In a city like Mumbai, where real estate is expensive, under-construction projects offer an affordable option for prospective home buyers. Projects under construction provide several advantages, like lower pricing, staggered payment options, and greater ROI through asset value appreciation. However, it is important to remember that under-construction projects carry risks of delay in delivery and even non-conformity with plans.
The first thing you need to check before investing in an under-construction project in Mumbai is to check its RERA registration. The Real Estate (Regulation and Development) Act 2016 offers a number of protections to the homebuyer. In case of delays in delivery or if the builder is unable to meet quality standards or promised facilities, there are legal safeguards available to the homebuyer under the RERA. To check the RERA registration, log on to the state RERA website and look up all details pertaining to the project. You can also view the building permits and approvals here.
Before investing in an under-construction property, it is important to understand the building design, the floor and unit plans and get a clear idea of the super-built area and carpet area. It is often difficult to envision the home or the unit you will own when the building is under construction. Check for any 3D or virtual renditions of the unit the builder may have to get a feel of the house. At this time, it is also essential to ask about the construction quality standards adhered to by the builder, the types of doors and windows, the fixtures, the flooring and countertop materials etc.
What makes under-construction projects attractive is the pricing. Ready-to-move flats are often more expensive than units that are under construction. This is because, by booking early, you are improving the cash flow and liquidity of the developer. In exchange, you agree to a lower price or payment in instalments (as the construction progresses) and to wait for an extended period. It is important to have clarity about the percentage of payment that is required at every stage and the timeline for meeting the construction goals. Checking the builder's reputation and track record while investing in under-construction apartments is a good idea.
Under-construction projects in Mumbai are a great investment option. Real estate investors often look at buying properties as soon as the project is launched and sell them when they get the occupation certificate or completion certificate. The value of the property is expected to rise considerably by the time it takes the builder to complete the project. However, this is true only if the location of the project has excellent growth prospects. Investing in places with upcoming infrastructural projects, like an upcoming metro station or a new expressway, may be a good idea.
Budgeting and personal finance are other things to keep in mind when you invest in an under-construction project. You may have to bear the outflow of monthly EMI and additionally pay rent for your current accommodation until the new apartment is ready for possession. Furthermore, under-construction properties attract an additional GST of 1% (affordable housing) and 5% (non-affordable housing). Ready-to-move apartments, on the other hand, do not attract a GST. This needs to be factored in before you buy the flat or apartment.
One advantage of opting for a home loan is being eligible for income tax deductions on the repayment of the principal and interest repayment. Under Section 80C, you can claim up to INR 1.5 lakh deduction each year on the repayment of the principal amount. This deduction is available only when the pre-construction phase ends but can be claimed during construction. Similarly, Section 24(B) of the Income Tax Act allows you to claim a deduction of up to INR 2lakh on the repayment of interest on a home loan. This is only available after construction is complete. It is a good idea to consult a tax advisor and understand the tax implications before investing.
Investing with a reputed developer or builder can allay most of the risks involved when buying an under-construction property. Blox brings you verified listings of RERA-registered properties from trusted developers in Mumbai and Navi Mumbai.
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