Buying a home is one of the biggest financial decisions for most Indians. Among the options available, under-construction properties often attract buyers because of their lower entry prices and flexible payment plans. But these deals also come with risks — especially delays, regulatory hurdles, and financing complications.
Here’s a detailed look at the pros and cons of buying an under-construction property so you can decide wisely.
Pros of Buying an Under-Construction Property
1. Lower Prices and Easy Payment Plans
Under-construction homes are generally 10–30% cheaper than ready-to-move-in (RTM) units in the same locality.
Developers usually offer construction-linked payment plans, meaning you pay in instalments as the project progresses — easing the burden on your finances.
2. Higher Appreciation Potential
Since you’re buying at an early stage, your property value can appreciate significantly by the time it’s completed.
This makes under-construction projects a good investment if located in a fast-developing area.
3. Customization Options
Some builders allow changes in layout, interiors, or fittings during construction, letting you personalize your home.
Early buyers often get better unit choices (corner flats, higher floors, better views).
4. Newer Amenities and Infrastructure
Most new projects come with modern designs, energy efficiency, and upgraded amenities such as EV charging stations, smart security systems, and clubhouses — features not always found in older RTM properties.
Cons of Buying an Under-Construction Property
1. Project Delays
The biggest risk is construction delay, which can stretch for years.
Even after RERA (Real Estate Regulation and Development Act), delays still occur due to funding issues, regulatory approvals, or builder insolvency.
2. Uncertainty and Builder Risk
You’re buying something that doesn’t exist yet, relying entirely on the developer’s track record.
If the builder fails to deliver as promised — or goes bankrupt — your money could be stuck for a long time.
3. Double Financial Burden
Buyers often need to pay both rent and EMIs during construction.
If possession gets delayed, this burden can last longer than expected.
4. Limited Loan Disbursement
Banks release home loans in phases for under-construction projects.
Any delay in a construction milestone may stall your loan disbursal, affecting your financial planning.
5. Possible Changes in Layout or Amenities
Developers sometimes alter layouts or cancel promised amenities, citing technical or regulatory reasons — which can reduce the property’s value or usability.
How to Minimize Risks
✔ Check RERA Registration:
Ensure the project is listed on your state’s RERA portal. Review details like completion timelines, approvals, and litigation history.
✔ Verify Builder Reputation:
Research previous projects, delivery timelines, and customer feedback. Avoid developers with a history of delays or legal disputes.
✔ Review Payment Schedule:
Prefer construction-linked plans over time-based plans. That way, you only pay when actual progress happens.
✔ Include Delay Clauses in the Agreement:
Ensure your sale agreement mentions compensation terms for delayed possession.
✔ Inspect Legal Approvals:
Confirm clear land title, environment clearances, and construction permits before signing the deal.
Bottom Line
An under-construction property can be a great investment — but only if you do proper due diligence.
If your goal is long-term appreciation and you’re comfortable waiting, it’s a good option.
However, if you want immediate possession, stable cash flow, or zero delay risk, a ready-to-move-in property is safer.
Quick Summary Table
| Factor | Under-Construction Property | Ready-to-Move-In Property |
|---|---|---|
| Price | 10–30% lower | Higher |
| Possession | After 2–5 years | Immediate |
| Customization | Possible during construction | Limited |
| Appreciation Potential | Higher | Moderate |
| Risk of Delay | High | Nil |
| Legal Clarity | Must be verified | Usually clear |
| Loan Disbursement | Phased | One-time |
| Rental Income | Delayed | Immediate |
FAQs:
1. Is it safe to buy an under-construction property in India?
Yes, but only if you verify the project’s RERA registration, check the builder’s track record, and ensure all legal approvals are in place. Choosing reputed developers and RERA-compliant projects minimizes risk.
2. What are the main risks of buying an under-construction flat?
The biggest risks include project delays, builder insolvency, and changes in layout or amenities. These can lead to financial strain or legal complications if not managed carefully.
3. How can I protect myself from construction delays?
Opt for construction-linked payment plans and ensure your agreement includes penalty clauses for delays. Regularly check progress and report discrepancies to RERA if needed.
4. Do banks provide loans for under-construction properties?
Yes. Banks and housing finance companies offer home loans disbursed in stages (based on construction milestones). However, any delay in progress may pause loan disbursal.
5. Is GST applicable on under-construction properties?
Yes. GST (Goods and Services Tax) is applicable on under-construction homes, currently at 5% for non-affordable and 1% for affordable housing, without input tax credit.
Published on : 31st October
Published by : SMITA
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