When you’re investing in real estate, you’re making the safest of all investments. After all, it is an asset that cannot be lost or stolen; neither can it be carried away. When purchased with proper planning, paid for in full, and managed with care, real estate will serve you a lifetime.
However, the real estate market offers two options that have confused buyers for ages. They are-
- Under-construction properties
- Ready-to-move-in houses
Is one better than the other? Let us find out.
Under-Construction vs ready-To-Move-In Property: A Comparison
Weigh the two home options on the following parameters to make an informed decision.
The risk factors
Buying a house that is under construction comes with a higher risk as compared to a property that is ready to move in. The risk could manifest itself in a variety of forms – builder failing to deliver on time or failing to deliver at all. Such situations can arise if the cost of construction materials shoots up, the developer faces a financial crunch, or there is a steep increase in home loan interest rates. Cases of builders duping buyers are also common.
Perhaps one of the most obvious advantages of purchasing a ready-to-move-in property is its immediate availability as compared to an under-construction house that comes with a waiting period that is subject to changes. Besides, if you are financing your home purchase with a housing loan, a ready-to-move-in house spares you the double burden of paying rent on one hand and home loan EMIs on the other.
The cost factors
When compared in terms of cost, an under-construction property fares better than a ready-to-move-in house. Moreover, there is no payment flexibility offered for ready-to-move-in homes. You will most likely pay what the seller demands without much scope for negotiation. For under-construction properties, you can make adjustments in the materials used and negotiate with the builder to make your purchase more pocket-friendly.
However, an under-construction house may end up being costlier when additional costs in the form of development charges, GST, etc. come up.
Age of the property and quality of its construction
Buying a house that is ready to move in comes with the risk of being old and unmaintained. This is not the case with an under-construction property which will be brand new and designed as per your specifications and configurations.
Moreover, an under-construction property allows you to be aware of the construction materials used, the strength of the foundation, work in progress, etc. – something which cannot be monitored or adjusted in a ready-to-move-in house.
The RERA or Real Estate Regulatory Act was introduced back in 2016 to safeguard the interest of homebuyers in many ways. Under this act, buyers have the right to information about a property, and buyers can receive compensation for project delays and faulty construction. Other grievances will also be heard and addressed speedily.
However, this benefit is only available to those homebuyers with Occupancy Certificates as on May 1st 2017, and beyond. All new under-construction properties are RERA-compliant. But, older units with Occupancy Certificates as on May 1st, 2016 will not come within the ambit of RERA protection.
An under-construction property gives a good appreciation on investment, unlike a ready-to-move in house. This benefit is available is due to the window period between construction and delivery, construction work, etc. The location of the property will also play a key role in determining returns.
A 5% of GST or Goods and Services Tax is imposed on the purchase of under-construction properties whereas ready-to-move-in houses are free from the GST ambit.
As you can see, there is no clear winner between the two – where a property under construction is ideal from an investment perspective, buying a house that is ready to move in makes sense if one is looking for just accommodation.
The ultimate decision is yours; but no matter whichever you decide to invest in, get an easy home loan that can help finance your purchase! Avail home loans online and enjoy high home loan eligibility, attractive home loan interest rates, and minimum documentation hassles.