If you are looking forward to buying a new property, one question that might be in your mind is that – “whether to invest in a ready-to-move-in or an under-construction house.” Well, both these properties are designed to serve different purposes and suitable for different needs.
You must be aware of the pros and cons of both these property types before making an investment. This is a complete guide to throw light on both advantages and disadvantages of these different kinds of properties. So, making a decision will be easier for you.
# Ready-to-move-in property:
Ready-to-move-in house is already well-constructed and furnished with all necessary utilities. Many home buyers prefer this property to avoid delays in under construction projects.
Let’s find out the pros and cons of investing in this property-
Pros of Ready-to-move-in property:
- No waiting period: you can purchase this property immediately without waiting for too long. You just have to go through the documentation, inspection of the property, make the payment, and move into your house. It even saves you from paying rents or EMIs, if you are paying the entire amount at once.
- You get what you pay for: Unlike an under-construction property, you get your ready property as you have seen at the time of inspection. You can check the ready unit before making the payment to avoid risks of discrepancies with amenities, features, layout, and other essential things.
- Free from immediate taxes: This property is left out from immediate taxes, such as Goods and Services Tax (GST), or any other tax that implies on other regional properties.
Cons of Ready-to-move-in property:
- High Cost: One of the major disadvantages of buying a ready-to-move-in house is that it is available at a high cost compared to an under-construction property.
- Quality of construction: Unlike an under-construction property, you cannot check the quality of construction, strength of foundation, and quality of materials used in case of ready-to-move-in houses.
- Age of the property: Buying a ready unit doesn’t ensure that you are purchasing a brand new house. It might have been on market listing for a long time. Moreover, if not maintained properly, it may start looking old.
- Exclusion from RERA: Old ready-to-move-in houses are not included under RERA. So, these properties are not liable for making their information and listing details available on any public platform.
# Under-construction property:
Investing in an under-construction property is an easy way to dream of your own home one day. However, this possession often has certain real estate risks like project delay.
Let’s have a look at the pros and cons of under-construction property:
Pros of Under-Construction Property
- Budget-friendly: Most under-construction properties are easier on the buyer’s pocket compared to the ready-to-move-in house. The pricing difference may vary from 10 to 30 per cent.
- Higher returns: Investing in an under-construction property means you will get a higher yield in terms of “return on investment.” This happens due to the extended window period that lies between the initial buying stage and final delivery timeline. Even if you sell this property closer to possession, you will still have a good chance of getting a good amount on your capital investment.
- RERA Compliance: Any under-construction property with Occupation Certificate must be registered under a particular state’s RERA compliance. Under-construction properties are mandated for this registration and are even liable to fair trade practices. Their information details can be made available on any public platform to draw the interest of more potential buyers.
Cons of Under-Construction Property:
- Higher risk: Under-construction properties are at a higher element of risk when it comes to making investments. In some cases, builders have failed to complete the construction on time. The worst could be a builder not even delivering anything due to certain reasons like increasing lending rates, funding crunch, higher cost of building materials, etc. Therefore, it is important to do a background check on the builder before investing in any such project or property.
- Discrepancies in the final layout or features: Another problem with under-construction properties is that you might not get the same features or layout as discussed earlier. Usual incongruities might include the availability of minimum usable area as promised earlier, deficient amenities, and changed layout.
- Tax Implication: The immediate taxes like GST that is implied at the time of purchase, are associated with an under-construction property. Moreover, the buyers also have to pay extra for stamp duty and registration of the under-construction property.
- Other taxes are also implied: Usually, buyers finance their properties through home loans, which are further associated with certain taxes that are liable as per the Income Tax Department. Only ready-to-move-in properties are free from such taxes after its possession has been taken over by any buyer. However, under construction properties are liable to pay the taxes that are implied on them.
So, these are some of the pros and cons of both ready-to-move-in and under-construction properties. You must know and evaluate each and every pro and con of both these properties and choose the one that suits your budget and lifestyle the best.