean, Wendy was careful after deciding to buy in Goa.

Wendy
We were here over six months before we even started down this route. We went to two lawyers - one locally, one in Mapsa - we asked the questions, we asked a lot of the other British ex-pats whom we'd got to know. I'm not sure what else we could do.

Waite
Vikram Varma is a lawyer who's representing many Britons like Wendy in their bid to validate their property rights. As such he's very familiar with the requirements of the Foreign Exchange Management Act or FEMA, as it's called, which was introduced in the year 2000 and governs property purchased by foreigners.

Varma
One of the prerequisites is that they need to be having a residential status, which they can have if they complete 182 days in the country.

Waite
They just live in the country for 182 then they get residential status?

Varma
Yes. The second prerequisite is that the funds which are used for purchase of the property need to come in through proper banking channels. The third prerequisite is that the land should not be agricultural land.

Waite
This all worked well for how long?

Varma
Well the FEMA act came in 2000, so from 2000 onwards all these provisions were used for purchase of properties.

Waite
So there was no problem for seven or eight years?

Varma
Absolutely no problem.

Waite
What has changed in recent months is the mood in the Goan state. Historically the region has been welcoming to foreigners, seemingly liberally granting long stay visas to people who wish to settle. Without them the new residents would have had to return to the UK on a regular basis, just to renew their visa. However, the state government and local opinion has turned against foreign communities in Goa. There's opposition to large scale property development, which some say is unsightly and inappropriate and perhaps more importantly pushes up prices beyond what locals can afford. The murder of 15-year-old English schoolgirl - Scarlett Keeling - and publicity about the alleged events which led up to her death on a Goan beach has fuelled these sentiments. The Goan state government has responded by turning to a section of FEMA, that law which covers who qualifies as an Indian resident and therefore who can and cannot buy property in India.

FEMA Act
A person residing in India is defined as residing in India for more than 182 days during the preceding financial year and who stays in India, either for taking up employment, carrying on business or vocation or for any other purpose that would indicate his intention to stay for an uncertain period.

Waite
For the best part of eight years that word "uncertain" has been taken to mean people buying property should have a longstanding commitment to the country, that's why their period of residency is uncertain. But in Goa in the last 12 months the word uncertain has come to mean something else as lawyer Vikram Varma explains.

Varma
The Goa government stand is that the foreigner might consider in his mind that his period of stay is uncertain but the fact that the visa granted to him is for a specific period means that under no conditions a foreigner's period of stay can be for uncertain. Now if a visa's been granted for say two years the foreigner has to leave the country after two years, if it's been granted for 10 years he has to leave the country at that point of time. So even though it's a long term visa the period of stay is always defined at any moment of time.

Waite
Even though this interpretation of the law has not raised its head in seven years, according to the Goan authorities now if migrants are on a fixed visa their period of stay is not uncertain and therefore they are not entitled and never were entitled to buy a property in India.

Varma
If the law permits a foreigner to buy land then that law must be respected, it should not be interpreted with retrospective effect, taking away his rights and his investments.

Waite
This is the problem, isn't it, it's retrospective.

Varma
It's retrospective.

Waite
Goa officials have identified at least 400 cases of alleged contraventions of FEMA, which have been passed on to the Indian government's Department of Enforcement. Many people have received Show Cause notices, asking them to provide evidence as to why their home should not be confiscated and auctioned. Others have received summons like this one - to appear at the Enforcement Department.

Summons
An investigation is being conducted against you under the provisions of the Foreign Exchange Management Act. You are hereby summoned to appear before me in person along with the documents listed below. Take notice that in the fault of your appearance you shall be liable to action under section 13 of FEMA or section 32 of the Code of Civil Procedure.

Adding insult to injury the Goan government is implementing an amendment to the 100 year old Indian Registration Act which governs the registering of property deeds in India. People have now been told to present their home purchase documents to the registrar. When they do, the people we've spoken to, have been told their deeds can't be registered, which means they have no proof that they own the property.

Wendy
We can't get the deeds because the Goa government have instructed the Registrar of Deeds here not to accept deeds from foreigners and the registrar, if you turn up as a foreigner, they say go away we're not accepting your deed.

