Choosing between ready-to-move and the under-construction property is a common dilemma most of the buyers undergo while
deciding the property purchase. Although both options have their own pros and cons, under-construction and new launch projects
are considered as more-risky as they may suffer from risks, such as variances from the promised layout, plans, quality, delays, and
price escalations, etc.
Check your financial outlook and income stability
While ready-to-move properties can help you avoid uncertainty in terms of the timeline of delivery and quality of construction, it comes at a high premium and hefty upfront initial payment. As the COVID-19 crisis and the subsequent lockdown is expected to cost many jobs and bring salary cuts, the first question you need to ask yourself is that how vulnerable and prepared are you for such a condition? As an initial step, you should weigh-in your options based on your net take-home, spending, and savings, and look at the difference in terms of the value of the property (of ready-to move-vs under-construction). You must adjust your investment ticket size realistically taking into consideration that the overall economy is going down.
Understand that ready-to-move property do not attract GST
From April 1, 2019, the government has imposed 5% Goods and Services Tax (GST) on under-construction properties (which would be charged over and above the value of the property) as the purchase of under-construction property do not attract immediate registration charges and stamp duty. While the government collects both these charges from the sale of the ready-to-move property
immediately on the sale, for the under-construction property, these charges are incurred at the time of hand over of the property.
Under-construction properties are prone to delay
As the cash-starved developers were already struggling to finish their construction to comply with their timelines, this lock-down period has resulted in the halting of construction activities nationwide. This development is expected to lead to further delay of the under-construction projects across the country and can also result in an increased number of litigations and further delays of outputs.
Deferment of RERA penalty clause to affect under-construction properties
COVID-19 crisis has led to many RERA organizations, including Maharashtra and Karnataka, already has announced the extension of 3 months in completion deadline for realty projects. The union government has also advised states/UTs to extend the registration and completion date by six months (for all registered projects expiring on or after March 25) and an additional 3-month extension, if required. This move will let developers avoid any kind of penalty pay-out if their under-construction project is delayed by 6-9 months.
Check the financial status of developers
COVID-19 crisis is expected to lead to many causalities in terms of cash-starved developers as many were already facing a severe economic crunch before the crisis. However, with various initiatives from the government and courts are making developers more accountable and liable to the end-consumer in the past few years.
New project launches are likely to be less
With the markets witnessing a significant drop in the number of new launches as a result of the expected fall of overall residential demand across the top six cities, a lot more of the buyers are expected to make investments in ready-to-move-in inventories as they have fewer options of new launches.