8rea­sons whyshouldy­ouopt for aready­to­move­in house

AD­VAN­TAGES Ready­to­move­in houses re­duce chances of get­ting duped, be­sides of­fer­ing a host of other ben­e­fits

HT Estates - - FRONT PAGE - Ash­wini Ku­mar Sharma ash­wini.s@htlive.com

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.


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.


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.


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.


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.


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.


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 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

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