Are you having problems choosing between a plot and a flat for your savings? It is very important to look into everything before you invest your hard-earned money anywhere. Learn more about plot vs flat on this blog!
Putting money into any property is a hard job to do. Not only is it important to look out for a safer way to invest, but also one has to take into consideration whether it is better to buy a flat, a plotted house, or a plot.
While investing in a plot, one gets the opportunity to construct their own house based on their own design and planning. However, when investing in a flat, the construction will be multi-storied, and therefore, one has no choice except accepting what has already been made.
With plotted construction, you are answerable for constructing and securing your own built-up home, while with apartments, you get the advantage of security and convenient location.
So which is better, a plot or a flat? We will try to find out.
A flat can be described as the space which is part of a bigger building. Flats are common in urban areas, and they provide facilities in common with the aim of enhancing the quality of life. One can argue that flats provide conveniences, hence the reason why many people prefer to live in them.
| Flats | Location |
|---|---|
| Max Estate 360 | Sector 36A, Gurgaon |
| Godrej Samaris | Sector 53, Gurgaon |
| Obeori Realty 360 North | Sector 58, Gurgaon |
| Emaar Serenity Hills | Sector 86, Gurgaon |
Plots can be described as parcels of land that have not yet been developed. A plot is an area where people can play around with the land and build their ideal house. They are very personal in nature and can be tailor-made according to the need and wish of the landowners.
There can be three types of plots, including residential, commercial and agricultural plots. The names themselves explain what they are meant for.
| Plots | Location |
|---|---|
| Pyramid Residential Plots | Sector 85, Gurgaon |
| Experion Westerlies | Sector 108, Gurgaon |
| DLF Alameda | Sector 71, Gurgaon |
| Tatva Estate | Sector 99A, Gurgaon |
Before we delve into specifics, have a look at the tabulated comparison of our land investment versus flat investment.
| Basis of Differentiation | Plots | Flats |
|---|---|---|
| Flexibility | With the plot, you have the pleasure of enjoying the freedom of constructing the structure as per your choice and preference. | If you have a flat, you can only modify it to a limited extent because the structure is already made. |
| Rate of Appreciation | Because the availability of land or plot space is limited, they have more value compared to flats, and their appreciation rate is higher. | Due to the tendency for a flat or an apartment to depreciate with time, its value becomes low. |
| Financial Aid or Assistance | Availing of a loan for a plot is challenging. | Financial assistance for purchasing a flat is easily available. |
| Potential of Income | You can expect a rental income from a plot only after building a structure on it. | You can get rental income from a flat without having to build anything. |
| Tax | Tax benefits can be claimed for a plot only after erecting a house in the plot. | Tax benefits can be claimed for a flat through housing loan interest, repayments, etc. |
However, while acquiring the land plot, one needs to construct according to the approved plan and gets the help of an architect or a contractor for the purpose. Besides looking into the construction process and financing the same, the job consists of doing many errands in trivial issues.
However, when one acquires a flat, the job of the developer assumes significance, and it is only after the completion of the building that the ownership of the house takes place. It is only the decoration of the house that assumes importance at this point.
Moreover, a flat would have all facilities like electricity backup, water supply, maintenance, and security, along with some additional facilities like a club, swimming pool, etc.
However, while acquiring the land plot and constructing the house, it is definitely the responsibility of the individual concerned. Hence, it is better to purchase a flat.
In comparing flats and plots based on delivery and possession, the fundamental distinction lies between immediacy and the time it takes to construct.
While acquiring any land or an under-construction plot in any authorised colony or township, the process of acquisition becomes immediate. Once all procedures are completed, you get the land in your possession that can be utilised for construction or any other purpose.
However, while acquiring any under-construction apartment, you will have to wait for months to even years to acquire it. Despite having a system like RERA in force, buying a flat itself becomes risky in relation to delayed delivery of property for one reason or another.
If you live in an apartment, then it is definite that you know about the monthly fees. The fees may be in relation to the use of lifts, cleaning fees, salaries of security personnel, water charges, or even the electricity bill of the common area.
Normally these monthly fees range to a few thousand rupees. It feels like a never-ending fee that you need to pay irrespective of how much you use the facility.
The situation is entirely different in case of the plot. There are no monthly fees till the construction of the building is done. All you might need to do is to ensure that the land is fenced and nothing happens. Once the building is constructed, the spending will depend on you.
Apartments may still prove to be a strong choice for those investors looking to earn steady income. Monthly cash flow is one of the key attractions of investing in flats for rental income in India.
The first thing that comes to mind for anyone who wants to make rental income is a built-up flat. You may create rental income from flats; however, this is not possible with plots.
You cannot earn anything unless the plot is constructed. “Today, it all depends on the end user.' Thinkstock', which is located in a developing area, and if it is authorised by the local authority, then it is a safe and profitable investment.” Ramesh Menon, founder of Certes Realty, an investment advisory firm.
Also Read: Best Real Estate Developer in Mumbai
There are some significant differences when it comes to taxation for a plot and a flat. When you take a loan to buy a flat or a builder floor, the monthly EMI can help you save on taxes.
One can also enjoy the benefit of a tax deduction of up to Rs 1.5 lakh per financial year on the interest paid. Further, a tax deduction of Rs 1 lakh can be taken on account of the principal paid. But in the case of plots, interest deduction will be available only once construction is over," says Kunj Kaushal, chartered accountant, Delhi.
One of the problems the buyers face in purchasing a plot is determining who the owner is and the documents necessary for facilitating the deal. However, this does not mean that purchasing an apartment is an easy thing.
The important point here is that when you purchase a plot, what you actually purchase is the ownership of the entire plot. In case of the flat, what you are purchasing is just one unit in the building.
It is typical of the apartments to have been owned by only one or two persons. Plots, on the other hand, can have been owned by many generations of the same family.
The purchase of a plot is more complicated legally than the purchase of an apartment.
Hopefully, through our comparison, you will get the idea of whether to purchase a plot or a flat. In case you still cannot decide, we recommend consulting a property consultant who would explain everything to you in detail.
It is essential that no matter what you choose, you should be sure about whether you have enough money and space to purchase that property. For most of us, buying a house is a lifetime investment, so think well before you make a decision.
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