Ron
Traditionally in India when you transfer your house from having paid for it to actually owning it and getting the deeds you have to pay a large amount of tax. Now we don't mind paying the tax, we would like to have our deeds, so you're in this sort of cleft situation. So we don't have the deeds, we've paid fully for it, we're living in it - we've been here four and a half, five years - and we still cannot get our deeds.

Waite
And of course without property deeds home owners are unable even to sell up. According to lawyer Vikram Varma there's only one sensible piece of advice to anyone thinking of buying a property in Goa - don't.

Varma
To my mind any decision about buying property in Goa by British nationals should be put on hold until this interpretation of the law is absolutely clear and there is clarity also in the registration of deeds of sales.

Waite
It would be good to report that British based estate agents, which market Goan homes to UK buyers, were passing on such cautious advice. In our research some agents were highlighting the problems likely to face would be buyers. But others were not being so responsible. So I went undercover in Goa to test the advice being given.

I started with a new complex being completed just inland in northern Goa, it's on the books of Goa Property Sales Limited based in Huddersfield and their local finance director - Mukesh - showed me round the noisy site, which the glossy brochure revealed would within months be blocks of apartments surrounding a central swimming pool. The two bedroom one I inspected was priced at £30,000.

So where are we now? What's this place called?

Mukesh
Baga.

Waite
Baga?

Mukesh
Baga Beach.

Waite
Oh I've heard of Baga Beach yes. Nice kitchen isn't it. Nice ....[Indistinct words]

Mukesh explained how I would have to become an Indian private company if I wanted to buy the place.

Mukesh
What happens is we require two people, they're called directors of the company and the company will be registered in India and then a bank account will be opened for that company and the payment order you're making shall come from the company's cheque book.

Waite
So we have a special cheque book, you only have to have a company, it doesn't have to do anything?

Mukesh
No, no it doesn't have to trade.

Waite
It doesn't have to trade.

Mukesh
But it has to exist, you know you have to do every year the accounts. We have probably more than 280 properties, officially at least a minimum 180 are holding companies.

Waite
But you have to file accounts?

Mukesh
Accounts. We do every year the accounts.

Waite
But how could there be accounts when there isn't a company?

Mukesh
No, no what happens is your bank statements shows what are the expenses.

Waite
Oh I see.

Mukesh
So there is money coming in and going out. And so we can show the hotel bill, restaurant bills.

Waite
We can put those through as accounts?

Mukesh
Yeah, you're publishing these, any expenses.

Waite
So anything I spend in India becomes the accounts of my property?

Mukesh
You can sort of leave it for the accounting office.

Waite
Good, so that's straightforward?

Mukesh
Yes.

Waite
Back at Goa Property Sales local office in the main street of nearby Calangute British sales staff confirmed that I would indeed have to register as a business and preferably file some sort of accounts, even though I wouldn't actually be running a business. Throughout there was no suggestion that I would be setting up a working business, this would simply give me the right to buy property. And at no time was I alerted to the problems being faced currently by British citizens.

Steve Wood is director of Goa Property Sales which describes itself as probably Goa's largest estate agents, so why is he continuing to sell property in such a climate of uncertainty?

Wood
Because there's clearly guidelines laid down of how to buy property in Goa. The rules state if you spend 183 days in India you'll gain residency. After that you can purchase property in India quite legally.

Waite
But that is not the way you're selling properties is it, it's certainly not the way your representative tried to get - to sell one to me?

Wood
What we are saying to clients we prefer the limited company route, it's not quite a grey area.

Waite
But I've spoken to Anapam Kishaw, who's the Goan government finance secretary, he's the official who's actually behind all these current investigations, and he says if you set up as a business, which isn't a true business, that that would be illegal.

Wood
That depends on their outlook and whether they want foreigners coming in and buying. They're achieving what they want to achieve if they don't want foreigners, they don't want tourists either. We've gone from selling 20 properties a month to selling 20 properties a year.

Waite
So if that is their end why would you encourage anyone to buy a property in a country that doesn't want foreigners apparently?

