Under Construction vs Ready to Move Property – Which is better ?

POSTED BY Jagoinvestor ON March 12, 2012 COMMENTS (191)

There is absolutely no confusion in saying that everyone wants to buy a house, a dream home which they can call their own. However, one big confusion among buyers is whether to buy an Under-Construction Property or a Ready to move in Property. Each of these options has its own pros and cons and it is extremely important to be aware about the advantages and disadvantages of Under construction and Ready to move property. Lets look at them:

Under Construction vs Ready to move in properties

Negative Points of Under Construction Property

1. Delay in project & Dispute of the Land & Permissions

If you know of any project which was delivered on the exact day that it was promised, its rare! Delay in the project for various reasons is one of the top most issue with under construction properties. On an average 2 years is the deadline given by the builders, but it gets delayed and further delayed most of the times. 2 yrs can turn out to be 4 or 5 yrs of wait in a lot of cases and this adds to the frustration of buyers.

This delay is caused mainly because of the dispute on the land, cash crunch and most of the times incomplete permissions from authorities. Builders start the construction after obtaining most of the required and most important permissions, but at times there might be few permissions which are still going on, but builders start the construction. So it becomes very important thing for a buyer to check all the required permissions and the ownership details of the lands. This is very true for small builders especially.

One important point to note is that even though the house is delayed by just 1-2 yrs and finally comes in your hand, but in a lot of cases promised amenities are given after a long period and some people are still waiting for that swimming pool which was promised in 2001 .

2. You don’t get what you see

The biggest issue, I repeat – the biggest issue of under construction properties is that you never get what you are promised or have seen as sample flat . Sample flats are built-in a way and decorated in a manner that your heart will met down and you will sell your self to grab that opportunity, and over years you will build so much expectations from your under construction house. But when you really get the possession, you will realise that a lot of things are not up to the mark and not as per the promise done. Sometimes layouts are changed & you may not like the new one.

Another issue is over promise in many things. For example – Some builders give false promises that Municipal Corporation Water Supply will be made available in the society after 3-6 months of completion of construction of society, but some builders never fulfill this problem once all the flats in the Society are sold. The builder’s objective of selling the flats is fulfilled and then he is not interested in the problems that people face. A lot of times oral promises are done on many things like cost of parking, extra facilities like swimming pool, gym etc and then they are not fulfilled. And at the end, you are in a situation where you can’t do anything. Either take it or fight a case against the builder and many hassles that come along. Hence please never agree to any oral agreements under any circumstances – Always insist on written agreements with clear delivery milestones etc. One bad experience from T. Ashok is like this

The builder did not construct shelfs and almirahs as promised. He left the house only with walls and lafts. So, I had spent more than 2 lacks for wooden works in kitchen and two bed rooms. Really that was a big burden for me apart from loan amount. So, here after anybody buying house, must ask the builder to mention all in agreements like painting, shelfs, windows, doors,etc., otherwise they may suffer like me.

3. Quality of work may be compromised

Another issue is the quality of work that gets done. The quality of the construction material used, Doors and windows fillings can be compromised with, electrical sockets and switches can be of cheap quality, plumbing can go horribly wrong and even the facilities like parking space, children playing area and other amenities might be below the mark or what you expected and when you complain about all this, there will be all sort of explanations like losses in other schemes, cash flow issues and the cost increase by builders and a new series of promises that it will be done soon. For an example watch this video experience for bad quality of construction and unkept promise by Unitech

4. Income tax claim is headache unless you get the possession certificate

I hope you knew that you can avail for tax benefits only after you get the possession of the house. Saving tax on the EMI’s is one of the big reason why many people plan their house buying, only to realise later that they never thought about this aspect. So if you are going to buy under construction property , be ready to pay rent + EMI and not getting any tax benefit unless you get the possession certificate, and incase the construction gets delayed by few months to 1-2 years, it will be frustrating.

Positive Points of Under Construction Property

1. You start paying slowly & conveniently

The best part of Under construction properties is that it is affordable for most of the people through a home loan. When I say “affordable”, all I mean is that from payment perspective life is easy. You make a down-payment which is generally 20% of the property price and then start making the monthly EMI’s each month and this is how a lot of people are able to own the house. Later after few years , a lot of people feel comfortable as their salaries go up, but the EMI’s value is very much the same. Even if one is not taking a home loan, they can pay the money in parts as it can be construction linked payment.

2. Choices of floor or location are much wider

There are various locations where new projects come up, so the choice in terms of location or which floor you want are generally high. If you are not happy with 12th floor, you can pay more and take the 3rd floor, but in case of ready to move apartments, if 12th is available, then that’s all you have. No choice!

3. Good scope of Price Increase

Under Construction properties are generally in the outer area’s or the non-core part of the city and hence the price appreciation due to future development is good in under construction properties. However this is not true in each and every case. You still have to look at the location and future plans around that area. But the point is that compared to ready to move in apartments, under construction properties have more potential for price increase.

Negatives Points of Ready to Move Property

1. A lot of legal work and documentation

Generally there is a lot of legal work and documentation required in case of Ready to move properties compared to Under construction, because there are no fresh documentation, but a lot of “transfer” documentation.

2. You need to arrange all the money in one shot for down payment, registration etc

In case of Ready to move in properties, all the payment has to be made upfront and all at one time. There is no stages in payment like you have in Under construction properties. So even if you are buying it on home loan, you have to pay all the down-payment, registration charges, stamp duty etc all at one go.

3. Chances of getting duped!

In case of ready to move in properties, there is a big risk of getting duped. You have to make sure that you investigate things very properly. There are cases where same property has been sold to more than 1 person. Make sure you hire a good real estate consultant or a good lawyer who can study the documents well and the fine prints.

4. Inflated Price already

The price appreciation in case of Ready to move properties is generally lower than Under Construction properties from percentage increase point of view (not absolute increase). Most probably the ready to move in properties which are much older than 5 yrs, a lot of development around them has already happened and the price appreciation has taken place for most what is deserves.

Positives Points of Ready to Move Property

1. You buy what you see

When you buy Ready to move properties, you exactly get what you have seen. There is no chances of getting duped at least in those things which you can feel and experience. This is not in the case of Under construction properties , because you never see the actual thing , you see samples or the “projections”. It’s a good idea to talk to the people around or the neighbors about the water/electricity and other things and take their feedback.

2. Immediate relief from Rent & travelling cost

A lot of people who are paying very high rent or travelling very far for their work tend to buy the ready to move houses because they want immediate relief from the high rent or travel cost and one can get it in ready to move properties.

3. You can know what kind of people live around you

This is one big advantage of ready to move houses. You can already see who your neighbours are, what community they belong to , what income level they have and if you would like to be with them or not . In case of under construction houses , you are never sure what kind of people will be around you.


So the final conclusion from various experience is that if you want to buy the house from investment point of view, then buying an under construction house makes sense. However if its mostly from living purpose and you want to consume it for your own purpose, then buying a ready to move house makes more sense. Also all the pros and cons discussed can vary from case to case and the points discussed here are based on a general information and feedback.

Can you share what are your experiences and pros and cons of under construction vs ready to move property !

191 replies on this article “Under Construction vs Ready to Move Property – Which is better ?”

  1. Saju says:

    I have burnt my hands and lost my capital in investing in under construction housing — Ready to move in is way, way better.

    1. Thanks for your comment Saju

  2. Mukesh says:

    Hi Manish,

    Need some guidance on the Ready to move retail shop/commercial property. Does service tax apply on it even if its ready to move.


    1. Hi Mukesh

      Thanks for asking your question. However we do not have answer to your question.


  3. Marimuthu says:

    Need some info on Tranche EMI option and accelerated Repayment scheme. Not able to find much details about the same.

