Under-Construction or Ready-to-Move?

The financial trade-offs between buying a flat still being built and buying a completed one, including price, GST, delays and rent costs.

Home buyers in India often choose between flats under construction and ready-to-move homes.

Under-construction homes

Advantages:

Lower prices, often at launch.
Payment in stages linked to construction progress.
Choice of units.

Disadvantages:

Delays: many projects have been delayed for years.
Risk of the developer failing.
GST: under-construction homes attract GST (5 percent for regular homes and 1 percent for affordable homes, without input tax credit, since 2019).
Paying rent and EMI at the same time while waiting.
What you get may differ from brochures.

Ready-to-move homes

Advantages:

No construction risk: you see what you’re buying.
No GST on completed homes with a completion certificate.
Move in immediately, saving rent.

Disadvantages:

Higher price.
Less choice.
Older buildings may need repairs.

RERA protection

The Real Estate (Regulation and Development) Act, 2016 requires projects to be registered, holds 70 percent of buyers’ money in dedicated accounts and allows compensation for delays, reducing risks for under-construction purchases.

The calculation

Compare the total cost:

Price + GST + rent paid during construction + interest on pre-EMI payments,
Versus a higher price for a ready home with no GST and no extra rent.

Tips

Check the developer’s track record.
Verify RERA registration and approvals.
Keep a buffer for delays.

The double burden

A family books an under-construction flat, paying EMIs on disbursed amounts while renting another home. The project is delayed two years, and the combined rent and EMIs strain their budget. A ready home would have cost more upfront but less overall.

Thinking under-construction homes are always cheaper

After GST, rent during construction and delay risks, the total cost can exceed a ready home.

Key takeaways

Under-construction homes are cheaper upfront but risk delays.
They attract GST; completed homes don't.
Paying rent and EMIs together can strain budgets.
RERA reduces but doesn't eliminate project risks.