Wood
If people want to buy properties in Goa then there's a need for a sales person to be there selling property. There are still people prepared to buy knowing what's happening.

Waite
Your finance director, Mukesh, told me that I would have to become a limited company to buy property in Goa.

Wood
It's a risk buying property anywhere in the world.

Waite
Fair enough but he knew and I knew that that would be phoney, I mean I didn't want to buy a business, I wanted to buy a property.

Wood
Why would the business be phoney, you're going to buy a property, you're probably going to be renting it out when it's empty?

Waite
I was going to live there. Anupam Kishore said if that was the way you bought property then that would be illegal.

Wood
You'll find newspaper articles telling you that only Delhi can confiscate property, Goa can't confiscate without paying compensation.

Waite
So the Goan government's ruling on this - you just sweep it aside?

Wood
It's not a case of sweeping it aside.

Waite
The definition in Indian law and your ability to buy immovable property is that that property must be - and I quote: "Necessary for carrying on commercial activities", buying a property to live in is not a commercial activity. And if it's a retirement home it isn't is it? It isn't, it's a lie.

Wood
But it's not, it's the office for the business.

Waite
So these 180 properties that Mukesh told me you had sold by making to people who set up limited companies they're all going to be fine in future are they?

Wood
When's third world war going to start?

Waite
So you're going to carry on doing business?

Wood
We're not breaking any laws, we're doing nothing wrong legally or morally.

Waite
So you'll continue?

Wood
Well why would I stop?

Waite
Steve Wood.

Another company - Knight Knox International Limited based in Manchester - told me before my visit to Goa that buying property there is all very straightforward. In a second call two weeks later they said there were uncertainties, nevertheless they arranged a viewing in Goa for me with a Mr Manjit, who works for Blue Beach Holiday Homes PVT Limited, which has offices in London and Goa. This time the development was further inland, overlooking a scene of gentle hills and paddy fields studded with water buffalo.

So this is Meadow Wood, can we have a look here? Yeah good.

It's difficult to imagine when it's just a shell.

Manjit
Two bedroom apartment.

Waite
I see.

Manjit
Kitchen, living room.

Waite
Big living space.

Manjit
Bedroom.

Waite
I see.

Manjit
And the bathroom.

Waite
Oh this is nice. Beautiful view. How much are these?

Manjit
This is [Indistinct words].

Waite
Can you tell me what that is in English money?

Manjit
It comes to £75,000.

Waite
Seventy five thousand English pounds. How do you purchase this - what's the procedure to buy it?

Manjit
[Indistinct words]...

Waite
Yeah, you've built a company? Yeah.

Manjit
Yeah. And we purchase the shares in the name of company, directly you cannot purchase.

Waite
Directly I cannot purchase?

Manjit
Yeah.

Waite
So does that mean I don't own it?

Manjit
For that you have to speak to a lawyer and owner.

Waite
Buying shares in a business, when I really just wanted to buy a flat, seemed all very confusing I told Mr Manjit, who promptly set up an interview with Mr Gajanan Korgaonkar to reassure me. His rather impressive offices, resplendent with name plate saying he was an advocate of the high court, were a few miles away in Mapsa. Still in my guise as a property buyer I asked was all I had to do simply to set up a phoney company?

So we buy this property and we say that we are a renting company do we?

Korgaonkar
Yes you have to say a renting company, you come here to do business - renting business.

Waite
But I don't want to rent it out, I want to live there.

Korgaonkar
You can live there but we need to show some business.

Waite
So basically that's what I'm going to have to do, if we want to buy something here we're going to have to make it a business even though that's not true, I'm not running a business?

Korgaonkar
There's no way ...

Waite
I have to pretend I'm running a business, that's what it is?

Korgaonkar
Yes.

Waite
Well the managing director of Knight Knox International, Jeremy Knight, sent us this statement:

Statement from Knight Knox International
We are a professional company and do our best to give accurate information about the properties we deal with. Property law is constantly changing and to be fully up to date with every rumour, government threat or change is not always easy. We wouldn't knowingly sell property in any country illegally.

Mr Knight added that as a result of our investigation his company would suspend selling property in Goa.