    I have identified an under construction project and looking for Loan of 30L. After analysing related things it seems like PRE-EMI option is not useful for me to go with. My requirement is like I want to reduce my Principle amount after some time which is not possible with all banks as in initial terms majority of Payment will go towards Interest and also in many banks I have to pay just Interest for 1st 3 years. So I am Planning to go with Tranche EMI option. Many banks in Markets are not offering the same. I have options either to go with HDFC (ROI 9.9 which will be on PLR) or IDBI (ROI -10.5 which will be on BR). Please suggest me best option out of these or any other good sectors to go with
    if any by keeping accelerated Repayment scheme also as one parameter? IDBI bank is government bank and ROI also on BR which depends directly on RBI guidance instead of PLR whereas HDFC is leading in the Market in Housing Loan and their ROI will be on PLR which is not guided by RBI. Also if you have some article on Tranche EMI that would be great and waiting for that.

    1. Hi Marimuthu

      This is very specific query which you should follow up with the concerned authority only. We wont be able to comment on that


  4. Mrs Patil says:

    Do you have any idea why Pune Pristine Properties, Jalan Group & Maple Group projects are getting delayed now days. I heard many projects are pending for possessions or delayed for many years. Neo City wagholi Pune, Pristine Ivy Estate Pune, Jalan Aura City Pune and Maple Apla Ghar. and Pristine city Bakori Road. All projects are having issues of work delay. I know these builders are good but why these projects owners are facing problems now days. I will suggest if some one getting ready possession flat in these projects book it immediately else booking under possession in these projects then big NO

    1. I have no idea on that !

  5. Mrs Patil says:

    Any builder who is not giving possession in time must pay at least rent amount to owners. Neo City wagholi project by builders Pristine, Jalan and Maple delayed to give possesion to owners from last 4 years. Owners must ask rent amount from builder.

    1. If its part of the agreement , then they are legally bound for that !

  6. Kulkarni says:

    Pristine, Maple and Jalan are good builders and carrying good faith in Pune. But their few projects are delayed for possessions, not sure why. It has been observed that their few East Pune side projects are delayed by work. Example they have joint project as Neo City located at Wagholi Pune, buyers are waiting for possession from last 4 years. Neo City project was started in January 2011 and people are still waiting for phase 1, 2 and 3 possessions. Not only for these builders but to buy a new flat always check builder’s record of possessions and then only buy new flats, thank you.
    – Mr. Kulkarni

  7. Siraj says:

    Good Day,
    I purchased a ready flat in Kharghar whose OC is just received directly from builder. The builder is asking to pay cidco transfer fees right now and he wont give any receipt for the same. My understanding from internet research is that if the property is directly purchased from the builder CIDCO Transfer fees is not applicable.

    Please advise

    1. Siraj

      Its too specific question to the CITY you are in .. I guess our Q&A forum is a better place to ask that – http://www.jagoinvestor.com/forum

  8. Mehul says:

    Hi Manish,
    I am buying an under-construction property in Mumbai. Construction is currently at plinth level.Possession will be in Jul-2015. Builder is asking for 30% advance payment and then slab wise.
    My question is should i make an agreement with builder after 30% advance payment or before that?
    and when should i do the registration of property?

    1. Any thing paid without any written agreement or proof , surely is not recommended, but then its all trust at times and you have to go by that rule, check builders past performance and what others have to say about it . Ask the building about the refund in case he is not able to complete project on time.

  9. Priyanshu says:

    Hi Manish,
    I’ve a question..

    Question:- My flat is under construction and the possession will be in Aug-2014. Can I register property now.

    Pros/Cons:- What all advantages are and what all Disadvantages. (In case the possession gets delayed by couple of years and since already registration happened, will that cause any problem if I want to take any Legal step against the builder)

    Reason:- The reason behind registering now is because in upcoming budget, Karnataka State Govt is going to revise the stamp duty which will increase the registration price by some 40,000/-.

    Please let me know what should I do.

    1. Priyanshu

      I am not sure if you can register it right now . Unless the complition certificate it there. Check it out on our forum – http://www.jagoinvestor.com/forum/

  10. KISHIN BHATIA says:

    Under the construction linked installments Plan wherein Developer has booked for various towers, say Tower A, B, C, D, E, F, G, H,…….. and collected booking value and initial payments followed by work in progress, and subsequently demand 2nd installment, in line with list of installments are payable without any documents, in that case can the unit holder demand from the developer, work-in-progress certificate issued by the consultant confirming status of the work supported by tower Number wherein unit holder invested and duly authenticated by regulatory body.

    Your assistance will be very helpful

    1. You can ask for that, but now it depends how much power you have as investor. A lot of builders do not entertain all this 🙂

      1. KISHIN BHATIA says:

        Dear Manish Ji,

        thank you ManishJI,

        All your sites are very very informative and very helpful for Indian community, and at certain stage “DIMAG KI BATI JALA DETI HAI” Congratulations for your humanitarian assistant.

        Best Regards,
        kishin bhatia

  11. Ankur says:

    I have a Q regarding buying apartment for renting by selling the plot vs keeping the plot for appreciation in future.
    If I sell a plot I can buy three 2BHK apartments in decent area and will get 10 k each rent in Bangalore. what if i don’t sell the plot and keep it for future appreciation ?
    which one will be more beneficial ?

    1. Its not an easy thing to predict , so many factors in between

  12. satya says:

    Can property Bubble will be burst any time soon?

    1. How would anyone know that 🙂

  13. Raghvendra says:

    Hi Manish,
    I have purchased a flat in under construction project & completion of this project is june-2015. I have already paid down payment 20% and want to take 70% home loan & at last want to pay 10% amount to the builder from my own contribution.

    Please suggest me, it is possible to pay 10% amount from my own contribution at last apart from home loan.

    1. That will purely depend on your builder agreement, ask him if thats possible

  14. Sims says:

    Hi Manish,
    We have taken an apartment in Pune and it is ready for possession. At the time of booking the flat, the project completion certifcate was ready for the builder and most of the people have moved in. We are planning to take possession the coming week.

    I wanted to check about the Maintenance charges. We have paid the maintenance charges for 2 years in advance to the builder. While I checked with him regarding from when it starts, I get to hear it has started from the time when the project completion certifcate is obtained to the builder. Does it happen that way? or it is considered from the time we take possession.

    Please advise.

    1. I am not sure on this, because its not a standard thing , you might want to start a thread on our forum to discuss it with other investors – http://jagoinvestor.dev.diginnovators.site/forum/

  15. Imroz Khan says:

    Hi Manish,

    I am planning to take an Under construction apartment which is only a total of 8 flats with four floors . The builder has a Share of 4 apartments and the owners 4. I am purchasing from the builder. Builder has promised to deliver in one year. I am also planning to take a Loan. My Questions.
    1. If I take a loan will I be eligible to get tax exemption till the possession. If no , is there a way ?
    2. Do I have to pay the builder any service tax at the time of registration?
    3. And is it wise to invest in such a property ? Do you think the delivery time line of the builder will be met considering the size of the apartment.

    Thanks in Advance Manish. Expecting a reply 🙂


    1. Imroz

      1. NO way

      2. Not sure on this ..

      3. If its not written, Its not there ! Simple rule

  16. Vikrant V. says:

    Dear Mr. Manish,

    Thanks for your informative blog.

    recently I booked flat in under construction property. 25% is the initial amount and I am going to take home loan for rest of the amount i.e. 80% slabwise.
    My question is like this… suppose I aspply for full 80% loan amount, which will be disbursed slabwise. Say I apply for 20 Loan (80%) loan amount for 20 years. Banks starts disbursing funds slab wise. If after some months I feel I have enough amount and can pay balance amount to the builder from my own funds. In this case do I have option to stop the further loan amount from Bank?
    Please advise.


    1. Yes.. in that case what ever amount you have taken will be considered as loan, however you need to make sure its written in the agreement !

      1. Vikrant says:

        Dear Manish,

        Thanks for your reply.

        God bless you..



