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Avoid under construction property, if it is for self occupation

Ajay was dreaming of moving to his new flat in Navi Mumbai during this Diwali, as promised by his builder 2 years back. But the situation is such that he has to wait for atleast 1 more year for the flat to be ready for occupation.

He was happy in booking this flat at the pre launch phase at a 20% discounted rate compared to the market rate. But now, he is paying rent and the Pre EMI, which is upsetting his monthly budget.

This is the situation of many who booked flats in under construction properties. With high interest rates and higher inflation, many builders are facing acute cash shortage and many projects are delayed in the last 3 years.

Avoid Pre launch deals if it is for self occupation

Pre launch deals are ideal for those who are purchasing it as an investment. At this stage, the risk in investment is high because there will be only few approvals in place. It is better to avoid pre launch purchase, if you are buying for self occupation.

Factors to consider while booking an under construction property

Reputation of the Developer

The track record of the developer is an important criteria to consider while buying an under construction property. If the developer has a clear record of many successful projects in your area and if he is financially sound, the risk is less for you. But, if he is having huge debt and is using the money collected from a project to complete the other pending projects, you are taking a risk.

Documents and approvals

In the pre launch stage, lot of approvals will be pending. But you have to ensure that atleast the basic approvals are in place.

The builder should have free and clear ownership of the land, where the project is coming up. He should also have the plan approval from the local authorities and town planning department. If the project is a joint venture, joint development agreement also should be in place. The project also should have a commencement certificate in place, in addition to the intimation of disapproval. You have to verify all the above before finalizing the purchase.

Bank Approvals

If you are planning to buy the property through a home loan, you should evaluate the possibility of the project to be approved by banks for loans. At this stage in the absence of all approvals, the project may not be in the approved list for banks. But, you have to evaluate the possibility of approval before finalizing the deal.


The main attraction of a pre launch purchase is the lower price compared to the ongoing market rate. But you have to consider the possibility of appreciation in that area before finalizing the deal. This can be decided by studying the historic market performance in the area, possibility of additional infrastructure development, future development chances etc. in the area. You have to make a cost benefit analysis, before finalizing the deal.

It is better to consult a professional and dependable real estate agent, if you cannot decide based on the above factors.



1 Comment

  • Rishika Posted February 24, 2017 5:05 pm

    one more reason to avoid under-construction property is Quality of the construction may not be as good as promised before the purchase, but you can’t do anything as you would already have paid for it. Also remember that Lead time for delivery may be 18-24 months. Many things happen and change during this time frame.

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