Is Ready-To-Move-In House Better Than Investing In An Under-Construction Property?

When planning to buy a house, the most important decision to make is to whether go in for a ready-for-possession property or opt for an under-construction project. This is an important question which every potential home buyer should think over carefully due to the pros and cons attached with both the options. Both serve different purposes and intents so it becomes important to carefully analyze the benefits and drawbacks attached with each option. While ready-to-move-in property keeps aside the inordinate delays in project completion but the premium cost of buying these projects might at times be a little too much. The 10-15% higher costs might prevent the buyers from opting for a ready-for-possession property but the question is that if these costs come down, whether the buyers will be able to wait for 2-3 years till the under-construction house is ready.

Due to the untimely project completions many home buyers have started preferring ready units as they find it an easiest way of realizing their dreams and aspirations of owning a house. There has been a considerable increase in inventory pile-up as it seems to be the most viable option of buying a house these days. Also, the buyers get an advantage of cracking good and cost effective deals in ready units which they won’t expect to get in case of an under-construction property. Due to the excess of inventories, there has been a control over the prices also as a sudden increase in the prices of a ready-for-possession project or a project nearly completion is no longer welcomed now. There are good quality projects available from top-class builders, at major locations, ready for possession.

The entire scenario has been given a push by the New Real Estate Bill passed by the government as per which the developers need to complete their projects fast and on-time adding to the inventory stock. The projects which were delayed earlier are being constructed with full swing just to ensure that they do not come under the gamut of the Real Estate Regulatory Act. Thus, a silent demand has prevented the prices of these projects from going up.

Benefits of a ready-for-possession property

The primary advantage of buying a ready-possession property is the absence of any waiting time. You select on the house, make the payment, complete all the legal formalities and the place is all yours and ready to move-in.

The buyers also save on the monthly rent of their current accommodation. But, in case he has bought the house for investment purposes and not to be used as his primary residence than he can immediately rent out the property earning an additional monthly income.

Another advantage is that in case of a ready unit, you pay for what you have actually seen. Since you inspect the house before buying there are zero chances of any discrepancies in terms of its promised layout, specifications, facilities or any other things.

In case of an under-construction property there are always chances that the developer might delay the project completion and as result of which the buyer might have to shell out extra as the rent of the place he is currently living or he might have to shift temporarily. The buyer might have to pay double the amount, one as the rental amount of current accommodation and secondly as the EMI’s of the home loan taken. They will also lose on the tax benefits on interest paid towards housing loan if they do not get the possession of the house within five years of having taken the loan. For example, for a person falling in the tax bracket of 30%, this delay on the part of the developer might lead to a considerable drop in his tax benefit from Rs 60,000 to Rs 9,000 per annum.

However, the choice of decision depends upon the financials of the buyer, affordability of the property and the possession time period. In case he does not have funds and can wait for 2-3 years then it is advisable to invest in an under-construction project but in case he has sufficient finances and is in urgent need of a property for an immediate use, then ready-to-move-in house is a better choice.

Things to keep in mind

In case of a possession-ready apartment, there is a limited choice in terms of project specifications like view, floor plan, etc. and more documentation work needs to be done as compared to an under-construction property. There is a lot of legal work to be done to get the title clearance from the seller to the buyer for a resale property. Unlike an under-construction project, buyers for a ready-to-move-in house need to arrange huge amounts of funds for the down payment, stamp duty, registration, etc. plus they will start paying the home loan installments immediately once they get the possession of the house.

Many developers are offering attractive discounts and offers on under-construction properties which are not in case of a ready-to-move-in house. Also the chances of price appreciation on your capital investment are low since a lot of development has already taken place in case of ready-possession house and thus, the prices are unlikely to be increased further. An under-construction house is expected to yield higher returns due to a long time frame between the buying stage and project completion.

Thus, overall we can say that a possession-ready house brings peace of mind complemented by the tax benefits on the home loans plus the capital profits on amount invested in case he plans to sell the house in a few years.