8reasons whyshouldyouopt for areadytomovein house
ADVANTAGES Readytomovein houses reduce chances of getting duped, besides offering a host of other benefits
Thereisnodearthofsupplyinthe residential real estate market acrossIndia, bothintheready-tomove-in andunder-construction categories, thanksto lowsales in the last fewyears. According to a report by LiasesForas, a Mumbai-based real estate rating and research firm, at the end of first quarter of financial year 2018-19, therewere945,964unsoldunitsin 8 tier-I cities including Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai Metropolitan region (MMR), National Capital region (NCR) and Pune. Moreover, considering the sales volumeduringthequarter, it will take 41 months to clear these inventories, said the report.
If you are looking to buy a property now, you would get plenty of options. But there is merit in choosing a ready-tomove-in property.
NO RISK OF PROJECT DELAY
When you buy a ready- tomove-in house, the biggest risk that you eliminate is project delay. You are not required to wait for the completion of the apartmentandotheramenitiesin the project. WhiletheRealEstate (Regulation and Development) Act(RERA), 2016 hasbeenimplemented and developers are expected to adhere to timelines, most developers have listed a deadline of 5-6yearsfromnowon the website for their projects. Typically, the deadline that developers gave earlier was for three years. In other words, most developers have already made provision for project delay. Any penalty or compensation under RERAwillgetimplementedonly whenthedeveloperdoesnotmeet the mentioned deadlines.
BUY WHAT YOU SEE
Uncertainty about space, size of rooms, viewfromtheapartment, and quality of construction, available amenities and fixtures can be eliminated when you buy areadyto-move-inapartment.“It is importanttoconsiderthequality of theproject; aready-to-move in project allows one to closely inspect the structure andquality of finish,” saidAnshulJain, country head and managing director, Cushman & Wakefield India.
While buying an under-construction property, you make a decision based on sample flats, which may be misleading. “The major benefit (of buying a completed apartment) is that buyers are completely aware and know exactly what they are buying while inspecting the apartment. The decision of purchasing a ready-to-move-in property is not based onwhatisshowninasample flat or on mere layouts,” said RameshNair, chief executiveofficer andcountryhead, JLLIndia.
KNOW THE NEIGHBOURHOOD
It is essential to knowyourneighbourhoodandtheavailableinfrastructurearoundtheareasuchas nearbymarkets, commonpublic areas and parks, connectivity issues, amongothers.“Abuilding offering amenities, security, a good neighbourhood and social infrastructure in the vicinity tends to work better for buyers,” said Nair.
GET IMMEDIATE POSSESSION
Youcanstartlivingin aready-tomove-inhouseassoonasyoubuy it. “For those with an immediate requirement who are unable to afford both rent and EMIs, a ready-to-move-in home works well,” said Jain. Eventhose who can delay moving to their own house by a few months or years canneverbesureaboutthetimeline as the possession will be dependent onwhetherthedeveloperis able to execute the project on time—or worse—at all. For instance, homebuyersinprojects of Jaypee Group, Unitech Group and Amrapali Group, builders that are facing insolvency proceedings, have been left in the lurch.
GET RENTAL INCOME
If youdonotwanttomoveintothe house your are buying and are planning to buyit for investment purposes, you can start earning rentals as soon as you buy a ready-to-move-in property.
Rentalscanhelpyoupaysome part of the EMI if you have taken aloanandenhanceyourreturns. “It is also advisable to study the pricing andrental yield trends in the location and check for any upcoming infrastructure in the vicinity to gaugepossible capital appreciation in the future,” said Nair.
Goods and services tax (GST) of 12% is applicable on an underconstruction property. It is chargedoverandabovethepropertyvalue. Soifyouarebuyingan under-constructionpropertyvaluing₹60lakh, youwillhavetopay ₹7.2 lakh as GST. “Currently, no GST is applicable (on ready-tomove-inproperty) whichreduces the overall financial outflow,” said Jain.
IMMEDIATE TAX BENEFIT
According to the IncometaxAct, 1961, aborrowercanclaimdeduction under Section 80C against principal repayment of a home loan, whichhasanoveralllimitof ₹1.5 lakhandupto₹2lakhforpayment of interest under Section 24(b) for a self-acquired house.
However, there is a catch; these tax benefits can only be claimed after the construction of the property is complete andyou get the registration and ownership documents. So, no possession meansnotaxbenefitagainst home loan repayment. You are allowedtoclaimdeductiononthe interest paid onahomeloanduring the construction phaseinfive equal instalments post possession. But if the construction gets delayed andtakesmorethanfive years, the maximum deduction allowed on interest payment reduces to ₹30,000 instead of ₹2 lakh per annum. Moreover, the principal amount repaid during construction is not allowed for deduction at all.
IT’S MORE LIQUID
It is difficult to sell anunder-construction property, especially if its delivery is delayed or it’s locked in a legal battle. In many cases, developersdonotallowthe transfer of apartments until the project is complete. Even if they do, you may have to pay hefty transfer charges in the range of ₹200-500 per sq.ft or more, which can dent your gain.
Though there are benefits of buyingaready-to-move-in apartment,“they(homebuyers) might have to shell out a little more on such purchases compared to under-construction ones,” said Jain. However, whetheryoubuy an under-construction or readyto-move-inproperty, besuretodo yourduediligence regarding the quality of construction, location andsurroundinginfrastructure.
When you buy a readytomovein house, the biggest risk that you eliminate is project delay