Selecting the Best Investment in Pune – Buying Under Construction or Ready to Move Property

In cities like Pune you are spoilt for choice when it comes to home buying. There is no dearth of under construction property in Pune and so also ready possession properties in Pune. While deciding which type to pick is no easy task; what further adds to the dilemma are the multiple advantages and disadvantages that are inherently linked to under-construction homes and ready-to-move-in units. Since both these property types serve and suit different purposes and intents, it is imperative to know their pros and cons in details.

Here is a ready reckoner guide you through.

Under-Construction Property 2 bhk flats

Buying under-construction flats in Pune has become one of the easiest ways to realize the dream of owning a home. With easy finance options, anyone can own a space. However, it comes with certain risks as well, the most common being delayed possession.

Ready-to-Move-in Property

You have great options to explore ready possession flat in Pune, all across the city. With a range of flats from luxury to affordable 1 BHK or 2 BHK flats in Pune ready possession, you have them all. Due to the incessant delays in project deliveries in the last few years, home buyers have increasingly started preferring ready units.

Let’s have a look at the benefits and drawbacks associated with such properties.

Under-Construction Property 

Advantages: 

1. Easy on the Wallet

An under-construction property does not hurt a buyer’s pocket as much as a ready home does at the time of buying. If factors such as location, area, property type and builder are same, a ready-to-move house costs more than an under-construction one. The difference in pricing can vary from anywhere between 10–30%.

2. Higher Returns

It usually yields a higher return on investment due an extended window period between the buying stage and delivery timeline. If you sell the property closer to possession, you stand a good chance of earning a healthy appreciation on your capital investment.

3. RERA Advantage

Any property with Occupation Certificate as on 1 May, 2017, is mandated to be registered under their States’ RERA. Under-construction properties, therefore, will necessarily come under the ambit of RERA and are liable to comply to fair trade practices. Buyers can avail information regarding these properties on their respective State’s RERA website and even seek speedy grievance redressal by the Appellate Tribunal formed under RERA.

Disadvantages:

1. Higher Risk

There is an element of risk in an under-construction project. There have been cases when the builder has failed to deliver on time or in some severe cases, failed to deliver at all due to various reasons such as funding crunch, rise in the cost of construction materials and increase in lending rates, among others. It is, thus, imperative to do a detailed background check of the developer before investing in an under-construction project.

2. Discrepancy in The Final Product Layout/ Features

The most common issue with under-construction properties is not getting the promised product at the time of possession. Usual incongruities are: lesser usable area than promised changed layout and deficient amenities.

3. GST Implication

Buying an under-construction property attracts a GST of 5% of the total cost of property. Stamp duty and registration charges are paid separately, resulting in heavy expenditure on taxes. However, affordable homes priced under Rs 45 lakh attract 1 % GST of the total cost of property.

4. Tax Implications

Buyers usually finance their home purchase through loans which helps them save on some taxes too. But these are restricted to only ready-to-move-in properties, once the possession has been taken over by the buyer (up to Rs 2.5 lakh on the interest paid on a home loan for a self-occupied property). But the catch is, the tax exemption is applicable if the construction gets completed and the homeowner shifts in the house within three years of availing the home loan. If the construction is not completed within 3 years, tax benefits up to Rs 30,000 can only be claimed.

5. Long Term Capital Gains Tax

If you buy an under-construction property by selling off an already existing asset, its construction should be completed within 3 years from the sale of the property. If it takes longer then (LTCG) from the sold property are taxed at 20 percent, coupled with the payment of cess and surcharge.

Ready-to-Move-in Property

Advantages:

1. Immediate Availability

There is no waiting period, all you have to do is make the payment, go through all the documentation work and move in. So, there is no burden of paying your rent and the EMIs.

2. No Risk; You Get What You See

Unlike an under-construction unit, in case of a ready unit, you actually get what you have paid for. As the unit is ready for you to inspect before you finalize the purchase, there is no risk of discrepancies with the promised layout, features, and amenities, among other important things.

3. Free from GST Implication

Ready properties, however, are left out of the ambit of GST.

 Disadvantages:

1.  Costly

One of the most obvious drawbacks of buying a ready-to-move unit is the higher cost as compared to an under-construction property, since you pay upfront. And the cost difference could be anywhere between Rs 20-30 per cent.

2. Construction Quality

In an under-construction property, you have the option of evaluating the work progress and thus being aware of the quality of construction in terms of the materials used, strength of the foundations etc. However, in case of a ready unit, you cannot conduct any such checks.

3. Age of the Property

Unlike an under-construction property, buying a ready unit might not always ensure you a brand-new home. It might have been in up for sale for a long time.

4. Exclusion from RERA

Old ready units with Occupancy Certificate as on 1 May, 2016, are not mandated to be included under RERA. As a result, its promoters are not liable to make its information available on a public platform.

While flats in Pune city are slightly costly, Pune suburbs also offer a variety of ready possession flats in Talegaon, Pimple Saudagar, Varale, Hinjewadi, etc. An emerging employment hub, there are a host of under construction projects in Pune and ready to move flats in Pune too. What you pick is entirely based on your requirements, but make an informed choice.