Things to check before buying an under-construction property

Buying a house under construction can be different from purchasing a ready-to-move house that has been fully set up. Sometimes, there can be a case of delay due to various factors. Legal issues can also crop up, and you may have to wait for months (sometimes even years) before you can move into your dream abode. 

However, a simple home buying guide can help you pick the right house without having to go through unnecessary hassles. So, here are some things to check before buying an under-construction flat:

• Consider the price factor:

An under-construction project can be bought at relatively affordable prices than move-in property. Real estate projects that are being constructed are launched at competitive prices and can help you save a lot of money. This can be an excellent option for home buyers who do not need to shift immediately. If you have some time on hand, a house under construction may offer you a better deal and help in saving money. So, compare the costs and avail of the most competitive price. 

Also Read: Benefits Of Buying A Property In A Woman's Name

• Look for a flexible payment plan:

Buying an under-construction house offers you the advantage of paying in instalments. Realtors usually charge a booking amount of approximately 5% of the value of the home. The remaining payments can be made over the years, depending on how quickly the house is constructed. This can offer you more flexibility and ease the financial burden. So, pay attention to the payment plan offered by the developer.

• Check for more choice and customisation options:

If you buy a move-in property, you would have to spend money on its renovation or reconstruction to make any changes to the layout. However, an under-construction property can be customised as per your needs. For instance, you can pick a flat that offers a good view. You can also customise your home according to Vaastu if that is an important concern. There is a lot more room for creativity and choice. 

• Understand the associated costs:

A house under construction can present some hidden costs that are generally added over and above the price. A service tax of 14.5% is levied on the cost of construction of the house. This tax is levied by the Central Government and does not take into account the land price. In addition to this, state governments charge VAT (value-added tax). The percentage of VAT can differ from state to state, so you must check the rate in your state to be sure. Other taxes, like GST (goods and services tax) at the rate of 12%, are also added to the cost of the house. Moreover, you will also be charged stamp duty and registration charges, as in the case of ready-to-move properties. However, the stamp duty and registration charges are generally lower for under construction houses. This is primarily because the value of such properties is relatively low. But the precise values can differ for each state. 

Also Read: Buying A Home In Your Hometown Or In A Big City: What Makes Financial Sense?

• Account for unexpected delays:

There can also be some causes of concern when buying an under-construction house. The biggest issue can be project delays. Sometimes, construction can stall due to legal hassles or lack of approvals. So, be cautious when picking a builder. It helps to look at their track record. See how long it took for them to construct their previous projects. You should also check if the land has the mandatory approvals and documents like registration under RERA (Real Estate Regulatory Authority), environmental clearance, agricultural land clearance, etc. Be aware of your rights under the Consumer Protection Act; this way, you can benefit from knowing the legal redressal options in case of any disputes. 

Also Read: 9 Important Documents You Will Need While Buying A House

Last words

​Buying a house under construction can have many advantages, but there are some cons as well. So, if you intend to buy a flat under construction, do check the past performance of the builder and perform a thorough site inspection before finalising the deal. This can safeguard you and your future financially and ensure that you get a fair deal for your money.