Updated: Mar 28, 2022, 15:05 ISTShare:
The purpose for which a residential property is purchased is crucial, when it comes to deciding between an under-construction, ready to move (new property) or a resale property. You may buy it for occupancy as an end-user or for investment purposes or to keep it as a second home.
What factors does one need to consider when choosing between an under-construction vs ready-to-move-in vs resale property?
Experts suggest that for under-construction properties, the buyer should ensure that the developer has taken all the approvals, that the project should be RERA-registered and that it is being developed as per the development plan. There should be no financial stress on the project, the developer should have a good track record and the capability to deliver the project.
In case of ready-to-move-in projects, the buyer should ensure that all the property papers and approvals are in place and there is no financial liability on the project. The amenities and utilities promised by the developer should be in place and functional.
While buying a resale property, the buyer should check the age of the property, repair costs (if any) and encumbrances related to electricity, water, society bills, etc.
|
Resale |
Under-construction |
Ready-to-move-in |
|
|
Price |
At market price or lower, if the seller is needy. |
Discount over market rate. |
At a premium over the market rate. |
|
Risk level |
Secure |
Risky |
Secure |
|
Possession delay |
No |
Possible |
No |
|
Social infrastructure |
Present in most cases. |
May not be present. |
Present in most cases. |
|
Physical infrastructure |
Present in most cases. |
May not be present. |
Present in most cases. |
|
Return on investment |
Low |
High |
Moderate |
|
Suitability |
End-use |
Investment |
End-use/Investment |
|
Loan facility |
Available |
Available |
Available |
|
Possession time |
Immediate |
Depends on project completion |
Immediate |
Who should buy under-construction properties?
An investor would always invest in an under-priced project, with an upside potential. During construction, the developers start with competitive pricing to attract buyers. As the project matures in construction and occupancy, the demand rises, leading to an increase in prices.
Investing in a resale property could be a costly affair because the existing buyer would have already paid stamp duty on it and the investor has to again pay the stamp duty for such a property. So, the cost of the ownership escalates by the value of its stamp duty. The existing property owner may also add some premium on the price of the property, increasing the purchase cost.
For example, if the stamp duty and the registration cost at a particular location is 8%. So, each time a property changes hands from one owner to another, the price will increase by at least 8% due to the stamp duty and registration thereof.
Who should buy ready-to-move-in properties?
People who are living on rent may find it challenging to manage the EMI and rental outgo, at the same time. The situation may become more complicated, if the possession of the property is delayed. Hence, such buyers should prefer ready-to-move-in properties over under-construction properties.
A ready-to-move-in property allows the buyer to understand the quality of construction, infrastructure support and locality. Moreover, the end-user can immediately leave the rental home, to save on the rental money. With a ready-to-move-in property, a buyer can also have a look and feel of the property and can compare it with other projects more effectively.
Who should buy a resale property?
Experts maintain that resale properties are an attractive proposition for buyers (investors, first-time or otherwise) who intend to stay in a well-established location, lay more emphasis on the available utilities than price appreciation, prefer assured rental income, etc. Further, in the case of a sluggish market scenario, the buyer can take the benefit of a good bargain with the seller.
For example, a buyer who wants to live close to one’s office, but cannot find any suitable under-construction or ready-to-move-in property, can explore resale properties. Resale properties, hence, are a good option for people who have specific preferences, vis-à-vis location, amenities, community type, etc.
In conclusion, if you are living on rent, you should consider resale or ready-to-move in properties depending on the location and availability. You can also have a look and feel of the property, amenities, community type, etc. and can compare it with other projects, more effectively.
If you are an investor or looking for a second-hand property, you can always invest in an under-priced project with an upside potential, since developers start with competitive pricing to attract the buyers. As the project matures in construction and occupancy, the demand rises, leading to an increase in the overall prices.
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