Buying an under-construction property does come with certain risks, and it's important to be aware of them before making a decision. Here are some potential risks associated with buying under-construction projects:
1. Delays in Completion: One of the most common risks is delays in project completion. Construction timelines can be affected by various factors such as regulatory approvals, funding issues, labor shortages, or unforeseen circumstances.
2. Changes in Plans: Developers may sometimes make changes to the original plans or specifications of the project, which could impact the final product you receive.
3. Quality Concerns: There may be concerns about the quality of construction or materials used in the project. It's essential to research the developer's track record and reputation in delivering quality projects.
4. Legal Issues: There could be legal issues related to the project, such as disputes over land ownership, regulatory compliance, or title clearances. It's crucial to conduct thorough due diligence before purchasing.
5. Financial Risks: If the developer faces financial difficulties or bankruptcy during the construction phase, it could impact the project's completion and your investment.
6. Interest Costs: If you have taken a home loan for an under-construction property, you may have to bear the burden of paying both the EMI and rent until possession, which can strain your finances.
To mitigate these risks, here are some steps you can take:
- Conduct thorough research on the developer's reputation, track record, and financial stability.
- Verify all legal documents and approvals related to the project.
- Understand the payment schedule and penalty clauses for delays.
- Consider opting for a construction-linked payment plan to align payments with project milestones.
- Have a clear understanding of your rights and recourse in case of project delays or quality issues.
It's advisable to work with a real estate advisor or legal expert who can guide you through the process and help you make an informed decision.