Blue Beach Holiday Homes told us: Our representatives are clearly instructed not to advise any potential buyers but to refer them to their own agents and lawyers for independent advice.

But what do the Goan authorities, which have re-interpreted one old law and implemented a new one, have to say about the effect their actions have had on British ex-pats who've invested in property there?

I made an appointment at the official residence of the Goan chief minister - Digambar Kamat.

Kamat
Those will not have violated the laws, I don't think there is any problem for them. But most of them are educated, they know the rules of the country.

Waite
Isn't the truth of it that there's been this change in approach, whereas once you welcomed people to buy property and now you don't want to do that?

Kamat
See buying property is one thing, lots of people come and because it is small and beautiful they come and try to invest money and try to buy huge tracts of land [indistinct words] is being sold.

Waite
Well this may be an attempt to stop that but those people who bought legitimately they've been caught up in this.

Kamat
Not if they bought legitimately I don't think there is any problem.

Waite
Our next stop in the corridors of power was at the office of Anupam Kishore, joint secretary of the Goan government's finance department. He was the man commissioned to identify any violations of property laws and report them to the Indian government. It's his report that has led to some 400 people being investigated.

Kishore
There are essentially two clauses out there, one is that you should have stayed for 182 days of the preceding financial year. The second part says that you must come to stay here for some business, for some vocation, with my intention to stay for an uncertain period.

Waite
I'm sure some people quite reasonably would assume uncertain in this case meant they weren't living here completely and permanently because their visa requirements meant they had to return periodically to Britain.

Kishore
Exactly, exactly.

Waite
So your period - your period of residency here is uncertain because it depends on the length of the visa.

Kishore
But length of the visa itself is a certainty.

Waite
In other words you mean indefinite, don't you?

Kishore
Right, absolutely, absolutely.

Waite
But why don't you say that?

Kishore
That's the word, that's the word.

Waite
But why don't you say that?

Kishore
The important thing is to understand what is the spirit, why it is done.

Waite
And do you think the spirit of the law is being upheld by taking in many cases perfectly innocent people, who've done nothing wrong as far as they knew and were best advised, and making them lose everything, potentially to lose their homes, all the equity they have, all the money ...

Kishore
I think ...

Waite
... is that a good spirit of the law?

Kishore
They should have taken proper advice and maybe with the authorities before going on.

Waite
But I mean this is outrageous, that you've suddenly realised that the law wasn't being interpreted correctly, so you cracked down on it and caught out all the people who thought that they were doing exactly what you wished. In future would be one thing but to make it retrospective many would say is outrageous.

Kishore
Ignorance of law we can't really do anything, the law is very clear.

Waite
But the ignorance of the law that you speak about seems to extend to every Goan lawyer who was involved in these purchases.

Kishore
I can't say every Goan lawyer.

Waite
So why are you not pursuing those advisors, why are you pursuing those who bought property in good faith in your country, rather than those who seem to have given them bad advice, taken their money and put them in this position?

Kishore
Ah it is for those foreign nationals to report who were their advisors and why did they give the wrong advice.

Waite
And what about the fact too that UK property agents are still selling properties in Goa, saying that you can come over here and it won't be too difficult to buy a property?

Kishore
Absolutely wrong, as you said that the lawyers here they misled the people, it's the same way the property dealers in your UK is misleading the people.

Waite
Now I'm told that I can register as a company in Goa, I can buy a property as a company asset - now is that possible?

Kishore
What is being suggested to you is to use that way to acquire property which is not correct.

Waite
So if you say I'm going to open a company in Goa and do business here but in fact all you have, as a business, is the asset of the property that you live in that would break the law?

Kishore
Yeah, I mean you are supposed to do business here.

Waite
So you're basically saying to anyone listening now in Britain don't buy property in Goa?

Kishore
As of now the rules doesn't permit you.

Waite
Doesn't permit you.

Advice that's come too late for those still waiting to see whether they will be absolved by the government's investigations.

Advocate Vikram Varma offers some hope though. He believes that the Goan government's interpretation of Indian law will not withstand scrutiny and he will take it to the country's supreme court if necessary to get it overturned.
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