We often have to make choices in life: go left or right? Chocolate or butterscotch? Game of Thrones or House of Cards? A slightly more important choice you may have to make is between a home that is ready for possession and one that is under construction. Making the right choice, in this case, can be tricky. But in the end, it all boils down to the number of benefits you can get.
It is true that possession-ready houses tend to have higher prices than under-construction ones. But, with the implementation of GST and RERA, the situation is changing. Many buyers are opting for properties that are complete. Here are the reasons behind this decision:
Advantages of buying a ready-for-possession house:
1) No risk of delays
In the real estate sector, various factors could cause a delay in the delivery of the project. Buyers may have to wait from six months to six years for their house to be ready. For most people, buying a house is a dream. And that dream materialises quicker if you buy a ready-to-move-in home.
2) Decreased costs
A delay in construction can cost buyers a lot of money. For instance, if you take a loan to buy a new house, you will end up paying the EMIs, along with the monthly rent for the house in which you are currently staying. By buying a ready-to-possess home, you can avoid this additional expense and hassle.
3) Rental income
Many people buy houses as a second property to start earning rent. If you buy a house that is ready to move into, you can start earning a rental income from it at once. In contrast, if you buy a property that is under construction, your investment is locked in a project that may not generate any money for a few years.
GST and RERA: The big impac
Two other major factors have changed the real estate sector in the country. These are the Goods and Services Tax (GST) and the Real Estate Regulation Act (RERA).
From 1 July 2017, GST replaced the many indirect taxes as a single-tax regime in all sectors, including real estate. This has resulted in an increase in the tax rate from 4.5 – 5.5% to 18% in this sector1. With various deductions, the effective rate comes to 12%. But this rate applies only to the projects that are under construction. You do not have to pay GST on ready-to-possess properties with an occupancy certificate from a municipal body. This brings down the cost of a completed project in a big way, as compared to a project that is under construction, resulting in big savings for buyers.