  17. suman gupta says:

    Manish, Please guide me.
    I have taken home loan of Rs 11 lacs last year (tenure 20 yrs) and want to settle it in next 10 years (will it be the right thing to settle ? ) but through table of outstanding amount i came to know that after passing of 50 % tenure (after 10 years) 75% amount is still remaining ( 8 Lacs) so is it better to prepay small amount every year instead of paying 8 lacs after 10 years.
    One more thing, after 13 years of duration, principal and interest component comes in equal ratio so will 13th year be the right time for full settlement.
    I want to purchase second house after 15 years from now.

    1. The best thing is keep prepaying as soon as possible if you want to complete the loan ! .. there is no other rule .

  18. P. K Singh says:

    Hi Manish,

    Thanks for the wonderful article. I am planning to a flat in Bangalore. I have gone through the properties and based upon my budget i have booked one apartment – a ready to move in one. Although its completely new as the apartment was handed over to the owners 3 months back, the flat booked by me comes under the Land owner’s share.
    So, now i need to sign a agreement with the land owner, instead of the builder. The Builder however will be coordinating on the overall process until registration and handover.
    I have couple of queries:
    1) Since I am going to purchase a ready to move in flat from Land Owner’s share, is there any way to find if the flat is being sold to more that 1 parties.
    2) I am not sure how is the nature of land owner means how can i trust him although i do not know him. What happens if he disappears after signing the agreement and doesn’t turns up for the registry. Is there any way to keep a check on this.
    Mentioning this as while booking the apartment, the builder didn’t updated me that the flat belongs to land owner’s share and it was only after 2 weeks of the booking i was made aware of the fact. Although the builder didn’t en-cashed the booking cheque of 2 lakhs, i am bit concerned before going for the agreement the hided the fact from me in the beginning.
    Kindly guide me.

  19. rajesh sughandh says:

    what r the chance of getting possession through court, can u guide me some good lawyer in mumbai high court

  20. rajesh sughandh says:

    can i get a stay and posssession through the court on the above arguements, that as banks r not ready to give loan, if possession is not available,

    1. That can be decided only by the court .

  21. rajesh sughandh says:


    1. Try to complain to consumer forum in that case !

  22. rajesh sughandh says:

    dear Manish , kindly advice me, i had take a ready possession flat from Mhada in 2011, and paid the full cost as per their advertisment in 2011, RS34,75000/- by taking loan fron SBI, and i did not get posssession of the flat due to following reason
    Now Mhada has demanded an extra amount of 15 lakhs , due to escalation and other factor
    Now can i get posssession of the flat through court as ,i hv already paid the advertiesment cost of the flat, and more over the bank is not ready to give me loan as do not have possession of the flat in my hand, can i get the posssession of my flat through court on the above grounds, please advice and , help me to a proper lawyer for the same
    with regards,

    1. Yes, if as per the agreement your cost was 34.75 lacs, then you dont need to pay more !

      1. rajesh sughandh says:

        Dear Manish, but there was a clause, in the agreement that this price is a temporary price, and they have the rights to increase or decrease the price

        1. In that case , where is the problem ? Everything is happening as per the agreement only right ! ?

  23. Kiran Patel says:

    Hi All,

    Thats very wonderful article. I am planning to purchased flat in Pimple Saudagar Pune. My requirement is 2 BHK and budget is around 50-52 Lacs.
    I have seen an pre-launched project, which looks pretty descent in terms of floor plan and three side open flat. Another reason I am looking for UC project that I dont want to get EMI burden which start from first month in case of Ready to Move flat.

    but I am really concerns about delivery of project on time. As per builder possession would be after 2 years i.e. Dec 2014. Currently I am staying in rented house.

    Any suggestion would be highly appreciate. Should I go with UC which has 2 year of time spam?

    Please advise.


    1. KP you can be sure that you will get it atleast in 3 yrs and it can strech upto 4-5 yrs also . Its your presonal decision to go for UC or not , you have pros and cons already .

  24. Dheeraj R says:

    For under construction property for which possession is 4 years down the line, when it is advisablet to go for stamp duty / registration. For me the builder has sent the letter in the first 6 month itself post booking.
    Also want to know the implications of registering the property in very early stage of under construction property


    1. Earlier the registration , better it is !

  25. Aditya says:

    Hello Manish,

    Thanks for the nice post. Recently I have booked a flat in bangalore with a small time builder. The catch is he has got approval (BBMP approval) for G+4 floors but he built an extra floor. Does SBI approves the loan for apartment in such project? The builder is saying that there are 20+ loan approved from SBI (total 120 flats in project) and he will get my loan approved as well. Even if SBI approves my loan, should I buy this flat? What are the complications, I would face in future while selling off this flat. I have given 20% of the money as booking amount.
    What are your suggestions in my case?

    Appreciate your help. Thanks in advance.


    1. Aditya

      Well, one way of looking at it is that this happens all the time and its like a standard now , so you can take the risk if you are planning to any ways sell it off later.

      but another thing is “its illegale” PERIOD ! . So you might have to face any consequences later, its purely a personal decision , i suggest you discuss it in detail here at our forum –

      1. Aditya says:

        Hello Manish,

        Thanks a lot for your reply and suggestion. What is the “it’s illegale” Period? What consequences may come later? What if I don’t sell it off and stay there.

        The same thing builder was saying that it’s quite a common practice in Bangalore (to build an extra floor and put it for rental purpose).. I have got my flat on 4th floor and above that 5th floor (unapproved floor is constructed).

        Thanks again for your response…


        1. Its illegal , because builder has not followed the rules simple . There is one thread going on our forum like this , read it http://jagoinvestor.dev.diginnovators.site/forum/unauthorized-floor-in-project/5067/

    2. Aditya

      Well, one way of looking at it is that this happens all the time and its like a standard now , so you can take the risk if you are planning to any ways sell it off later.

      but another thing is “its illegale” PERIOD ! . So you might have to face any consequences later, its purely a personal decision , i suggest you discuss it in detail here at our forum – http://jagoinvestor.dev.diginnovators.site/forum/

    3. Aditya

      Well, one way of looking at it is that this happens all the time and its like a standard now , so you can take the risk if you are planning to any ways sell it off later.

      but another thing is “its illegale” PERIOD ! . So you might have to face any consequences later, its purely a personal decision , i suggest you discuss it in detail here at our forum – http://jagoinvestor.dev.diginnovators.site/forum/

  26. Gaurav says:

    Hi manish,

    I can see all the information with regardse to property purchase/reday to move in/under construction/legal issues etc are covered very nicely, Thanks a lot for this blog sharing………

    I have booked a ready to move in flat which actually launced in mid 2011 with a proce of rs 2600 and now I have purchased in Rs 3000 Per sqft the posession of all the flats ( Ground + 4) will be given for poce ssion by Dec, Jan 2013 my only issue I have is its in the ground floor and why not other people not opted my flat 🙂 have a basic question always in my mind.

    This apartment have all the required amentities, please suggest

    1. If you are ok with all the terms and it looks good to you , just move ahead !

  27. ashwin says:

    It all really depends on the location and he house. I think a lot of apartments bult in the late 90’s or in the early 2000’s have better height,better terraces and are more spacious in stand alone buildings If you can afford one of these a good locations, you shouldnt bother yourself with the new high rises with tiny apartments.

    1. Yes .. these days the houses are sold for emotional reasons and by creating urgency situations !

      1. ashwin says:

        So do you think the bubble will burst some day? And prices will stabilize?

        1. Ashwin

          Dont you think it will happen someday, may be not very soon . Is it possible for the prices to just move up and up for years and entire life !

          1. satya says:

            Bubble will be burst only after you buy your dram home..btw it never burst..

            1. Satya

              Have you experienced this ?

            2. satya says:

              I didn’t buy yet 🙂

  28. Parikshit says:


    I liked one under construction project which is at prime location in Kandiwali(E). As usual, rate is much lower compared to rates in surrounding area. It is per launched project, and I have to pay 25% of flat cost as booking amount through cheque. After 5 months, agreement will be done.
    I have seen CC for plinth and C.O.D. certificate as well as environment clearance certificate. But sales manager not giving me those documents to legalize it.
    Target completion of this project is 2.5 years that will be around Mar2015. Can anyone guide me whether I should buy in this project? How can I check authenticity of this project?
    Please note that I am living with my parents so not paying any rent. I can wait till Mar2015. As of now I don’t have enough amount to go for resale flat.

