Keen on or actually purchasing a property? Which property are you actually looking out to purchase – under construction or ready to move? Or else, which one really should you get? Well, it depends on several factors like your budget, your taste and many other things. Explore the market and locations and weigh the pros and cons of both under construction property as well as ready to move property.
Advantages of Under Construction Property
1) Ease of payment – You just have to make a down payment, which is usually around 20% of the total cost and the rest you can pay in easy instalments. Therefore, this option is best for those who do not have a big amount to pay at one go.
2) Availability of options – Under construction property offers a wider set of choices like location of your flat, floor of your choice, etc.
3) Scope of capital gains – There may or may not be a scope of enhancement in the price of your property. Well, this depends on the location of your property and the reputation of the builder as well.
Disadvantages of Under Construction Property
1) Delay in project completion – This is the most common problem related to the under construction property. There are barely any projects that are constructed on time. Projects are mainly delayed due to reasons like dispute in property, lack of funds with the builder, problems in land conversion, delay in getting permissions from government authorities and so on. Waiting time for project completion may even take 4-5 years. This can be frustrating for the purchaser, one because of the wait, second because of the additional cost and the uncertainty that comes with all. In this case, the purchaser will have to bear the burden of rent and EMIs both till they get possession. Moreover, you will not get any benefit in income tax till you get possession of the property.
2) Cost escalation – Generally, builders ask you to sign several important documents with terms and conditions written on it and the investors sign these documents without reading the entire material. One such condition is cost escalation. It is written that the builder can escalate the cost of property if there is enhancement in the cost of the project. Therefore, the additional burden falls on the shoulders of the purchaser. And except bearing this additional cost, he is often not left with any other choice.
3) Difference in what is promised and what is delivered – This is one of the most common complaints by purchasers. You see the sample flat and several promises are orally made to you by the builder. But finally when you get the possession, you find a lot of differences in what has been promised to you and what has actually been delivered to you. Examples of such differences are: difference in flooring, woodwork, cost of parking, maintenance charges, 24 hour power and water back-up, amenities like swimming pools and so on.
4) Difference in the quality – There are builders who cheat on the basis of quality of material used in the project. A sample flat may have good quality of construction material, wooden flooring, wood work, etc. but the quality in the project may have been compromised.
Advantages of Ready to Move Property
1) No difference in what you see and what you get – Unlike under construction properties, there are less chances of getting cheated over promised things.
2) Saves your rentals – By moving into a ready to move property, the best benefit is you will be able to save the money you were paying as rent.
3) Society of people – Unlike under construction property, you can check out the kind of crowd living in the area before putting your funds in the property.
Disadvantages of Ready to Move Property
1) Title of property – There are cases where a property has been sold thrice or so, on the same registry. However, an investigation through a proper channel can help you in ascertaining the truth.
2) Less scope of capital gains – As compared to under construction property, the chances for enhancement in the value of your ready to move property is less. For that reason, you may encounter certain problems in re-selling.
3) Documentation – Ready to move property requires more documentation as compared to under construction property while making the deals. The final registrations also cost dearly which is normally done on possession only.
4) Payment in one go – If you have not arranged for a home loan then the entire value for the property has to be paid to the seller. These payment includes cost of property, registration cost, car parking cost, club membership fees, etc
Now, weigh your options rationally and choose a property wisely.
Making the Choice
The choice depends on you risk appetite and motive to buy property. The people looking for property for their own use either residential or commercial, should opt for Ready to move properties. The payment in one go could also be done with Home loan or Property loan and as such they may also save on rentals. Moreover, they do not have to take any risk on Builder performance and could also check out the suitability of the ready accommodation with their requirements, even before making any payments. However, it definitely makes sense for investors to get into under construction property and take profits using the leveraging tool. Also with more advertising coming from the builder’s side, more and more people will be attracted leading to a price increase and increase in liquidity.
