Under-Construction or Ready to Move in Property - Which is better? - Home Loan Stories - Kotak Bank
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26 SEPTEMBER, 2019

What is better, buying an under-construction property or a ready-to-move-in one? The answer is not always simple. If you are also thinking the same, let us simplify it for you. While many experts debate about the best choice between them, the fact is both of them can be a good choice under specific circumstances. In order to go with the best option suited to you, you need to study certain aspects of both types of properties. So, here are the major pros and cons of under-construction and ready-to-move-in houses that could help you make the decision.

Pros of Under-construction property:

Less Expensive

One of the most remarkable benefits of buying an under-construction house is that such properties are less expensive than ready to move-in houses. Regardless of price deciding factors like locality, builder or property types, the prices of under-construction properties are generally lower than ready to move-in homes.

Getting an unused property

After the completion of construction, you get an entirely new house for yourself. You can decorate the way you want. Moreover, you can also customise your house by asking the developer. This will enable you to build your house as per your convenience. You can ask them to add special facilities such as flooring or room partitions when you are buying an under-construction property.

Higher returns

Due to the window period between the buying stage and delivery timeline, the prices of under-construction properties tend to increase. That’s why under-construction properties are generally known to yield higher returns on investment. So, there is a high chance to earn significant appreciation on your investment when you sell your house when it is closer to its possession.

Real Estate Regulatory Authority (RERA) Compliance

Indian Government has made it compulsory to register all projects post 1st May 2017 under RERA. RERA is aimed at protecting potential buyers from frauds or malpractices. Buyers can obtain all necessary updates regarding their under-construction properties from the respective State’s RERA website.

Cons of buying an under-construction property

Higher risk

Investing in under-construction properties are linked to higher risk. You might have seen or read the stories of builders that did not deliver projects in time. There are even cases where property developers failed to deliver the projects due to several reasons such as lack of funding. So, experts advise doing a proper background check of the financial health of your builder while buying under-construction houses.

Inconsistencies between promised and final product

There are many cases, where the buyers have reported major unpleasing differences between promised and final product at the time of possession.

Tax obligations

The tax benefits under section 24, 80EE and 80C of the Income Tax Act are not applied on the home loans taken to buy under-constriction properties till possession. So, you cannot claim the tax benefit until the developer hands over the property to you.

Pros of buying a ready-to-move house


This is one of the primary reasons why many people prefer to buy ready-made houses. As there is no waiting period, you can move in as soon as you get possession of your new home. All you need to do is making payments and completing the necessary documentation.


Unlike under-construction houses, you get to see the actual condition of the home. You can assess all the facilities as well as features in the ready-to-move-in flats before paying for them. There is no chance of inconsistencies with features and amenities.

Tax benefits

Ready-to-move houses are free from GST obligations.  Furthermore, you can apply for tax benefits in the same year when you purchase a property with the help of a home loan.However, developer will only get input credits on construction costs. Developers will pay GST on the cost of the project. Apartments may become costlier, due to GST compliances. The premium charged for ready apartments, might nullify any benefits from the GST.

Cons of Ready-to-move houses


The price of ready-to-move-in properties is higher than the price of under-construction properties.

The inability to inspect certain factors

Though you get to see the structure of the house, you cannot examine some critical factors like quality of construction material, foundation, etc. while purchasing a ready-to-move-in home.

Not protected by RERA

The housing units constructed before the incorporation of RERA are excluded from its practices. So, the builders of such properties are not obliged to publish information on public platforms.
Now that you know the pros and cons of both types of properties, you can arrive at a better judgement based on your comfort.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.