    1. Parikshit

      these kind of discussions should happen at http://jagoinvestor.dev.diginnovators.site/forum/

  29. Adesh Gupta says:

    In the case of under construction property, you can claim HRA and can have tax benefit, property is appreciating at a higher rate as compared to ready to move property, ease of payment in CLP, and as soon as you get the possession, start paying EMI and get tax benefit instead of HRA benefit.
    In HRA, if the amount you are saving through tax is much higher than the expected appreciation in the property value, then go for under construction property.

    1. Thanks for your views and sharing !

      1. Chandrakant says:

        My question is as under

        Sir, I have purchased a ready made, duly completed in all respect , who already got the completion certificate from municipal corporation, in the year Aug 2011.
        The completion certificate has been already obtained by the builder in the mo nth of April 2011.

        Is 1% VAT Applicable to me?

        If yes under which law ? and

        if is noe applicable to me

        update me with the trade ciruclars or any informative material so that I can not pay the tax as i have purchased the flat after completion certificate.

        Pl guide me


  30. Shrenik says:


    I have purchased by home in Jan 2009 for 12.5 lacs and sold it for 41 lacs in April 2012. Pls can you let me know what will be the tax implication ? My salary comes under bracket of 10 %. From available proceed I have booked another flat in May 2012 worth 36 lacs…I have taken home loan of 12 lacs and its EMI has also started from current month. I am planning to sell that home too before possession ( ie while it is under construction) in Feb 2013 for around 40 lacs. Will I be charged LTCG ? Can I claim interest paid for my new flat in any type of deduction ? What things needs to be taken care so as to have minimum tax charges ?


    1. For the first house you dont need to pay any tax because after 3 yrs, you have used the proceeds to buy a new house , but for new house , as it has not completed 3 yrs, you will have to pay tax on the profit (4 lacs) , it will be added to your income and your final income will be considered for taxation .

      1. Shrenik says:

        Thanks for the reply.. Just in need of one more clarification.. Even if i am selling my second house before doing sale deed, the said property wont be in my name and hence i dont think there would be any tax for it. I hope i am able to make myself clear..

        1. This should then be illegal right .. you are buying and selling without documents .

    1. Thanks for that article .. really eye openor !

  31. Rakesh says:


    Very good comparison. I had an option to choose between a Under construction property from a reputed builder and a Ready to move from a small builder and i opted for the later. I think i made a wise decision since the under construction property took an additional year to complete.

    1. Good to hear your experience Rakesh !

  32. prashant says:


    You buy what you see- For under construction properties, builders show a sample flat, which is almost same as the flat a person buys. This point is does not seem to be a complete advantage for a ready to move property over under construction property.

    overall, good points mentioned.


    1. Prashant

      Atleast I have heard most of the cases where the final flat was very very different than what they saw , thats why I have put it in the points .. there can be other way round experience too !

  33. Roopesh Kumar Majeti says:

    Good post Manish.
    Seeing the discussion, i see that its personal choice which finally one has to take.

    In my case, iam planning to take a Under Construction property, which the Builder has promised to deliver by Jan 2012. I personally rented in one of his earlier ventures and found the quality of the construction good.

    But seeing all the above posts, iam bit scared now, whether to go with UC property or just go ahead and take Ready-to-move property.

    Is it always better to go with ready-to-move in property for a family person ? Please comment.

    1. Roopesh

      Its obvious that in ready to move properties you will not get anything else, and mostly you can check all the things . but in under construction case , you can never guarantee that. So incase its for your living purpose , ready to move is better for these reasons .

  34. amol says:

    just came across this link. Thought of sharing it here

    btw, good job manish, AS ALWAYS!


  35. @Jig, to compare the merits of ready-to-move-in(RTMI) vs under-construction(UC), one should not look into the case you have mentioned. Assume in 2006 your property was 20 lakh and by 2009 it became 40 lakh. This does NOT prove UC is better. You have compared the rate of UC in year 2006 vs RTMI in year 2009.
    The correct comparison is to check the rate of UC vs RTMI in the same year.

    In the comments I find the majority agreeing to the benefits of RTMI. Still, in practice, I guess mostly UC properties are sold. Why is this? My guess is that there are not many RTMI properties for sale. The extremely high demand makes sure that a house hunter at any given point of time will find his/her choice restricted in RTMI category. Hopefully the situation changes in future.

  36. Jig says:

    Yep but i have seen that flat prices are doubled by the time it is ready to move in. ( even before that ) I got a good deal.

  37. lokesh says:

    thanks for starting this thread manish!
    I am on the side of buying ready to move-in property. I always fail to understand logical reasons behind buying something which is not there yet.
    Especially something which is one of the biggest decision any individual takes in his life like buying home.
    Some of my friends have/are putting in money in under construction properties…its been 2 years and still not completed. They were supposed to get it 1 year back…
    they are still counting…
    one of the friend went with modification in the original plan of kitchen and certainly didn’t like it and asked builder to use his original plan…but he has wasted around 70-90 thousands with this things

    1. Lokesh

      yes , really the under construction properties have that risk !

  38. ashish says:

    Thanks Ashal… I will look into the details whereevr possible…
    I will be always be thankful to Manish.I believe in GOD as still there are good peoples in world who helps the society… Thanks to the forum & thanks to all who shares the knowledge… 🙂

    1. Good to know that you got the answer, all i would say is small things cost a lot sometimes, so make sure you evaluate things from all angle and then take an action !

  39. ashish says:

    I have purchased a ready flat & paid stamp duty for the same but as my wife was in hospital,I could not get her for co-signing.So flat is on my name only.Now,suppose If i want to make my wife as co-applicant,I have been told by my colligues that again I have to pay another stamp duty…which could be beyond 1 lacs…please clarify are they right..?

    1. Ashish

      I am not sure on this, but it might be the case . ask it on our forum http://www.jagoinvestor.com/forum , i am sure you will get a right answer within few hours

    2. ASHAL JAUHARI says:

      Dear Ashish, yes the transfer ‘ll invite stamp duty. A workable solution is to part Gift to your wife, in this case, the applicable charges ‘ll be lower than direct transfer. Please do note in case of gifting to your wife, you are merely adding your wife’s name in the record as co-owner. From taxation angle as & when you ‘ll sell this house, the entire cpital gains ‘ll be taxable in your name being the original owner.



  40. Sahil Bhatia says:

    Hi Manish,

    Thanks for the great article.
    It was a really good read.

    Sahil Bhatia

  41. gazala says:

    Hi Manish,

    I have purchased a new flat. Recently when I had been for a visit I came to know there were shops coming up inside the residence complex which is effecting my flat specificly, this was’nt mentioned earlier or even in the project Brochure when I booked it. When I asked the sales manager and other concerned people the answer I got was “the permission was granted now so we have made these changes”.Could you please guide me as to how should I appeal against it as it is effecting only my flat and also I do not expect any collective appeal from all the flat owners as it is none of their concern. also taking into consideration the builders today.

    1. Gazala

      Let me bring in people who might have a better answer than me . Also please post this query on our forum for appropriate answers : jagoinvestor.com/forum


    2. ASHAL JAUHARI says:

      Dear Gazala, Please check the approved plan of the building given to you by the builder. Also ask them to provide the new approved plan taken for these shops.

      If there is any discrepancy in the 2 plans, then only a case can be fought.

      Please do read your development agreement also. In all probability there may be a line in the same – “The Developer reserves the right to change, alter the plan of the building after taking the due permission from the respective authorities.”

      Please read & confirm the same.



    3. Vivek K says:


      One thing I’d suggest is to get as many people as possible with you who have purchased the apartment and together try to put pressure on the builder. Fighting the battle alone might not get you anywhere or at max builder will tell you to sell it to someone else.

