The decision to invest in real estate is crucial, and it often comes with a fundamental question: Should you buy a ready-to-move-in property or a pre-launch (under-construction) property? Well, both options have their pros and cons; understanding them better is essential for making an informed decision.
Advantages of ready-to-move-in properties:
Immediate ownership: In the case of a ready-to-move-in property, one can immediately move into the new house. You will immediately take possession of the house. There’s no waiting for construction to be completed, which is good for individuals who immediately need a place to live or rent.
GST exemption: Buyers do not pay any GST while buying a ready-to-move-in property. In some countries, ready-to-move-in properties and newly constructed properties are subject to GST and other taxes. An under-construction property, on the other hand, has 12% GST.
Tax benefits: Tax benefits for home loans can only be claimed after possession of the property. Under Section 80C of the Income Tax Law, the principle amount is deducted from income, and under Section 24B, interest is deducted. In a ready-to-move-in property, you can challenge tax exemption on your home loan on both principal and interest payments.
Rental income: If you plan to generate rental income from the property, you can start earning immediately after purchase. If you are not planning on living in the same property, renting it out is the best option.
No delay in construction: With fully constructed property, there’s no worry about construction delays, which is very common with real estate projects. This excludes the uncertainty associated with project timelines.
Physical Inspection Leverage: You always have the opportunity to physically inspect the property before purchase. This allows you to assess the condition of the property, verify the quality of construction, and ensure that it meets your expectations. Since the property is constructed, you have the leverage to see what you’re buying, hence the low risk of encountering construction-related issues or unexpected design flaws.
Resale ready: Ready-to-move properties are often easier to resell in the future, as they have a track record and a known condition. This can be important if you plan to sell the property later on.
Negotiation: In some cases, sellers of completed properties are sometimes open to price negotiation if they are motivated to sell. This provides opportunities for favourable pricing.
Instant Gratification: You get the satisfaction of owning and living in your new property immediately without having to wait for it to be built.
It’s important to note that while ready-to-move-in properties have certain advantages, they may come at a slightly higher price compared to under-construction or pre-launch properties. Additionally, the availability of such properties may vary depending on the local real estate market. When considering a ready-to-move property, it’s essential to conduct due diligence, including a thorough inspection, legal checks, and market research, to ensure that the property aligns with your needs and budget.
Things to consider while investing in ready-to-move-in properties:
In ready-to-move-in property, a buyer has certainty of what he will get as a complete structure. There is no risk of changes in the future. The construction quality of the project, infrastructure, and home loan eligibility can be known before the purchase. There is no risk of delays or extra-increasing costs. Choosing a ready-to-move-in property helps the buyer avoid the unnecessary expense of paying rent and the hustle of searching for perfect accommodation. The buyer should know about neighbours and the infrastructure in the vicinity of the house.
After the COVID-19 pandemic and lockdown, restrictions were implemented on construction. This led buyers to choose ready-to-move-in units as they fear delays in under-construction projects.
With RERA implementation, the registration granted for a project can be extended. During such delays, developers are not required to pay compensation for suspension.
Advantages of pre-launch property:
Lower initial cost and cost-effectiveness: Pre-launch properties are often priced lower than ready-to-move-in properties in the same area. As buyers have many options for under-construction properties, they cost less. With RERA implementation, developers are liable to deliver. Post-RERA, there is an added advantage of booking a unit in under-construction for the buyers.
Payment Flexibility: Developers typically offer flexible payment plans for pre-launch properties. These plans may allow buyers to spread out their payments over the construction period, making it easier to manage finances. In order to reserve an under-construction property, you must pay a booking fee of 10-15% or token money. You can pay EMIs to the bank in case the property is financed, or else you pay as per the construction plan.
Customization: By buying during the pre-launch phase, you have the chance to make changes to the property’s design, layout, and You can work with the developer to make certain customizations according to your taste and choices.
Desirable Location Choice: Pre-launch properties often become available in emerging or desirable neighborhoods. Buyers have the opportunity to secure a property in the desired location that is expected to appreciate in value over time.
Tax Benefits: In some regions, there are tax benefits associated with buying an under-construction or pre-launch property.
Discounts and offers: It is comparatively more difficult to get a discount on a ready-to-move-in property than on pre-launch properties. You will need to pay the amount as per market standards and depending on the amenities. However, in an under-construction project, there are several discounts and free offers, such as a modular kitchen, an air conditioner, free car parking, etc. You also have the chance of negotiating the final price.
It is essential to consider local conditions and market trends when evaluating pre-launch opportunities.
Things to consider while investing in a pre-launch property:
Tax exemption on the capital gains in pre-launch property is allowed on property sales that are held for more than two years. Pre-launch properties are usually located in the non-established part of the city; hence, the rise in price is good for future development. You should look at premium locations and future plans for the area. However, pre-launch property buyers have flexibility in their payments.
The biggest risk in pre-launch property is a delay in possession. They can also be more expensive, owing to expenses incurred on development charges, GST, etc. Tax exemption is allowed on the sale of property that is held for more than two years. If the developer delays ownership, the owner may have to pay capital gains tax.