Old vs new construction house: Which is better for a homebuyer?

Purchasing a house is becoming an increasingly popular investment option for many Indians. Property values tend to appreciate over time and the property’s physical condition is a key factor that influences the price. In India, the lifespan of apartments is typically around 50 to 70 years and the use of quality construction materials and regular maintenance is crucial for keeping the structure in a proper condition. As a buyer, you may come across two options when shortlisting a property: an old construction and a newly constructed property. Before making a choice, buyers should carefully assess the pros and cons of each option to ensure they get the maximum return on their investment. 

How to identify an old construction house?

There is no legal definition of an old construction property. However, an old construction property may be referred to as a structure that has aged or was constructed at least 20 to 30 years ago. Additionally, these properties are likely to experience structural issues due to wear and tear, which poses greater safety risks. Moreover, there is a higher chance that layout and design elements, such as plumbing features, will be outdated. Old construction properties or resale properties will have at least one previous owner. 

What is a new construction property?

A newly constructed property is a structure that has been recently developed, typically within the last five years. These may also include properties that are under construction or not yet ready for possession. Usually, these properties are purchased directly from builders and feature modern layouts, amenities, etc. More importantly, such properties are likely to adhere to the latest construction standards and building codes, ensuring the safety of the occupants. 

Pros of buying old construction property

Buying a property in the resale market comes with a lot of advantages. Here are some of the top reasons why buying an old property may work for you.

Lower purchase price and tax benefit

Older properties are known to be more affordable than newer ones. The older the house, the lower its price is likely to be. However, one must note that if it is a standalone house, the price will depend on the land on which it is built. In case of an apartment in a building, the buyer can negotiate the price, citing the structure’s age, interiors, etc.

A property buyer must pay Goods and Services Tax (GST) on new properties. However, GST does not apply to resale property, which further increases the affordability of the house. 

Prime location

There is a higher likelihood that older properties will be located in well-developed neighbourhoods. This will be beneficial for families and working professionals, as public transport, schools, colleges, and business hubs will be easily accessible. Additionally, as these locations continue to develop, prices are expected to appreciate further. So, the resale value will increase with time, which is an added advantage for the buyer. If the property is located in a high-demand neighbourhood, the buyer may consider renting it out to earn attractive rental returns. 

Spacious homes and scope for renovation

Older properties tend to have larger layouts with spacious balconies and thicker walls. Some properties may also come with unique architectural features and designs, which the previous owners may have added. Standalone houses may also have fully developed landscaping with mature trees, increasing the property’s appeal. Furthermore, older properties present buyers with the opportunity for renovation. Customising or modifying the property with upgraded features will enhance its value. 

Ready for occupancy

In most cases, purchasing an older property may mean the chance for immediate occupancy. The buyer can move in immediately after completing the formalities. For example, for someone considering relocating to another city immediately, buying an older property may make sense. However, the decision should be made after considering other factors such as verifying the structural condition and ownership records of the property. 

Downside of buying an old property 

There are certain drawbacks to buying an older property that a buyer should consider before investing. These include:

• Maintenance issues: Older properties tend to face more structural problems, causing safety risks. Some examples are cracks in the walls, foundation problems, plumbing issues, etc. The cost of repair and maintenance in these properties is likely to be higher. 
• Outdated amenities: Old properties may lack certain facilities such as lifts, parking areas and modern security features. This may not be suitable for someone looking to lead a contemporary lifestyle. 
• Compliance risks: There are higher chances of these buildings not conforming to the current building or fire safety codes.

Pros of buying new construction property

Newly constructed properties are highly sought after, as most buyers look to begin their home ownership journeys. Besides, there are several advantages of investing in a new property. 

Modern amenities

New properties are constructed with the needs and aspirations of modern home seekers in mind. Hence, one is likely to have access to numerous facilities and conveniences, including parking spaces, elevators, a gymnasium, smart home technology and security features, among others. These properties may include energy-efficient designs and layouts. 

Lower initial maintenance

Since newly constructed homes have been developed with the latest construction techniques and materials, such properties will not have any major issues. Hence, the cost of repair and maintenance is likely to be less, especially in the initial years. 

Compliance with building norms

Newer properties will adhere to the local construction regulations and building codes. This will make them safer for the occupants and less likely to cause legal hassles for the buyer. 

Higher property value

Newer properties are more appealing to buyers and tenants, compared to older ones. These properties, even if they are located in far-flung areas, will be more easily marketable owing to their modern features and aesthetic appeal. Hence, they may be a great investment option. Besides, the property value will increase as the area develops. 

Downsides of new construction properties

Higher costs 

Due to the modern construction with all the latest facilities, purchasing a newer property can be a costly affair for any homebuyer. Moreover, a buyer has to pay GST, which will increase the overall cost of the property purchase. Therefore, a significant amount of financial planning is involved in purchasing a new property. 

Location problems

Property markets in big cities such as Delhi and Mumbai witness a saturation due to a lack of land availability. Hence, most of the developments have moved to the peripheral areas with a higher availability of new residential units in gated communities. One of the major disadvantages of investing in these properties is a lack of amenities and commuting problems. 

Delays in possession

Buying an under-construction property involves a lot of careful planning on the buyer’s part, as there could be delays in construction completion and handover. A new house may take years to build. This could be stressful for the homebuyer as they may have to look for alternate accommodation for the time being. 

Housing.com News Viewpoint

Investment in any of the options – an older property or a newer property – may be beneficial for a buyer if it aligns with their needs, budget and risk tolerance. Before choosing between an old property and a new property, a buyer needs to address some key questions. For example, is the location suitable? Am I financially ready to bear the higher maintenance costs, or should I opt for a low-maintenance property? Moreover, it is crucial for the buyer to undertake property due diligence in terms of verifying property ownership and property inspection. 

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