      1. Gazala Khan says:

        Thanks Vivek, but I do not hope any other members to join as i said it is jus effecting my flat. And as it is others will be happy as daily necessity things are now easy accessible for them without any issues causing like mine, so no reason for them to support me.

        1. Vivek K says:

          In that case you can either negotiate to get some compensation for the inconvenience or if the impact is such that you can’t live with it, try selling it off.
          Other option what Ashal suggested is to compare the two approved plans and proceed accordingly. And yes forums are always open to get more ideas and suggestions.

          Good luck! I hope things go your way.

  42. Bhushan says:

    Right!!! It’s a big choice to be made between choosing a under construction or ready to move in house. I feel that sometimes don’t act logical enough while dealing with it. Either we act too conservatively or don’t think enough. People are driven not by intellect but by emotions-be it excitement or fear.

    1. Yes Bhushan

      A lot of people never plan the purchase in such a detail that they can see all these points .

  43. Vivek K says:

    Hi Manish,

    This article is very helpful for people to be aware of what they are getting into, lot of people fall prey to builders because of lack of awareness.

    I personally bought an under construction property for myself from a small builder and it turned to be a good deal for me. However, I engaged myself throughout the construction and below is what I did to avoid any pitfalls: –

    1) Got a lawyer to check all the documents thoroughly, not just the photocopy but all the originals as well.
    2) Formed a payment plan with the builder based on the progress of building like x amount to be paid after casting of 1st floor roof, then second floor and so on. I kept some amount to be paid after possession and at the time of registration.
    3) The payment plan was given to the bank and bank did not release any payment without doing the inspection of the construction.
    4) I made sure that I visit the property and meet builder once in 2 weeks to check what is being constructed is what was promised.
    5) I picked the flaws at the time of construction and got them rectified by the builder. This is one advantage of dealing with small builders; they are available at the site most of the times.
    6) I did not go for registration until the construction was fully completed and it was ready for possession. Many builders force their clients to do the registration upfront and later delay the possession.
    7) I made sure that a penalty clause in the sale deed was included for the builder in case he delays the project by more than 6 months of the promised possession date.
    8) I checked that parking space was allocated as per the no. of apartments allocated so that there is no extra illegal construction happens. The top floors as penthouses are illegal in most of the buildings and it leads to crunch in the parking space.
    9) I checked all the material used in electric wiring and water pipes are ISI marked and got switches and water connections installed as per my need.

    These are small headaches, which if one takes in the beginning can avoid the big headache at the later stage.

    1. Vivek

      Good job ! . These points are very helpful . But how come a person follows these if they are dealing with large builders ?


      1. Vivek K says:

        It would be a bit more challenging with large builders. But I think some basic steps can still be done like checking documents, payment plan, penalty clause etc.
        You probably cannot go deep enough to check material quality and customize apartment as per your needs but that’s ok, they are cosmetics not essentials.

        I still feel under construction properties are a good deal if agreement is read and negotiated properly by the buyers.

        1. Thanks for your guidance Vivek

  44. Sunil says:

    Good Day !

    Further to Q. abt Blue Print, mean copy of Orignal Plan Layout

    and Registration of Society is compulsory and SOCIETY should have a
    NO DUES CERTIFICATE(authorised) in favour of Devloper/Builder (mostly in practice Devlopers / builders buy the open space / plot and make the development on such a plot / open space against Bank Mortgage_Loan Facility )

    Above are my personal VIEWs as per my Knowledge and Experience.

    1. Thanks for your views Sunil

  45. pranita says:

    I am of the opinion that buying ready to move property is wiser choice since we can identify the most of the pros and cons of project including construction quality, how the locality has developed, how much work builder has completed out of advertised…

    its like “what you get is what you see…!”

    1. Yes Pranita

      I think thats the biggest advantage !

  46. bharat shah says:

    i wish to extend the discussion to include the ready to move old property (more than 10-15 yrs) but in very good condition i.e. well maintained , in good area, with basic facility like water, lift, security, emergency power etc , but available 20-30% lower than its intrinsic value calculated on basis of the land cost and depreciated construction cost. in today’s trend, in my city Surat, the price of new constructed/under constructed flats in immediate neighborhood developing area to my already developed area has almost doubled in two years , whereas in my area remained stagnant. before two years they were same. the reason, i think , the investors are more in new property segments and really needy are small in numbers and can’t afford high prices. in my building (on one of main road of the area) , the flats are available at cost of the land (construction cost free) whereas nearby new area newly constructed flat is priced at @10% premium than its intrinsic value . i think, such anomalies would be narrowed as time would pass . so when we need the home for shelter and prices of newly constructed/under construction property seem unreachable, we can consider 10-15 old good property also , considering the life of such could be well over 35yrs and we would be paying only land cost.

    1. Bharat

      Yes .. thats a very good point and totally makes sense . But can you share how can you reach or find INTRINSIC value ?


      1. bharat shah says:

        i calculate intrinsic value of the flat as the function of the value of the land pertaining to the flat , which as i understand mentioned in the Purchase Deed (Dastavej), and the prevailing cost of construction, factored by the depreciation depending upon the age of building. of course i take higher figure of construction for recently constructed buildings having more amenities like gym., club, library and others compared to 10-15 yrs building. if i state it in formula, it would be:
        intrinsic value of a flat per sq.ft super built up = (Rate of land per sq. yard or sq. meter in the area* land pertaining to the flat in sq. yard or sq. meter + Rate of construction of the flat per sq. ft super built area * super built up area of the flat* depreciation factor (1- age of building* 0.025))/ total super built up area of the flat
        i have taken sq.yard/sq. meter for land and sq.ft for super built up area of the flat , as they are the norms here. normally the super built up area of the flat is more than 4 times e land pertaining to the flat. i am taking the construction cost for new flat is @30% than 10-15 years old flat and again for old flat is factored by depreciation as per formula. both are for super built up area.

        1. Bharat

          Thansk for explaining how to do that 🙂 .

  47. prabee says:


    About the suggestion for articles “checklist to be filled before buying a apartment” is one idead you can work on to help people.

    1. Prabeesh

      At the end of this article : http://jagoinvestor.dev.diginnovators.site/2010/08/tips-while-buying-house-real-life-experiences.html there are most of the docs and things mentioned which one should look at before buying

      1. Vivek K says:

        If you hire a good lawyer to check the documents you don’t have to worry about the list of documents, they will check everything thoroughly. But yea it is good to know the list and cross check.

  48. Vijay says:

    My 2 cents here,

    Buying an under-construction property is risky and the premium you get is the reduced price. Some mitigations available are:
    a) being thoroughly “informed”
    b) having a keen attention to project details (all agreements)
    c) Ability to negotiate/bargain and getting things in writing from the builder (not easy but you should be able to walk off deals where builders are hesitant)
    d) Trying to push for pre-emi waivers. This almost negates the risk of buying under-construction properties and the only loss you will incur is the the interest-loss on the invested amount.

    While buying a ‘ready to move’ property, you don’t have to take the risk and hence you don’t get the reward. But people do miss the fact that you could’ve wisely invested the money that you would have otherwise invested in the under-construction property. By the time you purchase a ‘ready-to-move’ property, this money could’ve appreciated (3-4 yr timeframe) and you somewhat negate (not fully though) the higher price you pay for a ‘ready to move’ property. More importantly you do get a ‘peace of mind’ and ‘unhindered sleeps’ (which is price less,if you ask me).

    1. Brilliantly put Vijay! I completely agree with you.

    2. Thanks for sharing your views Vijay !

    3. Vivek K says:

      Good point Vijay but not everyone would have budget to afford ready to move in properties. Their alternate is to go for an under construction property, which if dealt wisely can turn out to be a good deal.

