Thursday 22 December 2016

Here’s Why You Should Buy An Under-Construction Property.

While buying a property, there are several questions that crosses every home buyer’s mind. And at which construction stage to buying Property for sale in Bangalore is just one of them. Before we begin, let us tell you that there are three major stages at which you can buy a property. 

These include pre-launch, under-construction and ready-to-move-in. While, today, majority of the buyers prefer ready-to-move-in properties, there are still a few who invests at under-construction stage to gain monetary benefits.

Thus, here are a few more reasons that are most likely to motivate you to buy a property at this stage.

 Monetary Benefits: 

Under-construction property, in most of the cases, is relatively affordable when compared to ready-to-move-in property. While buying, you will have to pay the booking amount that is generally 20 per cent of the total property cost and rest can be paid in installments.

 More Options to Select From: In addition to the cost benefit, under-construction properties also lets you select the floor and unit of your choice.

 A good bet for Investors: Since prices are relatively less, one can fetch decent returns on investment.

 Scope for Customization: At this stage, there are a few developers who allow customisation (to some extent) as per buyer’s requirements.

Flexibility in Payment: In under-construction stage, usually a buyer gets a plethora of payment plan options. The popular ones include construction-linked plan, down payment plan, 30:70 scheme, 20:80 scheme, to name a few.

While there are several pros of buying an under-construction property, it is advisable to look at the cons as well.

 Delayed Possession: The problem of delayed possession has marred the real estate sector adversely. Hence, this is the biggest risk while investing at under-construction stage. And it can be really troublesome if you have opted for the home loan route as you will end up paying rent as well as EMIs, which can impact your financial situation. Moreover, in case of delayed possession, you should also be prepared for paying the EMIs without tax redemption.

 Additional Taxes: 



Service tax and VAT are two taxes that you need to pay while buying an under-construction property. For properties valued below Rs 1 crore, the effective rate of service tax comes up to 3.50 per cent (14 per cent on 25 per cent of property value), while for properties valued above Rs 1 crore, it is 4.2 per cent (14 per cent on 30 per cent of property value). 

VAT, on the other hand, varies from city to city. For instance, VAT is charged at around 5.5 per cent in Bangalore. However, if you are looking to buy a flat in Noida, Chennai or Kolkata, there is no VAT applicable.

 Exit Clauses: Developers usually have certain clauses pertaining to the exit. For instance, there could be a clause of no exit for a certain period or even if it is there, you will have to pay the transfer charges that could be very high.


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