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Real Estate Buying / Property Buying

Real Estate Buying / Property Buying

  1. Which is better – Ready-To-Move-In or Under Construction Apartment?

There is an old proverb – ‘a bird in hand is worth two in the bush’ which goes very much true for today’s homebuyers who find themselves in a perplexing situation as to whether you should go for an under-construction apartment or a ready-to-move-in flat. According to real estate expert, the decision to choose between both the option largely depends on several factors. This is because both have their own merits and demerits.

“If we talk specifically about the real estate scenario in Delhi-NCR, home buyers are a bit cautious as there were some projects where buyers faced a disastrous response after investing their hard-earned money. This has resulted in a changed mindset of buyers where they prefer a ready-to-move-in property over an under-construction one”, says Sanjeev Kathuria, COO at CRC Group, in conversation with ABHISHEK PATHAK from The Indian Express.

2. How important is the location factor about buying RTM v/s buying UC property?

Home buyers must take into consideration the location of the ready-to-move-in property. In the case of a prominent location, decision making gets easy. The same goes for an under-construction property too. The reason is simple – a well-established location guarantees world-class social infrastructure like schools, hospitals, multiplexes, parks, commercial centers, offices, etc.

The best part of investing in an RTM property is that you have the privilege of knowing the surroundings like the nearby markets, people living in the neighborhood, etc. But, remember that comes at a big high cost.

Location matters for those who have plants to live in that chosen property for years to come. So, it can easily be said that it is certainly a big decision-making factor between RTM and UC properties.

3. Does construction quality matter between choosing an RTM and UC property?

I would say both have their pros and cons. Like, in an RTM property, you have the option to check the overall quality and build. For home buyers, it always feels more satisfied when they get to touch and feel the apartment they’re buying. The quality of the material used, viz. tiles, sanitary fittings (taps, washbasin, WC, counter), kitchen slab and sink, electrical switches, paint and polish, doors and handles, balcony grills, and, eventually, the overall orientation of the apartment is all predetermined and can be examined if it matches the buyer’s requirement and preferences.

Another benefit is that you can determine the cost of living in such a property such as monthly maintenance and other expenses. Keep in mind that you would have to pay just the EMI and not EMI+Rent.

If we talk about the other side, the UC property is not readily available to touch and feel and you won’t get the big picture. However, it provides the benefit of choosing newer 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 updated regarding 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 a 2-bedroom and Rs 20 lakh in a 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.

4. Which is better from an investment perspective?

In the case of an RTM apartment, you’re supposed to pay the entire amount in one go. In the UC apartment, you pay as per the construction-linked payment plan where you will pay EMI depending on the stage of construction. In this case, you get the chance to plan your finances better.

The possibility of appreciation, even if it is inflationary, is weak when you invest in an RTM apartment as the cost at which you buy has built that in. In UC property, there is a high likelihood that if the property is good and the location is sure to become a prime property in the coming years, the price of the property will go up. This will also make your investment worthwhile.

5. Are there any downsides of buying an RTM v/s buying US property?

There are several points that demand your careful attention when it comes to choosing between an RTM or a UC property. There are some weaknesses also associated with an RTM property. For example, most of the RTM properties available would be a minimum of 5-10 years old, which means there is a little scope for modernization and up-gradation of that specific area. On the other hand, a US property carries an advantage of the upgraded infrastructure and a high scope of modernization. This could be understood in terms of new schools, modernized hospitals, transportation, commercial and retail complexes, etc.

The most important thing with a UC property is the use of new and improved construction materials that means the property would be more durable in terms of looks and structure.

In UC property, the likelihood of getting an apartment of your choice is quite high, whereas in RTM property you may have limited options to select your preferred choice of the unit.

6. How RERA and GST impact a buyer’s decision for RTM v/s UC property?

With RERA and other compliances and checks set up by the government, UC property becomes a great opportunity. The RERA makes the developer liable for any infrastructure default or construction issue up to 5 years after possession, so the buyer feels more secure in case of any construction default.

Now when it comes to GST, it doesn’t apply for an RTM property which is another deciding factor between the two types of properties.

Besides RERA, the government is committed to spending 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 coming up in the next couple of years. New and upcoming UC properties in 21st century India will offer a plethora of opportunities to find your home nest in developments which is sure to give an elite appeal to the overall setting.

Keeping all the above-mentioned points in mind, it is advisable to evaluate each and every factor and then choose between a ready-to-move-in and an under-construction property.

Highlights from the interview :

  • RTM property ensures instant 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 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 attain higher appreciation over time.
  • You can start earning rentals as soon as you buy an RTM property.
  • 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.