I want to buy a home for self-use. Should I go for a ready-to-move home or a newly launched residential property? What all factors should I keep in mind while arriving at a final decision?
Ajay Garg, Mumbai
There is not a one-line straight answer to your question. It depends on various factors including your preferred location, budget, choice of unit configuration and area and lifestyle amenities. It is also to be taken into consideration whether you are getting a wide inventory across different projects to choose from and what kind of deal you are getting in terms of cash discounts and or incentives.
If one is getting a wide choice in terms of various parameters and requirements, going for a ready-to-move home may well be a wise decision due to various advantages associated with such homes. The foremost advantage of buying a ready-to-move home is that there is no development risk involved as you are getting property off the shelf. Moreover, unlike in the case of newly launched / under-construction property, one is saved from the burden of paying both the rent and the EMI. Even the home loan from banks and other financial institutions. comes easy. The buyer also enjoys the lower overall transaction cost as there is zero GST on ready homes. Another clear advantage of buying a ready-to-move home is that one can see the quality of construction and available amenities. As such unlike in under-construction homes, one is assured of getting what he is paying for. The ready-to-occupy homes come at a higher cost than newly launched homes and generally these homes do not come with discounts and deals. But these days there are deals/discounts available on ready-to-move homes as many developers are preferring to liquidate their inventory to generate/ improve their cash flows.
Newly launched or under-construction homes do have the risk of development/delivery defaults. But in these post-RERA days of regulation, the risk has considerably reduced as developers are fully regulated and are bound to follow various compliances aimed at protecting the interests of home buyers. Especially as there is a provision to keep 70% of home buyer’s money in an escrow account to ensure that it is spent only on the housing project for which it has been collected. Moreover, after 7 years of RERA coming into force, the real estate market has been cleaned up, with unprofessional and fly by night developers forced out. Today, the market has more professional and reliable developers. The post-RERA statistics also show that consumer complaints have drastically come down in under-construction projects. Moreover, today a lot of fresh inventory in the market is by big branded corporate developers with good business practices.
The under-construction homes have a clear cost arbitrage. Moreover, the newly launched homes provide modern living amenities with best contemporary lifestyle designs, meeting the aspirations of home buyers. The newly launched projects of reputed branded developers with a good track record of delivery, have high quality sustainable and modern lifestyle to offer. The under-construction homes come with easy payment plans and one can get discounts/ freebies as well. However, one has to bear higher transaction costs. Unlike ready-to-move homes where there is zero GST, the standard homes attract 4% GST while the GST levy on affordable homes is 1%.
So, considering all these pros and cons of newly launched/under-construction homes, one should take a final call considering whether you are getting the home within your budget, whether it fulfills all your requirements in terms of location, connectivity, social infra, civic facilities and amenities. And last but not the least, how safe is your investment.