Should You Buy Ready-To-Move-In or Under Construction Apartment?
Homebuyers are always perturbed by the decision to opt for either a ready-to-move-in or an under-construction apartment. The thumb rule for homebuyers in this regard is to weigh their options carefully and think from the prospect of longevity.
“The residential Real Estate Buyer seems to be haunted with this “BIG QUESTION”. Every homebuyer is in a state of confusion on whether to buy a Ready-to-move-in (RTM) property v/s a property Under Construction (UC). There have been a host of defaults and delays in the last few years due to which the customer is reluctant to buy an UC property. As a result, sometimes he lands up compromising his selection on RTM property”, says Sanjeev Kathuria, COO at CRC Group, in conversation with ABHISHEK PATHAK from The Indian Express.
How important is the location factor with regard to buying RTM v/s buying UC property?
Buyers should take cognisance of the location of the RTM. If the location is well-established, it suits the choice. This is also true for UC apartment. A good location ensures better social infrastructure around the apartment like schools, hospitals, commercial establishments, business offices, etc. Most importantly, RTM comes with an established neighbourhood, where you can always check the profile of the people residing in the community. Available infrastructure around the area such as nearby markets, common public areas and parks, connectivity issues, is a boon for RTM buyers.
Remember, you have to live in this property not just for now but for years to come; hence, the location is super important and becomes a major deciding factor between RTM and UC properties.
What are the advantages of buying RTM v/s buying UC property with regard to quality of Construction and other provided services?
The infrastructure of RTM property can be inspected and audited. Touch and Feel of the apartment is possible. The quality of the material used, viz. tiles, sanitary fittings (taps, wash basin, WC, counter), kitchen slab and sink, electrical switches, paint and polish, doors and handles, balcony grills and, finally, the facing of the apartment is all predetermined and can be audited if it suits the choice. Facility or complex maintenance can be inspected. Quality of security guards and maintenance staff can be assessed. Cost of living in the said area can be understood and evaluated whether it fits the budget or not. Most importantly, you pay EMI alone and not EMI and RENT.
On the other hand, the UC property is not physically ready to see; however, it provides the advantage of new technology and better consultants working on the project. This enables UC properties to have more carpet area in terms of size, and in being more efficient in terms of technology. Size factor also plays a major role in your selection, i.e., you can buy compact 2-bedroom apartments in 900-1000 sq.ft. and 3 bedrooms in 1300-1400 sq.ft. Similar units are made in 2-bedroom configuration: 1100 sq.ft. and in 3-bedroom: 1800 sq.ft. which translates to an extra spend of Rs 10 lakh in 2-bedroom and Rs 20 lakh in 3-bedroom set, considering a price of Rs 5000/sq. ft. No point buying a 2-bedroom apartment in 1100 sq. ft., when it can be done in 900 sq. ft., or 3-bedroom set in 1800 sq.ft., when it can be done in 1400 sq. ft.
Which of them offers better investment opportunities to buyers?
For RTM apartment, complete payment is to be made in one go. In UC apartment, you pay as per construction-linked payment plan where you will pay EMI as per the stage of construction. In this case, you can plan your finances better.
The possibility of appreciation, even if it is inflationary, is lost when you buy RTM apartment as the cost at which you buy has built that in. In UC property, there are good chances that if the property is good and the location is bound to become prime in future, the price of the property will go up. This will also make your investment worthwhile.
What are the other downsides of buying a RTM v/s buying UC property?
There are some other points that can be considered before taking decision on buying RTM v/s UC property.
Any location which has RTM apartments available would be at least 5-10 years old, hence chances of upliftment and modernization of that particular area are less and sometimes negligible. The location of the UC apartment comes with the latest infrastructure and scope of modernization. The new areas come with modern social infrastructure like new schools, hospitals, transportation facilities, commercial and retail establishments, etc. UC property can also be used as a savings instrument, meaning you can invest a portion of your earnings over a period of time and build a corpus. Also, new and better construction materials with more durability and better finish keep coming into the market that help in more upgraded and improved construction of UC properties.
In UC property, the chances of finding an apartment of your preferred choice are very high, whereas in RTM property you have limited options to select your preferred choice of the unit.
How RERA and GST impact buyer’s decision for RTM v/s UC property?
With RERA and other compliances and checks set up by the government, UC property translates into a great opportunity. In RERA, the developer is liable for any infrastructure default or construction issue up to 5 years after possession, so buyer feels more secure in case there’s some of construction default.
Taking GST factor into consideration, GST for RTM property is not applicable and is another deciding factor between the two types of properties.
In addition to RERA, the government has promised to spend an additional Rs 100 lakh crore on infrastructure in the next 5 years. We will see more highways, metro, fast trains, seaways and ports and also airports come up in the next couple of years. New and upcoming UC properties in modern India will offer many opportunities to find your home nest in developments which give an international feel. Hence, it is advisable to evaluate both cases with due diligence and take a calculated decision in this regard.
Highlights from the interview
• RTM property ensures immediate availability
• UC properties offer higher capital gains and other attractive deals
• In RTM property, you get what you see.
• RTM properties are exempt from the ambit of GST.
• UC properties are cheaper than RTM ones, with the cost difference being between 20-30%.
• RTM property eliminates the biggest risk of project delay and possession delays.
• UC properties offer brand new features and amenities
• Inspection of structure and quality of finish is possible in RTM properties.
• UC properties give higher price point over a period of time.
• You can start earning rentals as soon as you buy a RTM property.
• Location is a deciding factor between UC and RTM properties.
• In RTM property, you pay EMI alone and not EMI and RENT unlike in UC property.
• In UC property, you will pay lesser EMI until the property gets ready, whereas in RTM property you will pay the complete EMI from the day of purchase.