  49. Kalyani says:

    hi Manish:
    A friend of mine has booked a Tata Amantra property & paid 20% down payment. The construction schedule and agreement was to come immediately after the 20% payment was made. Till date (about 4 months after the initial amt was paid), there is no sign of the agreement or the slab dates. He has been running from pillar to post trying to get the officials to commit to some dates. Any light on how he could handle this would be greatly helpful

    1. Kalyani

      I would say – “Welcome to the world of Indian Real estate and the nontrasparant system” . Its pretty much how it works , He can threaten the builder , he can file a complaint against him . Those are the only ways , Ask him to start a thread on our forum and seek help from there , he will get good answers and directions http://www.jagoinvestor.com/forum

    2. Vivek K says:

      I am surprised to see that 20% down payment was done without signing any agreement or am I reading it wrong?

      1. Jig says:

        Many places it is like this only my dear frd Vivek.
        Go to surat and you will not find any signing document even before the project been completed. I am also surprised but what to do?

  50. Sudheer says:

    C M Vyas, can you advise what would a typical maintenance fee be in Bangalore.

    1. C M Vyas says:


      For independent apartment blocks without amenities (amenities= party hall + gym or play area) it varies between Rs 1000 and R1500 pm with basic watchman and water charges at actuals. It is Rs 2.00 to Rs 3.00 per sft for apartments with amenities including swimming pool where there are at least 100 apartments. Water charges at actuals. For Apartment projects from big builders with fancy club house, landscaping, water bodies and swimming pool and other facilities, it is over 3.00 per sft per month depending on the size of project and the fancy features involved. It also depends on who maintains all this. The society reps or a small FM Co or FM Cos promoted by the big builders themselves.

    2. Vivek K says:

      Hi Sudheer,

      I am living in Bangalore in a small apartment building of 15 apartments without any amenties. The monthly maintenance is 1250 + tanker water charges at actuals.

  51. C M Vyas says:

    The entire discussion till now has avoided independent housing as an option. If one is going in for such a property the better option is when you construct your own house. I would not to dwell on how far from city one would end up staying, but barring the Metros, buying a plot and constructing is still a decent option. Just a point of view for consideration as an option.

    Own design, so you are satisfied.
    No common area loading so a 1200sft house is equal to a 1650+ sft flat! Here is how.
    ‘Utility’ attached to a kitchen is in secure open area for which you pay minimal cost of construction in an independent house.
    Balcony area is also not loaded and paid for in an independent house. Ditto for Car parking area and internal ‘open to sky’ shafts.
    If you want, you can have a servant room on the terrace. You can get a servant room only in high end, high cost flats paid at high rate per sft equal to the your basic cost.

    For a 1200 sft land at Rs 4000 per sft + 1200 sft duplex construction at Rs 1300 per sft + Statutory expenses gets you the equivalent of a 1650 sft apartment costing Rs 3500 per sft (locality comparable to where I have assumed the land to cost Rs 4000 per sft as land cost) + Rs 750000 (for car park + club+ statutory deposits+ VAT, ST etc+ corpus etc) + Registration Rs 350000. Apartment costs about Rs 6875000. Compare to independent house at Rs 4800000 + 1560000 + Rs 500000 + ownership & self maintenance headache + far lower maintenance cost + avoid unnecessary compulsory amenities + definitely no security guards. Costs are roughly the same. You own the land! Older constructions are also comparably attractive to buy outright with or without bank loan facility.

    1. Srinivas says:

      True. I can vouch for many points as i had constructed one in Tyre II city.

      However, there are points to be remembered.

      For constructing or getting one constructed, constant supervision is a must. However, can take the help of senior family members for this.(I did)

      Security can be an issue as for independent plots one has to go a bit far off the city where the development is not yet picked up.

      That said, the feeling of planning and constructing, i feel, is worth the effort.

    2. CM Vyas

      thanks for that idea .. tht totally makes sense. Building the house on our own plot is the best thing

    3. Vivek K says:

      Mr. Vyas,

      The security is the biggest concern for me while building an independent house. I know few people who live in independent houses and have had burglary in their homes.
      Also, if you are living in a city where you don’t know the local language it becomes a huge headache to deal with government departments for approvals etc.

      1. C M Vyas says:

        Sorry didn’t see your post. Well, for security why not look at electronics security system for your house? What one would need for an independent home is Electronic Video Door Phone, Glass Break Detectors, possibly a couple of simple Video Cameras and alarm system to activate. The basic ones cost under Rs 50000 for all. If you feel you can add basic Digital Video Recorder, Gas Leak detector for kitchen etc. These will cost another Rs 20000 or so. Do not go to big players who palm off Chinese manufactured stuff as their own manufacture. Unorganised players can give you a great bargain.

        As far as approvals and Govt Depts go, the contractor you hire gets it done. The common language, as we all know, is action under the table. That is honestly done!!!

  52. Vineet says:

    Another negative point for under construction property is service tax. Government has imposed service tax which comes out to be approx 2.58 % of agreement value. If property has OC then this service tax is not applicable.

    1. Vineet

      Thanks for that point , in case of ready to move in houses, wont the price of the house already reflect the SERVICE TAX Value because the earliar buyer would like to recover that also and would price the house accordingly .


      1. Vineet says:

        Yes Manish, you have a point here.

      2. Pundarik says:

        This is true in case OC was given after July,2010. Service tax on under construction house started around that time. So if you buy a house which was occupied before July,2010, you might get away with the service tax part.

  53. Chandrashekhar Chandvale says:

    Dear Manish,
    Thanks for your valuable article.
    I think it is advisable to go for a ready to move property in registered society vs property under construction.
    However the property shall be 3 to 5 years old at the time of purchase.
    One has to do the property search from the legal firm and Valuation done from any authorised valuation expert.
    The property search from the Registrar Office will confirm the true status of the property.
    Also valuation report will ensure that the price oaid for the property is generally matching with the surrounding areas property rates.
    As the Society is formed and one has to pay the charges for share certificates of society, you may be sure that the property is not sold to any one else.
    Another advantage of registered society is one can go to the Secretary/ Chairman of the society in case of any problem occurs and to get the sloution therein
    Chandrashekhar Chandvale

    1. Thanks for your tips Chandrashekhar 🙂 . Looks like you have had a good experience on this yourself !

  54. Sunil says:

    If you buy property first time, First of all should need to check documents of property and for this get (paid) advise from reputed advocate (Advocate’s Fees would be very cheap at this stage ) and before make sure yourself about property, please raise the questions freely about property with Advocate and Devloper. If you see any fault in Documents or Terms letter please don’t buy that property. Always try to get Blue Print (If possible) of the property and keep the same with you.

    1. Sunil

      Thanks for your views and tips , what exactly is meant by “blueprint” ?


      1. Vivek K says:

        I think that’s the building plan architect has prepared.

  55. Sunil says:

    Dnot buy poor condition property. And try to get house (even little) which is constructed on own plot.

  56. Sunil says:

    Don’t try to buy Under construction property(any type of) .

    Be ready to buy at Market price. Don’t try to get Any Loan and buy Property.

    1. Sunil

      Why do you recommend against buying any kind of under construction property . Agreed that it has its own share of negative points ,but that does not mean that you should rule out the option itself !

  57. Sunil says:

    I recently brought a home in Mumbai. It is nicely suited on the 14th floor. It was a ready possession flat.

    I analysed the pros and cons of this buy
    1) You get what you see. I could not have imagined the view from 14th floor.
    2) The flat was almost ready when i bought it. The builder promised possession around Dec ’11 end. I got the flat on 15th Feb. Acceptable delay…:)

    1) Huge difference in cost. I met one of the earlier buyers. He had booked couple years earlier at the rate of 2800/-. I booked at 5200/-. Almost double…:(

    Also, I think one more important factor that decides between the two options is the social need. In my case, I didnt want to wander around in rented flats with my infant. So I opted for ready possession.

    Overall, my advice to single people would be – buy under construction properties. You will benefit via property appreciation.

    1. Comparison with earlier buyer is not apple-to-apple comparison. At the time when you bought for 5200, what was the rate being quoted for underconstruction properties at the same time? That should be the comparison which shall make you feel good/bad.

