Under Construction Vs. Ready-To-Move-In Property: Which One Is Better For You?

Purchasing a house is a long-term financial responsibility and therefore, you must access all aspects of the property carefully before making the final decision. One of the most common dilemmas that home buyers face while purchasing a house is whether they should opt for a ready-to-move-in house or book an under-construction one. Since both these property types serve different purposes, it is essential to know their pros and cons to make the right choice.

Advantages of under-construction property

  • Cost-effective

Buying an under-construction property will cost you lesser as compared to ready-to-move-in-property. The difference in the value can vary from anywhere between 10 -30 percent.

  • Higher returns

Buying an under-construction property usually yields a higher return on investment due to an extended period between the buying and the possession of the property. Therefore, selling an under-construction property after taking its possession can yield you a healthy appreciation.

  • RERA Compliance

Properties with Occupation Certificate as on 1 May, 2017, are mandated to be registered under their state’s Real Estate Regulatory Authority (RERA). As a result of this, all the Under-construction properties will necessarily come under RERA and thus, become liable to observe fair trade practices.

Disadvantages of under-construction property

  • Higher risk

Buying an under-construction property involves a certain amount of risk. The most common being delayed possession. Many home buyers hesitate while purchasing an under-construction property due to the uncertainty regarding its possession period. There is also a risk of not getting the expected product at the time of possession.

  • GST Implication

Buying an under-construction property will attract a tax rate of 12 percent of the total property cost. Additionally, stamp duty and registration charges will lead to heavy expenditure on taxes.

Advantages of ready-to-move-in property

  • Immediate availability

One of the major benefits of a ready-to-move-in property is the absence of any waiting period. You are just required to make the payment and go through all the documentation before shifting to your new place.

  • You get what you see

Unlike an under-construction unit, in case of a ready-to-move-in property, you actually get what you have pay for. There is no risk of discrepancies with the promised layout, features, amenities and other important things.

  • Free from GST Implication

The recently implemented Goods and Services Tax (GST) is not applicable for a ready-to-move-in property.

Disadvantages of ready-to-move-in property

  • High Cost

One of the major drawbacks of purchasing a ready-to-move property is its higher cost as compared to an under-construction property.

  • Construction quality

In case of an under-construction property, you can evaluate the progress of the work progress and thus, you are always aware of the quality of the construction. However, in case of a ready unit, you cannot evaluate the quality of the construction.

  • Exclusion from RERA

Old properties with Occupancy Certificate as on 1 May, 2016, are not mandated to be included under RERA.

Now that you are well aware of the pros and cons of both the property types, you can make a better choice for yourself. For purchasing any property, you would require access to a large amount of capital. This is where a home loan can be extremely helpful. While availing a home loan, do not forget to read its terms and conditions carefully.

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