Nowadays most homebuyers especially new buyers are looking for a safe investment which is in surveyed properties, which were ready to move in. We tend to listen like such several stories wherein home-buyers had invested in under-construction projects almost 10 years ago, and there is still no visibility of getting possession of their homes. Hence, most of them purchase a ready property as it hedges the risk and gives the comfort of getting physical possession of the property. Also, since the development was ready, I had the opportunity to see the actual layout/quality of the apartment/amenities and make a decision based on that.
According to a survey conducted by a leading tech-based brokerage-free real estate platform, 78 percent of the buyers preferred to invest in ready-to-move-in properties when it came to home-buying activity in 2021.
“We have seen instances in the past wherein a home that is six months away from delivery has seen no construction activity. This has left home buyers stranded and disappointed. Also, if possession of the house gets delayed, buyers would end up paying EMIs as well as the rent at the same time. Hence, buyers prefer ready-to-move-in properties as there is a sense of security attached to such an investment.
Ready-to-move-in vs. under-construction properties
The appetite for ready-to-move-in homes has shot up post-pandemic with first-time home-buyers ditching rental living and veering towards home-ownership to get a sense of financial security, manage their work-from-home operations more efficiently, and also elevate their lifestyle.
“Home-buyers don’t want to chase a distant dream and want instant gratification, something which ready-to-move-in homes provide. Besides, under-construction properties carry the risk of construction delays and builder defaults, whereas a finished property negates that threat. Home-buyers can also save on paying GST and get tax benefits on home loans in ready-to-move-in properties. On the other hand, under-construction properties attract GST at the rate of five percent.
Further adding, “The biggest advantage of ready-to-move-in properties is that home-buyers can verify the quality of construction and match the features and amenities that are mentioned in the sales brochure before investing their hard-earned money. In an under-construction property, amenities and quality of construction are often compromised at the time of possession. Lastly, if the buyer does not plan on using it for self-use, s/he can let it out on rent and start earning an income right away.”
Due diligence is a must
A home purchase doesn’t happen more than once or twice for most buyers in India; after all, it is an expensive proposition. Hence, home-buyers must verify the title of the property and involve a lawyer in the process, since it is a very detailed exercise.
“Ask the developer for the approved drawings of the project, a copy of the IOD (intimation of disapproval), completion certificate, and a clear land title. Check the encumbrance certificate as it is proof that the property is free from any kind of dispute over its title and there is no loan or mortgage against it. Besides, an Occupancy Certificate (OC) certifies that a building has been completed and complied with the approved plan i.e. the sanction plan. Hence, only after receiving the OC should the home-buyer take possession of one’s flat.
Measure the carpet area of the Flat / House
“The purchaser should also measure the area of the flat to ascertain whether it matches the carpet area recorded by the developer in the agreement. The agreement for sale with the developer should also be duly stamped and registered. Finally, the purchaser should check the status of the amenities and facilities provided in the agreement.”
Eye on the future
According to experts, ready-to-move-in properties will continue to be popular considering the historically-low interest rates on home loans and the security that residential properties offer.
“The third wave will end up being a speed bump wherein things will slow down slightly, but the underlying positive sentiment towards real estate will not change. Also, ready-to-move-in properties will have an edge over under-construction projects as we are living in an end-user market and buyers want to move into their homes immediately.
“Previously, buyers of under-construction homes had one major advantage. Their patience and willingness to court construction risk were rewarded by notably lower prices. However, construction delays and stalled projects had a predictable outcome and risk-aversion set in, with demand tilted heavily towards ready properties. Besides, RTMI homes do not attract GST, and even the price gap between RTMI and UC homes has eroded substantially.