      1. Sunil says:

        That’s correct! The rate for all under construction properties is around 5000-5500 currently.

        Infact, thats the only consolation i have. 🙂

    2. Sunil

      Thanks for your points .. Regarding the earliar buyers , did they pay all the money in one go ? Because suppose they did , then they must have paid years earliar at Rs 2800 rate and you paid 5200 after say 4 yrs, so that means that if you also had bought it around 4 yrs back , how much you should have shelled out ? See that Rs 5200 paid after 4 yrs means not such a big price difference .

    3. Vivek K says:

      I really like this Sunil: –
      “Overall, my advice to single people would be – buy under construction properties. You will benefit via property appreciation.”

      A sensible way to invest and save money.

      1. Sunil says:

        Thanks for appreciating Vivek.

    4. Vivek K says:

      And not just single people, working couples with no kids should also look to buy under construction properties.

  58. sanjay kartari says:

    Dear manish,
    Gd post
    i am real estate broker
    one of the biggest highlights of this post is
    pro of ready to move proeprty

    1. Yes Sanjay

      Thats a very big point , because most of the people who buy under construction properties are un satisfied with what they get !

      1. satish aher says:

        In Jan 2011 i have booked,Registered and stamp duty paid property located at Navi Mumbai(CIDCO property)and all the required documents are submitted to HDFC for under construction property.After verification and search report the Loan sanctioned. The payments are made according to Demands and Work completion by developer on time to time basis.Till the 70% of work completion all the payments are made(April 2012),but after that 19th July 2012 the developer has arrested by local police for cheating and fruad registration(Double registration) on his running projects.In this issue he was arrested and the news spread accross thorugh all the media news papers that Customers are Cheated for Crores of rupees by Navi Mumbai Developer since May 2012.In this case on his arrest i have also made police complaint that, “The construction work has stopped since last two months and Developer has shut his office and mobile.According to media news i am also feeling that i was cheated and the home loan EMI are still there.”Now the developer and Police is also asking me to take back my complaint otherwise developer will sell that property to others and only give me the money which i have paid till the date.Kindly suggest in this………….

        1. Satish

          Truely speaking, you should be talking to a lawyer instead of asking it on a blog. This involves your hard earned money , make sure you are able to secure atleast what you have paid . You might want to discuss it on our forum too – http://jagoinvestor.dev.diginnovators.site/forum

          1. satish says:

            Thanks for ur promt reply.When All the registered original doc’s are mortgage with the bank for Loan.when the issue is presists,bank should help to its customer for legal help.isn’t it??
            Also this matter is as clean as Milk and water seperately.So to proceeding further the Law and Order should show courage and win the faith of peoples to fight aginst this by helping them by right path and right complaint claims to tackle this critical issue instead of advicing to take back complaints,which is Judge and Court’s rights???
            How a Developer can ask peoples to take back complaints infront of Law and Order, otherwise he will sell there properties to others on current rates and return their money which they have actualy spent till the date.This Means this is preplanned and he is making fool to all- Customers,Banks,Law and Order system,Registrar,,,,,,,,everybody..I dont know i court will deal with this,becaue of this is a appox 400 peoples involved and crores of rupees issue.
            Guys pls look in to this very carefully before going for Underconstruction Property wheather it is Branded or unbranded Developer………Currently CIDCO has demolished after fully completion of a 21storey Tower at Kharghar after all the 160 apartments were sold to tenants and most of them are on loan….Be care ful for under Construction property……

            1. Satish

              These thigns are veyr much possible as the real estate is highly unregulated and lot of goons are into the business . Tell me one thing , has the bank given the money to the Builder and you have signed on the papers, if you look at it from bank angle, you are the one from whom the bank is going to recover the loan from. I know that its a fraud done by builder, but from business point , this is how the bank will behave, is that the case ?


            2. satish says:

              Yes manish,,,,When i asked my bank about this to kinldy hold my EMI till the issue will solved.How do i pay EMI of the loan which i took for my Home and without getting home how do i proceed further for EMI?Bank said,”We have given a Loan to you not developer,even though all the documents are clear from Developer according to procedure.And my registration documents are Mortgage with the bank.So i have pay the EMI for the 70% Loan amount which i took from bank till the 70% work completion by developer.”Now i am paying EMI’s without getting Home……..So guys pls think 100 of times before procedding for Underconstruction property.It doesnot matter whether it is a branded or Unbranded(Known/unknown Builder).
              I have shown all the documents to Law and Order,Court Judge,Estate consultants and they are clear that there is no issue of the documents.The issue is lies with the developer intention which is suddenly changed and he has started making money with Double Registration,Double Booking blindly…..

            3. Hmm .. i can understand your situation . Here obviously you are affected because of builder intention , the bank has nothing to do with it (from business point of view) .

            4. Satish says:

              We need to think and study on the issue of Double /triple Registration on same Property done at Registrar office by the registrar.
              To understand the cause of Double /triple Property Registration i have visited the registrar office yesterday along with Police inspector(PI) who is investigating the Case have asked to registrar(SRO-Sub registrar Officer) about the process and he has replied that they are required only Buyer and Seller with stamp duty paid and agreed for deal,within 15-20minutes, registration is complete. There job is only collect Registartion fee,Stamp duty even if the same property sell by seller in a day several times.They do not have system to Track to Stop such duplication issues.He said its peoples Job to take care of there property agreeent,They should lodge a compaint and fight in court against this.If a person wants to search his property registration details,normally Home loan banks or Loan holders are asking for search reports,that time he has to pay 20/- fee to registrar and search the reports himself, no registrar will help him to check wheather it is Double/ triple or several.if he found one he will say One is done,if other will find Two on same,he will say Two are done.That is not our(Registrar) but there duty(peoples) to trace and check all the records which are with registrar offices.
              In this investigation i reach the conclusion that The Stamp duty and Registration is the only window which is set by Government to collect funds nothing else.The Home where we are leaving today can be sold to others by sellers without our knowledge.Only police and Court is the option for the peoples like us after paying Stamp duty,VAT,Service Tax,property Tax and so on……..According to ACT defination of Registration and its Requirement,”Registration means recording of the contents of a document with a Registering Officer and preservation of copies of the original document.The documents are registered for the purpose of conservation of evidence, assurance of title, publicity of documents and prevention of fraud.”But what security we are getting after Registration,only the Pain and harrasement,,,,,,,,

            5. Satish

              Thanks for raising this issue .. its really a big issue … I will try to find out this and write on it !

  59. Suhas says:

    Hi Manish,

    Good post again…….. I think this is the default statement for all your posts….Keep up the good work.:))
    You have certainly covered most of the points.

    I think if you are staying in rented flat buying a resale flat is a good option.I bought a resale flat in pune but was not much aware of the legal things involved at that time.

    The seller had a existing loan from bank so I didn’t bother much about the documents.The deal went smoothly and no with much hassle.

    But from my experience I think you need to take some precautions.

    First and foremost Identify the bank you want to seek loan & take the papers (Xerox) from the Owner and show it to the best advocate.Ask him to evaluate the property price as per Govt which might help you to negotiate(?).
    Also it will help you check if the property is clear from any claims or not.
    Also you can ask him to guide you on the process wiz..how to do the deal,Papers and procedure and society transfer/electricity meter/property transfer (please take signs on all transfer documents electric meter,property tax etc at the time od deal)

    You can consult the advocate from your loan provider as it will help for easy process of loan approval as far as legal matters are concerned.
    This thing worked best for me.My LICHF loan agent was not very much aware about the documentation for resale flat and was insisting on many irrelevant documents as per the list but my advocate helped in turn for this.

    Also I negotiated such that if I pay the owner the 20% amount (Gave cheque-took the receipts and mentioned in agreement as bank provides only on 80% of loan) then I will take the possession as it will take time for his loan clearing through my loan provider and getting of papers to execute the final deal. this helped me as I saved 3-4 months rent and had the property in my possession before the deal.

