Whenever it comes to choose between ready-to-move-in house or an under-construction unit, most of the homebuyers often get confused as both the property types serve different purposes and intents. Although buying an under-construction property has become one of the easiest ways to own a house these days, it comes with certain risk factors as well. Want to know which property type will better suit you? In this blog, we have presented a comprehensive analysis of both the properties so that you can make an informed decision. 

Firstly, let’s talk about the pros and cons of buying an under-construction property

Advantages of Under-Construction Property

• Easier on the pocket

An under-construction property does not put as much burden on the buyer’s pocket as a ready-to-move-in apartment. If factors such as location, amenities, property size and builder are same, an under-construction house is much cheaper and affordable than a ready-to-move one. In fact, the price difference can vary by around 10-30 percent.

• Higher returns

Buying an under-construction property generally yields a higher return on investment. All thanks to the extended window period between the buying stage and delivery timeline. If you sell the property closer to possession, you stand a good chance of earning a healthy appreciation on your invested capital. 

• RERA Compliance

As per the rules, any property with Occupation Certificate (OC) as on 1 May, 2017 must be mandatorily registered under its respective state’s Real Estate Regulatory Authority (RERA).Therefore, properties that are still under construction automatically fall under the purview of RERA and must adhere to fair trade standards. On the State’s RERA website, buyers can obtain information about these properties and even request prompt grievance resolution from the RERA-established Appellate Tribunal.

Cons Of Under-Construction Homes

• Higher risk

When it comes to buying an under-construction property, one needs to consider all the factors carefully because there is a risk element involved in the process of investing in such a type of property. There have been cases when the builder has failed to deliver on time or worse, failed to deliver at all. This can happen due to various reasons such as lack of funding, rise in the cost of construction materials, increase in lending rates and others. It is, thus, recommended to check the builder’s background before investing your hard-earned money in an under-construction house. 

• Discrepancy in the final layout/features

One of the most common glitches associated with under-construction properties is the insecurity of not getting the promised results at the time of possession. Usual incongruities consist – less usable area than promised, changed layout and reduced number of amenities.

• GST implication

During the purchase of an under-construction property, 1 or 5% of the total cost of the property is subject to taxes. While 1% GST is payable on the homes priced under Rs 45 lakh, it is charged at 5% in the case of properties priced more than Rs 45 lakh. With further stamp duty and registration charges applicable, such properties lead to heavy tax expenses for the buyers. 

Moving on, let’s talk about the advantages and disadvantages of buying a ready-to-move property

Benefits of Ready-To-Move-In property

• Immediate availability

One of the biggest advantages of buying a ready-to-move-in property is its immediate availability. You don’t have to wait for months or years to live in your ideal home. Homebuyers are just required to make the payment, go through some documentation work and they can move in easily. This can save them from the double burden of paying rent and EMIs simultaneously, in case of a home loan.

• You get what you see

When it comes to ready homes, buyers actually get what they see. As the unit is ready for you to inspect before you finalise the purchase, there are lesser chances of discrepancies with the availability of promised layout, features, amenities, and other things.

• Free from GST Implication

GST levies up to 5% tax on the purchase of under-construction properties. Ready properties, on the other hand, are left out of the ambit of GST as of now. 

Disadvantages of Ready-To-Move Homes

• High cost

One of the most obvious drawbacks of buying a ready-to-move-in property is its high cost in comparison to an under-construction project. As builders provide a finished home without any delay, they charge a hefty price on such properties.

• Quality of construction

In under-construction projects, buyers have the choice of evaluating the work progress and thus assess the quality of construction from time to time. Homebuyers can check themselves the materials used, strength of the foundation, structural integrity, and other key aspects. However, such is not the case in ready-to-move-in properties as you cannot conduct any checks.

• Age of the property

Unlike an under-construction property, buying a ready unit might not always guarantee you a brand new home. There are chances that it might have been up for sale for a considerable time. Therefore, if it is not well maintained, it could have issues like seepage, damaged walls, and rusted iron fixtures. 

While under-construction and ready-to-move-in properties have their own sets of advantages and disadvantages, homebuyers should evaluate every factor thoroughly in order to make the right decision. Furthermore, the purpose and requirement of the property must be gauged to take the most financially optimized decision.