From homebuyers’ perspective, it matters to understand whether he or she should go for a ready-to-move-in (RTM) property or under-construction one as there are various implications attached to this decision.
The Real Estate (Regulation& Development) Act 2016, or RERA, is slated to be the most significant reform for homebuyers as well as the entire real estate sector and there have been several positive developments since its advent. Meanwhile, a number of aspects have undergone a significant change post the advent of RERA as well as the new GST regimen. From homebuyers’ perspective, it matters to understand whether he or she should go for a ready-to-move-in (RTM) property or under-construction one as there are various implications attached to this decision.
Under the new GST framework, the RTM properties do not attract GST. That means a property buyer can save 12% GST straightaway. At the same time, the cost of RTM properties is quite higher than the under-construction properties and it also requires instant funding which may not be possible for many people.
Of course, RTM properties offer instant fulfilment & gratification of getting the property in hand, but there is little room left for capital gains in case one wants to sell it off in the near term.
From the above discussion, we have understood that under-construction properties offer greater chances of capital gains and other benefits such as staggered payment plans and attractive deals.
The reason why homebuyers are wary of these properties is that under-construction projects suffer the risk of delayed possession, cancellations and bankruptcies. But this was about the pre-RERA period.
The projects launched after the implementation of RERA are better placed to be delivered in time. The developers are needed to fulfil an exhaustive list of conditions in order to get the project registered under RERA and this ensures the project is viable and completes within the set time-frame.
The Act has also addressed the issue of funding diversion through provision of escrow accounts to ensure that the money raised for a certain project is deployed in the same one and not diverted to other projects. There are several other such provisions that safeguard buyers as well as developers from the risks of under-construction properties. Thus, if anyone finds a RERA-registered project with a good deal, they should go for it.
Recognizing viable & feasible under-construction projects
Location is the first thing that matters when one goes in search of such viable under-construction projects. Locations with inventory unsold for a long time are not a good option to invest in even when the state of affairs is reflecting good reasons. Liveability quotient of these locations will go low until a market boost lands up there.
As long as well-capitalized developers are backing off the project, one should consider going for under-construction projects.
The rule of thumb for homebuyers is: go for projects registered under RERA. The projects which are launched after the advent of RERA are far better placed to get delivered. Though RTM properties offer advantages, millions of buyers won’t have funds and inclination to shift immediately and they would still like to go for under-construction properties. Just make sure that the project is duly registered under RERA. One can do this by visiting the official portal of the state RERA directly.
(By Sakshi Katiyal, CEO, Home and Soul)