    1. Thanks for those tips Suhas … I am sure if a person has hunger to learn and he is ready to go through the whole process and make his hands dirty . He can avoid all the pain points later.


  60. Hi Manish,

    I bought a resale property 2 years back. At the time of buying the property, it was 5 years old. Since it is the builder’s sample flat it is well built and nicely maintained….. 🙂

    Rather than buying a new property, I would prefer a resale property that is 3-5 years old. Few reasons for saying that are:
    1) It is already complete and ready to move in with no waiting period. Also as you have mentioned you get what you see
    2) All the permissions are taken care off, no legal issues, society formation is already taken care of. If there is already a bank loan on the property, I feel it is more safe. I say that because before giving a loan on the property, the bank must have done their round of legal checks and scrutiny and verification or whatever you call it. Infact in case of buying new property also I believe a person should approach two banks for a loan even though he intends to take the loan from one bank. Two banks doing a legal check on the property will give you double surety on the property legal issues. The cost off course for you will be the processing fees to be paid to 2 banks for double surety.
    3) If the property is 3-5 years old, leakage problems if any get highlighted. I believe if the property has stood the test of 3 monsoon seasons without leakage problems then it is good enough to buy it. You will not get to know this in a new property. Keeping in mind the quality of construction material used these days, leakage test is very essential. During my property search, I came across a newly constructed society where all the newly constructed flats were not even completely sold and already there were leakage complaints some people who had moved in to stay. I was really surprised to see a new construction leaking ……… 🙂
    4) Also if a property is 3-5 years old apart from the leakage problem you become more aware about the quality of construction, paint staying intact or peeling off, POP staying intact or cracking, the people staying around you etc etc…..

    I hope it makes sense the points that I mentioned for a going in for a resale property. That said a new construction property always has its own advantages.

    1. Thanks for your tips Gopal

      the tips on leakages is really something worth knowing 🙂 . I will personally keep that in mind when I buy mine !

  61. Vivek says:

    Under Construction vs Ready to Move Property – Which one ?

    Considering all pros nd cons i think, for self use it is always better to get ready house nd investment point of view under constraction will be better.
    For both cases the builder must have good repo in market.

    1. Vivek

      Yes thats a good final conclusion !

    2. Mrs. Kulkarni says:

      East Pune side construction projects are delayed. Neo City project located at Wagholi Pune, buyers are waiting for possession from last 4 years. However builder Pristine, Maple and Jalan are good builders and hoping they will give possession as soon as possible. Many owners are currently staying on rent and waiting for possession, builder is likely to give rent amount at least for such delay of possession.

      – Mrs. Kulkarni

  62. bemoneyaware says:

    Another advantage of Ready to Move Property is you know the kind of people living in premises, maintenance budget is known, classes(for children and adults) up and running,
    the community events organization.(What kind of festivals are celebrated and at what scale)

    1. Bemoneyaware

      Thats a very good point actually . I never thought of it

    2. Vivek K says:

      Not sure how this would help in taking a decision to buy any property? Would you not buy a property if certain festivals are not celebrated or are celebrated? or would you not buy a property if your neighbours have more kids or adults?
      In many cases the maintenance amount is known for under construction properties as well.

      1. Vivek

        That might be your personal opinion. But suppose a person wishes that they should have same caste or community people around and they are not comfortable if that is not the case , then in case of ready to move property they can see this in advance. They can see if those people around are friendly (as per their own definition) , Its an added information and can be helpful for a lot of people .

        Its not about the festival celebration. Its also related to a lot of things . Dont you agree that there will be many people for whom this data will be helpful , Or are you saying that this additional informaton is not at all helpful for anyone ?

        Note – everyone can have their own thinking, agreed that this criteria has no weightage for you personally, which is totally ok and acceptable .


        1. Vivek K says:

          I agree this data could be useful to people who wish to give more weightage to such actors. Since these things don’t bother me much I was trying to understand why would anyone want this data.

        2. Raja says:

          Same caste / community , neighbours’ childrens’ age-group , festivals etc are very temporary factors.

          The neighbours might be tenants , so high chances of them moving elsewhere. Some owners also end up relocating / transferred.

          Such aspects are 99% unworthy of considering while searching to buy a house.

          1. Raja

            thats a personal opinion. many people will not agree on this , they can see this as 50% important , I see it as 20% important and you see it as 1% important . Nothing wrong !

          2. ashwin says:

            Well they might be, for example people want to move to only-vegetarian societies.

  63. anonymous says:

    One important thing that you left over is around Pre EMIs. If you have opted for paying Pre EMIs then, you will only be paying the interest part of the loan that is disbursed and not the principal amount. So until possession you will end paying only interest which will be over and above the cost of home.

    1. TS Ashok says:

      In HDFC, you can go for trench based EMI which means you can pay EMI instead of interest.Such that principle also will be subtracted when you pay pre EMI.
      But my view is please go for constructed one..since they are making huuuuuge delay and asking surprise costs suddenly and they will not hear what we say.. the builders almost consturct on their own. what ever we say, they will tell as “this is standard. we have 10 years of exp. if we execute as per your idea, you may feel fault in future..”. non sense guys!!(builders!!).

    2. Yes thats correct , but it depends if a person choose pre-EMI or not !

  64. Hitesh says:

    Dear Manish,

    A very good article considering some important points to decide the type of prorerty to be purchased. Its come on the right time for me. I will definitely use this info for my purchase.
    Keep it up !!!!!


    1. Sure Hitesh

      Good to know that this was helpful for you . Do share your experience with us later 🙂

  65. Thanks Manish for this post. I have a related post at http://oshantomon.blogspot.in/2011/08/buying-apartment-my-experience.html

    Couple of points:
    1. For ready-to-move-in properties too you can get loans. So why did you consider arranging money for ready-to-move-in-properties as an additional ‘con’?
    2. The house in which one wants to stay, should be bought in ready-to-move-in state. The second house/apartment which one buys for investment, may be bought in under construction phase. (I won’t do so, but then my risk appetite is my personal choice).

    1. Sambaran

      I looked at your post 🙂 . Actually the pros wanted to say that you had to arrange downpayment, registeration, stamp duty , parking etc all at one go ? Correct me if I am wrong . Doesnt it happen in most of the cases .I know the home loan will be available in most of hte cases

      1. banudas says:

        Right. We should also note that instead of paying the builder the installments, we can save the money and invest in some debt funds and wait for the property to get completed before buying it

        1. But what about the price appreciation ?

          1. banudas says:

            Glad that you asked. I would like to make a couple of points here.

            1. We need to now understand that the price can appreciate or depreciate based on the market conditions and so it is not a safe assumption that prices will appreciate. If at all the prices appreciate at a higher rate than your other investments, it would be the price you pay for the certainty over uncertainty. The builder delays and pre-emi costs generally much higher that what we assume and the finishing may not be upto our standard. I believe that the price is well worth it

            2. It is only in India that we have this concept of in construction properties being sold so aggressively. In developed economies the realty Company bears all the risk until completion and the consumer gets generally only finished properties. One of the Foreign realty companies were asked why were they planning an India Entry their reply was – “Where else can we get customers to fund our projects ans still make good returns”
            I think we need to change that in India.

            1. Good point . thanks for those points ! ..

              Can you share more about yourself, how did you get in touch with international builders ?

            2. banudas says:

              Sure. Can you share your coordinates to banudas@yahoo.com and we can get together?

    2. Kulkarni says:

      Pristine, Maple and Jalan are good builders and carrying good faith in Pune. But their few projects are delayed for possessions, not sure why. It has been observed that their few East Pune side projects are delayed by work. Example they have joint project as Neo City located at Wagholi Pune, buyers are waiting for possession from last 4 years. Neo City project was started in January 2011 and people are still waiting for phase 1, 2 and 3 possessions. Not only for these builders but to buy a new flat always check builder’s record of possessions and then only buy new flats, thank you.
      – Mr. Kulkarni

      1. Hey Kulkarni

        Thanks for sharing your experience with all of us. It was a great learning.


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