Ready to Move vs Under Construction Property: What to choose?
Are you standing at the crossroads of property acquisition, torn between the allure of a ready-to-move-in home and the potential of an under-construction property? The decision hinges on various factors, from immediate possession to future investment returns. To assist you in making an informed choice, VBVR presents a comprehensive guide outlining the advantages and disadvantages of both ready and under-construction properties.
Advantages of Purchasing an Under-Construction Property:
1. Easier on the Pocket:
- Under-construction properties tend to be more budget-friendly compared to ready homes. The pricing difference can vary from 10-30%, making it an attractive option for cost-conscious buyers.
2. Higher Returns:
- Investing in an under-construction property often yields higher returns. The extended period between purchase and possession provides an opportunity for substantial appreciation on the capital investment.
3. RERA Compliance:
- Under-construction properties fall under the ambit of Real Estate Regulatory Authority (RERA) regulations, ensuring transparency and fair trade practices. This compliance safeguards buyers and facilitates grievance redressal through the Appellate Tribunal formed under RERA.
Advantages of a Ready-to-Move-In Property:
1. Immediate Availability:
- The key advantage of a ready unit is immediate possession. Homebuyers can make the payment, complete documentation, and move in without the burden of paying rent and Equated Monthly Instalments (EMI) simultaneously.
2. You Get What You See:
- Ready properties allow buyers to inspect the finished product before purchase, reducing the chances of discrepancies with layout, features, and amenities promised during the sale.
3. Free from GST Implication:
- Ready-to-move properties are exempt from the Goods and Services Tax (GST), providing a financial advantage compared to under-construction properties.
Disadvantages of an Under-Construction Property:
1. Higher Risk:
- Investing in an under-construction project carries inherent risks, including potential delays or, in severe cases, failure to deliver. It’s crucial to thoroughly vet the builder’s background before committing to such a project.
2. Discrepancies in Final Product:
- Common issues with under-construction properties include receiving a product different from what was promised, such as reduced usable area, changed layout, and a lack of amenities.
3. GST Implication:
- Purchasing an under-construction property attracts GST, ranging from one to five percent, adding to the overall expenditure on taxes.
Disadvantages of a Ready-to-Move-In Property:
1. High Cost:
- Ready-to-move units often come with a premium price tag due to the convenience of immediate possession provided by builders.
2. Quality of Construction:
- Unlike under-construction properties, buyers have limited opportunities to assess the quality of construction in ready units, potentially leading to unforeseen issues.
3. Age of the Property:
- Ready units may not guarantee a brand-new home, as they might have been up for sale for some time. Lack of maintenance can result in issues like seepage, damaged walls, and rusted fixtures.
4. Exclusion from RERA:
- Older ready units with Occupation Certificate (OC) as of May 1, 2016, may not be mandated to be included under RERA, raising concerns about grievance redressal and accountability.
5. Capital Gains Tax:
- Buying an under-construction property involves selling an existing asset, and if construction takes longer than three years, Long Term Capital Gains (LTCG) from the sold property are taxed at 20%.
Choosing between a ready and under-construction property depends on individual preferences, financial considerations, and investment goals. Thorough evaluation and understanding of the purpose of the property are crucial for making a financially optimized decision.
If you need expert guidance or assistance in navigating the real estate market, the VBVR team is ready to help. Contact us for personalized advice and support, ensuring a smooth and well-informed property investment journey. Your dream home is just a thoughtful decision away!