Make The Right Choice Between Resale and Under-Construction Property

Posted in Housing Articles By Sajhyadri Chattopadhyay-
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We all dream of the perfect home, whether it's a sprawling suburban bungalow or a postmodern city duplex. Yet, for those looking for budget options, the challenge arises in deciding between an under-construction property and a resale one. It's crucial to grasp the pros and cons of both these types of properties before sealing the deal. 

Pros of an Under-Construction Property

 

1. Lower Initial Investment:

Investing in an under-construction property carries the enticing advantage of a lower upfront cost. This can be especially appealing to first-time buyers or those seeking to diversify their investment portfolio. 

2. Customization Options: 

With under-construction properties, you can select finishes, layouts, and features to infuse your personal style into the property. It's like creating a masterpiece from a blank canvas! 

3. Potential Capital Appreciation: 

Purchasing an under-construction property can help you sow the seeds of future wealth. With the potential for the property's value to rise, you could get substantial returns on your investment. 

4. RERA Compliance: 

If a property has the Occupation Certificate (OC) as of May 1, 2017, it must be registered with the state's RERA. This ensures fair trade practices and provides you with essential property details. Plus, the RERA Appellate Tribunal grants you swift grievances redressal. 

5. Potential for Income: 

Under-construction properties can become a 2nd income source. Once completed, you can lease them out and earn rent. Ensure it appeals to potential tenants and work with a reputable developer. 

6. Easy Payment Plans: 

Developers often offer flexible payment plans for under-construction properties. This includes lenient installment or down payment options, making your dream home ownership more attainable. 

Cons of an Under-Construction Property

 

1. Uncertainty and Delays:

Delays can occur due to factors beyond your control, like weather or bureaucratic hurdles. Be prepared for potential setbacks when investing in under-construction properties. 

2. No Immediate Possession: 

If you're eager to move in or generate rental income swiftly, under-construction properties might not align with your goals, as the project's completion might face potential delays. 

3. Quality Concerns:

Be wary about the quality of an under-construction property, mainly the construction quality and materials used. It is advisable to assess the developer's reputation and seek professional inspection. 

4. Higher Risk: 

Instances of builders falling short of promises due to factors like inadequate funding and rising construction costs might occur. Investigate the builder's background before proceeding. 

5. GST Implication: 

Buying under-construction properties carries tax implications. GST rates vary, along with stamp duty and registration charges, raising your overall costs. 

6. Tax Implications: 

You can claim tax benefits for a home loan under Sections 80C, 24, and 80EE of the Income Tax Act, 1961. However, under-construction properties only grant tax benefits after possession. The tax advantages can be claimed for the interest paid during construction in five equal installments. 

Pros of a Resale Property

 

1. Affordable Prices: 

Resale properties often come at more budget-friendly prices compared to new ones, allowing for negotiation based on factors like interiors and the building's age. 

2. Immediate Possession:

Buying a resale house means you can avoid construction delays and move in right away. This offers a clear view of the property, allowing you to plan your furniture and decor accordingly. 

3. Quick Home Loans: 

Banks readily approve home loans for resale properties, involving minimal documentation, swift processing, and quick disbursals. 

Read More: 5 Tips to Get a Home Loan in India

4. No Legal Disputes: 

Purchasing a resale property shields you from legal disputes, which can sometimes plague under-construction projects. With a resale property, you know the exact number of clearances you need. 

5. Pre-Installed Amenities:

Many resale properties come with pre-installed amenities, such as electricity, gas, water, maintenance, and security services, helping you save money. 

6. Tax Benefits: 

Resale houses offer tax exemptions of up to ₹1 Lakh on the principal and up to ₹5 Lakhs on the interest of a home loan under Sections 80C and 24B of the I-T Act. Immediate possession allows you to benefit from these tax advantages right from your first home loan installment. 

Cons of a Resale Property

 

1. Lesser Scope for Structural Changes: 

Purchasing a resale property may limit your ability to make significant structural alterations as you’ll have to remove the existing furnishings first before installing new ones. 

2. May Have Fewer Amenities: 

Some resale properties may lack the amenities commonly found in newly constructed homes. Ensure that all the basic amenities are in good working order. 

3. Full Upfront Payment: 

Unlike new houses, where you can often negotiate installment plans, resale properties may demand the full upfront payment, which can be limiting for some buyers. 

4. Risk of Unmet Expectations: 

Assessing the condition and value of a resale property is crucial to avoid post-purchase disappointment. There's a risk that the property may not meet your expectations or require extensive renovations. 

5. Non-Eco-Friendly Features: 

Older resale properties may lack modern sustainability features, making it necessary to invest in costly upgrades for energy efficiency and environmental consciousness. 

6. Quality of Materials: 

The previous owner may have used cheaper materials to increase the property's value, which can pose quality concerns. or require upgrades to meet your desired standards. 

 

Choosing between under-construction and resale properties requires careful consideration. Each option comes with its own set of benefits and drawbacks. Knowing the pros and cons of both types of houses can make your financing decisions easier. For additional benefits like high loan amount, moderate interest rates, and easy repayment terms, choose a Home Loan from Bajaj Markets. 

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