Akshaya Tritiya: Which flats should you buy ready-to-move or under-construction?

Like every year, first time home buyers will be in a dilemma on which segment of flat to purchase for the upcoming Akshaya Tritiya festival which is considered to be an opportune time for making new property purchases.

Akshaya Tritiya is an Hindu festival which will be celebrated on April 28 this year.

Zeebiz.com managed to speak to some of the real estate experts and it's learned that there is a growing demand among home buyers this time preferring ready-to-move flats over under-construction ones for the upcoming festival on account of benefits offered by the former segment of housing. 

"This Akshaya Tritiya, ready-to-move flats will be more in demand as home buyers are now gradually opting for ready possession flats. Under-construction purchases lead to consumers bearing additional financial burden of paying rent for existing accommodation along  with home loan installments," Nahar Group's vice-chairperson Manju Yagnik told Zeebiz.com in an e-mail interview. 

According to a property dealer Sai Estate Consultants, the real estate investors at present are opting for ready possession flats due to rising instances of developers delaying possession of under-construction properties.

"It is an era of instant gratification, buyers today are looking for flats that are 90% ready. Due to the rise in defaulters in the city the buyers today are more and more conscious while buying a property. Hence, ready to move in options are the best as there is no risk attached to it," Sai Estate Consultants director Amit Wadhwani told Zeebiz.

Echoing similar views, Ajmera Realty director Dhaval Ajmera said, "The primary advantage of buying a possession-ready house is that consumer saves on rent as well as they don’t have to pay Pre-EMI interest for the same. Investors those who buy property purely for investment can give it out on rent and start gaining the returns right away."  

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"With an under-construction property, there is always the chance of delay in possession. Home buyers expect to get possession during such auspicious day like Akshaya tritiya so they opt for ready-to-move flats," Ajmera added. 

According to Wadhwani of Sai Estate Consultants,there are several advantages that the ready-to-move flats can provide as compared to that offered by under-construction flats, some of them are: 

1. Zero delivery risk

2. Tax benefits on home loans

3. Rental yield

4. Savings on service tax and VAT which amounts to savings upto 6% in most states  

Under-construction flats could come cheaper but carries performance risk considering dynamic nature of real estate compliances, Wadhwani added. 

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Therefore, to help you to understand the benefits of both segments of housing in much better way, we managed to have a indicative comparative analysis of the ready-to-move flat over under-constructions one.

If you are buying a ready-to-move flat which is priced Rs 50 lakh then you will have to make a down payment of Rs 10 lakh and have to take a home loan of Rs 40 lakh.

In case of under-construction flat which is priced at Rs 37.5 lakh you will have to make a down payment of Rs 10 lakh and have to take a home loan of Rs 28.7 lakh.

For the ready-to-move flat, you will have pay the service tax of Rs 50 lakh for the service tax rate at 3.09% while for the under-construction flat you will pay service tax of Rs 38.7 lakh. 

Your annual equated monthly installment (EMI) at 10% interest rate for 20 years will be Rs 4.63 lakh for the ready-to-move flat while the annual EMI for the under-construction flat will be Rs 3.31 lakh. 

The interest component of EMI for the ready-to-move flat will be Rs 3.97 lakh while that for the under-construction property will be Rs 2.84 lakh.

As far a annual rental outgo is concerned, it will be nil in case of ready-to-move flat while it will be Rs 1 lakh in case of under-construction property.

In ready-to-move flat, you will save tax of Rs 45,000 on the interest paid for the 30% tax bracket while there is nil tax saving for the under-construction flat. 

The net annual outgo in the first three years for the ready-to-move flat will be Rs 4.18 lakh while it will be Rs 4.31 lakh for the under-construction flat.

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