Ready to move-in is Better or Under-construction House?

If you are looking to buy a house, you can buy either a ready-to-move-in home or an under construction house. Each has its advantages, and, of course, disadvantages as well.

Read on to understand the difference between ready-to-move-in and under-construction properties, so that you can figure out which one is better for your situation, whether you are looking for a flat or an independent house for sale in Hyderabad.

What is Meant by Ready-to-move-in Property?

A ready-to-move-in property is typically one where the construction is complete in all respects, and it is fully habitable. The buyer can get possession immediately after the sale deed is executed and people can move into the house. Some common amenities could be pending as the case may be, but the house itself is ready to move in.

A ready-to move-in house may be a new house or even a resale. That is to say, it could be a left-over unit from a newly constructed project, or a resale of old property. 

What is Meant by Under-construction Property?

An under-construction property refers to units of an under construction building. The construction is usually in the preliminary stages - the foundation is laid, or some part of the skeletal structure is ready, or maybe the construction status is a bit more advanced than that, as the case may be. It may take several months to a year or two or more before the buyer is given possession of the under construction house.

Advantages & Disadvantages of Ready-to-move-in Property

Advantages:

• The biggest advantage of a ready-to-move unit is that what you see is what you get.  You can check the quality of construction, the features, and other amenities, before you make a commitment or investment.  
• Ready-to-move-in houses are generally located in well developed areas with good social infrastructure. You will find schools, colleges, hospitals, cinema, restaurants, shops and malls in the surroundings. 
• Ready-to-move units come with no encumbrances.
• You don’t have a wait time and the anxiety or anticipation, and you can move in with immediate effect. 
• You don’t have to pay GST for ready-to-move-in property.
• If you have taken a home loan to buy a ready-to-move-in property, then you can avail benefits under section 24, 80EE and 80C of the Income Tax Act. 

Disadvantages:

• Inventory is limited with ready-to-move-in houses, and you don’t have a lot of variety to choose from. 
• There is an ageing factor associated with ready-to move-in properties. They may not necessarily be new. If it is used property, and if the previous owner has not maintained it well, you may have to invest in renovation and repairs. 
• You will not have RERA protection for property for which an Occupancy Certificate was issued before 1st May, 2016.

Advantages & Disadvantages of Under-construction Property

Advantages:

• If you are buying a property for investment purposes, then an under-construction house  is an ideal option. It may fetch high returns in the future after development of  social infrastructure. You can profit even if you sell it at the time of possession, as prices would have escalated by then.
• Under-construction properties are usually lower priced compared to ready-to-move-in homes, with developer incentives and discounts. 
• Risks are mitigated for buyers of under-construction projects  since the enactment of the RERA act in 2016.  Builders are obliged to follow timelines and deliver the project on time. Further, the Occupancy Certificate required by RERA rules ensures that the property has all the  civic infrastructure like water, sanitation, electricity, lifts,etc.
• If you have sold an existing property to buy an under-construction property, then you can save on capital gains tax if the construction is completed within three years from the sale of the property.

Disadvantages:

• What you get is not necessarily what you see in the sales brochure of an under-construction house. Features and amenities look prettier in visual representations on the website and marketing collateral, and you have to take it with a pinch of salt. Some features may even be compromised when the property is finally delivered to the buyer.
• Under-construction properties are usually located in underdeveloped or developing areas. It may take many years for the development of  social infrastructure around the area.  
• We can’t be sure about the timeline of possession for under-constructed property. It can get delayed because of funding issues or any litigation. If you are buying one for moving there yourself, then you may have to put up with some inconvenience in this regard. If you are living in a rented house, then you have to bear the costs of both the rent and the EMI till such time.
• In rare cases, an under-construction project can also get cancelled for whatever reason. If such a thing happens, you would have lost the time you spent waiting, in addition to the stress and anxiety associated with getting the refund from the developer.
• There is a 5% GST on purchase of under-construction properties. 
• If you have sold an existing property to buy an under-construction property, and the construction is delayed such that it takes longer than three years from sale of the property, then you would have to pay 20% capital gains tax along with cess and surcharge.
• Home loan tax benefits under section 24, 80EE and 80C of the Income Tax Act for buyers of under-construction property are applicable only after taking possession of the property.  However, the tax benefits on the interest paid during the construction period can be claimed in five equal instalments beginning from the year of possession.

What Should You Choose?

We can see that there are benefits with both ready-to-move-in and under-construction properties. There are also certain inconveniences associated with each. You need to weigh the pros and cons depending on your situation and your goals, and make the best decision whether you are looking to buy a flat or an independent house for sale in Hyderabad.