RERA in Real Estate: What Buyers and Builders Need to Know
2024-12-23 01:51:26
Residential plots and residential flats are two distinct investment options to consider. Each comes with its own advantages, but understanding which suits your needs better is crucial.
Purchasing a plot and constructing your own home can often be more cost-effective than buying a flat, especially in certain parts of India where land prices are lower. By opting to buy a plot, you may get more space for your money, allowing you to build a larger home at a lower overall cost.
Additionally, building on your own plot gives you the freedom to design a house tailored to your specific needs and preferences. You aren't bound by the limitations of a pre-designed flat, and you have full control over the layout, size, and budget of the project.
On the other hand, when you purchase a flat, maintenance responsibilities are taken care of by the builder or developer. Any issues that arise can be quickly addressed, sparing you from having to manage repairs and upkeep on your own.
Buying a flat also eliminates the hassle of securing permits and approvals, as the developer handles all legalities. Moreover, flats come with the added security of being free from encroachment risks.
The main distinction between a residential plot and a flat is that a plot is an empty piece of land on which you can build a custom home, while a flat is a pre-constructed unit developed by builders.
Residential Plots:
A residential plot is land where you have the option to build your own house. It can be purchased from either the government or private owners, with the buyer responsible for securing building and planning permissions. Generally, residential plots provide more space compared to other types of property.
Residential Flats:
Flats are typically located within city limits, offering more convenience and accessibility. They are built with modern infrastructure, including roads, drainage, and utilities, and often feature open spaces, enhancing both their functionality and aesthetic appeal.
Different Metrics | Residential Plot | Residential Flat |
Flexibility | Residential plots offer maximum flexibility to the buyers as they can build their own houses according to their budget and preferences. They can also add their own touch to the house according to their needs and requirements. | On the other hand, residential flats are more expensive than residential plots because they offer less flexibility when it comes to customization options while constructing your dream home. |
Rate of Appreciation | Plots and land are more valuable than flats because there is a limited supply. | As time goes on, the value of an apartment or flat decreases and the condition deteriorates.Due to this reason, people who want to invest their money in real estate prefer purchasing plots instead of flats or apartments. |
Financial Aid or Assistance | Availability of a loan for a plot is challenging. You will have to go through several rounds of documentation and documentation to get funding from banks or financial institutions | The financial assistance for purchasing a flat is easily available. In fact, the government has come up with schemes to help people avail housing loans at low interest rates and with easy repayment. |
Potential of Income | You can expect a rental income from a plot only after building a structure on it. You will have to wait until the construction work is complete and then start collecting rent from your tenant after giving him possession of the property. | If you want to make money immediately, then you should go for buying a flat instead of plot because then you can get rental income right away without having to wait for years until your construction work is complete. |
Tax | You can avail of tax benefits only after constructing a property on the plot. This is because you do not have to pay for anything in advance but when construction starts, then it becomes taxable income. | You can avail of tax benefits through a flat on your housing loan interest, principal repayments, etc. This is because you have to pay for everything in advance and there is no such thing as an income tax benefit available through a flat. |
In India, residential plots and residential flats are two of the most common property types. Each has its own set of advantages and disadvantages, so it's important to choose the one that best fits your needs. To help you make an informed decision, we’ve compared the benefits and drawbacks of both residential plots and flats.
Plot vs. Flat – Effort
One key difference between a plot and a flat is the amount of effort required. Acquiring a plot typically demands more effort than purchasing a flat.
Plot:
A plot is a piece of land with defined boundaries, with or without a building structure. The owner has complete control over it and can either sell or develop it as desired.
Flat:
A flat is an apartment in a multi-story building, where ownership is shared with other residents. While the size can vary depending on needs and budget, full ownership rights are shared with other flat owners.
Plot vs. Flat – Possession Timeline
While it may take months or even years to take possession of a flat, plots are often available for immediate possession. If the plot is part of a township, the chances of earlier possession are higher compared to a flat.
Plot vs. Flat – Investment Returns
Residential plots are generally considered a better investment option in terms of returns. Plots tend to offer higher returns due to lower land costs and greater development potential.
In contrast, flats usually have lower returns because of higher construction costs and smaller sizes. However, if you're seeking a short-term investment or plan to live in the same building, a flat may be a more practical option.
Plot vs. Flat – Income Potential
Plots don’t generate income until a house is built on them. On the other hand, owning a flat provides an opportunity for rental income, making it easy to rent out extra space and generate additional revenue.
Plot vs. Flat – Tax Benefits
The tax treatment of plots and flats differs. When you take out a home loan to purchase a flat or a builder’s floor, you can save on taxes through loan repayment deductions.
In the case of developer-built flats, the interest paid on the loan is treated as rent, allowing you to claim deductions for various expenses related to the property.
Conclusion: Residential Plot vs. Residential Flat
Ultimately, the decision between a residential plot and a flat comes down to personal preference and convenience. As long as the property is well-located within a metro area with access to key infrastructure like airports and highways, either option can be a good investment. For personalized advice, it’s always a good idea to consult with a real estate agent who can guide you through the available options.
Which is a better investment: a plot or a flat?
Currently, both plots and flats are in high demand. People are increasingly looking to own homes in secure locations with all essential amenities provided by developers or the government. The demand for plots, particularly in areas like Lucknow, has risen as more individuals prefer owning land over paying rent.
Do plots appreciate more than flats?
Yes, plots typically appreciate more than flats. The larger space and greater development potential that comes with a plot often lead to higher returns. Plots also offer more privacy and security.
Which offers better design flexibility: a plot or a flat?
A plot offers complete design freedom, allowing you to build your dream home according to your taste and requirements. In contrast, flats come with limited design options, though they are generally more affordable and provide easy access to amenities.
Is it easier to get a loan for a flat?
Yes, obtaining a loan for a flat is usually easier. Flats tend to be more expensive, providing lenders with more security in case of default, as the flat itself can be used as collateral. However, the lender will still evaluate your income and other factors before approving the loan.
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