Is Investing in Under-Construction Flats Beneficial?

May 2024

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Everyone wants a place that they can call their own, and they want it as soon as possible. But sometimes, the outcome of waiting for something so special, like a dream house, can be a feeling of unmatched fulfilment.

Under-construction flats are such options for investors and buyers. These types of properties are becoming the first preference of many investors and buyers who can wait for some time to get ownership.

But the question is, ‘Is buying under-construction property beneficial in the long term?’ The below articles shall discuss this in detail.

Advantages of Investing in an Under-Construction Flat

When making a purchase decision, home buyers typically have a certain checklist – the size of the flat, preferred locality, budget, builder’s reputation, ease of purchase and the urgency of ownership. For buyers willing to wait to get possession, an under-construction property can be the ideal choice.

1. A Fair Deal
   The rising price of real estate is known to every investor and buyer, and if they are planning to buy a ready-to-move property, then the prices are typically higher. However, in the case of an under-construction apartment, investors or buyers can crack a fair deal.
   
   Often, real estate builders offer great deals on under-construction flats in order to attract more buyers. It is excellent for investors and buyers who want to get a property at a compelling price range.


2. Adjustable Payment Options
   With under-construction flats, investors and buyers get flexible payment options. They can pay a part of the total price of the property at the beginning and make the rest of the payments throughout the construction process of the property.
   
   But that is not the case in Ready To Move In (RTMI) properties. Usually, this flexibility is not available for fully constructed properties, and the buyer must pay the complete transaction amount within a short period.
   
   Under-construction flats are also an excellent option for buyers with budget constraints or who are short of funds to outright purchase RTMIs.


3. Discounts and Deals
   Other than flexibility in payment options, the builders of under-construction flats provide several discounts and schemes to investors and buyers. As the property is still under construction, builders provide schemes such as receiving X% per cent discount on Y amount of prepayment, gold coins, free home appliances, etc.
   
   However, in ready-to-move properties, the final price includes all the costs and service prices. Thus, builders usually do not offer any lucrative deals.


4. Great Return on Investment
   Most property buyers choose to buy real estate as an investment. Buying an under-construction building is an ideal choice for these buyers. These properties are often sold at lower prices than their after-constructed price, which means investors can expect a significant rise in the rates of the property even before the flat is completely ready.


5. Futuristic Designs
   Under-construction buildings are built to sustain in future too. Thus, their overall construction planning and execution are done to build a future-friendly home for the buyers. Such as including amenities and features that already constructed properties might not include.


6. Customer Customisations
   A buyer always aspires to have customised interiors in their homes. Several property builders provide the option of customisation of their under-construction properties, for example, marbles of customers’ choice, painting the walls differently or making wardrobes according to buyers’ needs etc. But no such choice is given to buyers in the ready-to-move-in homes.


7. Less Cost of Maintenance
   As mentioned earlier, an under-construction building is made keeping all the aspects of construction in mind. It means when the buyers are ready to move into their homes, they do not have concerns regarding the regular maintenance.


8. Tax Benefits
   With under-construction property, buyers and investors can avail of several tax deductions and waivers. Such as 2 lakh rupees of waiver per financial year under Section 24 B under the Income Tax Act 1961 for buying an under-construction property.
   
   Additionally, buyers can also get deductions on interests of loans taken for property and there are other deductions under Section 80C of Income Tax.

Summing Up
Purchasing a property is a significant life decision that needs to be taken after lots of consideration and research. Whether one buys a property in an under-construction project or a ready-to-move one, the decision should fulfil all the requirements.

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Source: investopedia.com

Also Read: What Are the 8 Effective Tips to Buy a House in India?

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