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Safe Retreat in Nerve-wracking times of COVID-19 for Home Buyers: Ready-To-Move-In Project

Homebuyers are expected to gradually return to the market in the coming six months as real estate is still professed as the ideal mode of investment, a report by National Real Estate Development Council (NAREDCO). While investing in real estate, it is important for homebuyers to comprehend how to reduce risk insight in this time of pandemic.

According to The Indian Real Estate Consumer (April – May 2020)  report, real estate (35%) is still alleged as the preferred means of investment, followed by gold (28%); fixed deposits (22%), stocks (16%). 

The survey was conducted in April and May 2020, through a random sampling technique for a fair depiction across regions. The insights presented in the review entirely represent the view of more than 3,000 potential homebuyers. 

A majority of respondents surveyed (73%) comprise ‘first time homebuyers’, who are looking to procure a ‘ready-to-move-in-house’ for end-use and are from the age group of 25-45 years. While 60% of respondents opined that for the next six months, they would prefer a ready-to-move-in property, 21% said they were okay with a property with a delivery timeline of maximum one year. NAREDCO said that it is believed that, real estate will be ‘positive’ for both end-users and investors in the post-COVID-19 world.

While the vagueness is likely to impend over the next two quarters, it has also created a sense of urgency and obligation in the mind of solemn home buyers, who are looking to endow in real estate to secure their future and to reap benefits such as discounts and schemes and scope for harder negotiations in the current environment.

The biggest blow of the pandemic and the lockdown thereafter led to emergence of two major trends that are – the rises in demand for condominium living and thereafter increasing demand for ready-to-move-in units, which involve low risk and are readily available to purchase with easy finance options. 

Ready-to-move-in condominiums are showing elevated footing due to the anticipated delay in deliveries associated with under-construction units. With no GST payable on resale flats, the demand for ready-to-move houses has soared noticeably since the lockdown and the industry is also seen moving towards this trend.

Another trend that will emerge from this period is demand for condominiums and integrated townships in Tier-II cities that are becoming prime destination. With available pricing, more space, and better ROI, these cities will eyewitness increased investment from home buyers who want to minimize risk and maximize returns. In a post Coronavirus era, some buyers are also looking for a lifestyle that is away from the hustle of mainstream city life.

No GST on ready to move in flats: The government has provided some support to developers with six months extension in the completion dates for projects under RERA, to de-stress the industry, but does that help consumers to take a decision on where to invest and if it’s the right time? 

In an effort to protect homebuyers from being fleeced by the unscrupulous builders in the name of GST, the finance ministry issued a clarification stating that no GST is applicable on the sale of constructed property – ready-to-move-in flats and buildings – where sale takes place after the issue of completion certificate by the government authorities.

Finance Ministry clarified that GST was pertinent only on the sale of those under construction properties or ready to move-in flats where completion certificates have not been issued at the time of sale.

The government said that the efficient pre-GST tax rate in the real estate sector was around 15 to 18%, which has not gone up for reasonable and other segments after the realization of GST.

Clause 171 of the GST Act makes it mandatory for any GST registered business to pass on the benefits of the input tax credit to the end-users as GST has been designed to abolish the cascading of taxes.

Ready-to-move-in houses are not just an investment of accumulated fund, but the decision is also sentiment-driven to safeguard own future. That’s why first-time investors are interested in residential property and are opting for ready to move in projects. 

As a result, potential buyers who have been in discussion for over 3-6 months have decided to close the deals during the lockdown. 

Conclusion:

Ready-to-move-in property is fast becoming the most popular choice in recent times. Uncertainty over project completion has made ready-to-move-in property more of a necessity rather than a desire! 

However, there is still a debate In cities like Delhi, Mumbai, and Bangalore where most of the buyers can afford under-construction instead of Ready to move in properties. The risk factor involved in ready-to-move-in property in terms of delays and hassles during construction is nullified, as the home buyer is getting ready accommodation. 

Evaluate your financial state not just for today but also for five to ten years from now. And, lastly, keep monitoring interest rates to take advantage of the low-interest management if you are considering taking a loan. It is prudent to invest in plausible developers who have had a proven bequest to deliver on commitments, and properties that are RERA approved, to minimize risk. 

Looking for properties in Delhi, Zirakpur, Mohali, New Chandigarh, or Derabassi?

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