What is Off-Plan / Under-Construction Property?
When a developer launches a new housing project, they typically start selling apartments before the building is complete — sometimes even before construction has begun. Buyers make payment commitments based on brochures, sample flat displays, floor plans, and RERA-registered project details. This is an off-plan purchase, or in Indian terminology, buying an under-construction flat.
Off-plan buying has been the dominant model in Indian real estate for decades. It allows developers to fund construction using buyer payments, and gives buyers the ability to buy at lower prices and pay in stages over the construction period rather than arranging the full amount upfront.
Pros and Cons of Off-Plan / Under-Construction Property
Advantages
- Lower entry price — 10–25% below ready-to-move
- Appreciation potential during 3–5 year construction period
- Staged payment — easier on cash flow
- Choice of floor, unit, and sometimes customisation
- RERA escrow account protects 70% of funds
- New building — no wear and tear, latest design
Risks
- Delivery delay — most projects run 6–36 months late
- Cannot see actual unit before purchase
- Specifications may change from brochure
- GST of 5% not applicable on ready property
- Pre-EMI interest during construction adds cost
- Builder financial stress can stall project
Payment Plans for Under-Construction Property
| Plan Type | How it Works | Risk Level | Best For |
|---|---|---|---|
| Construction-Linked Plan (CLP) | Pay in stages as construction milestones are reached — foundation, slab, floors, finishing | Lowest — pay only for completed work | All buyers — safest option |
| Time-Linked Plan (TLP) | Pay on fixed calendar dates regardless of construction stage | Medium — risk if construction lags behind | Buyers with predictable income but watch RERA compliance |
| Down Payment Plan | Pay 80–100% upfront at booking for significant discount (5–10%) | High — all funds at risk if builder defaults | Only with top-tier builders with proven track record |
| Subvention Scheme | Builder pays EMI during construction — buyer only pays possession | Medium — builder's financial health matters | Buyers who cannot afford pre-EMI; verify RERA status |
Always prefer CLP (Construction-Linked Plan): This is the most buyer-protective payment structure. You pay only when the builder actually completes a verifiable construction stage. RERA also mandates that construction stage completion is certified by the project engineer before the builder can raise the corresponding demand.
RERA Protections for Off-Plan Buyers
Key RERA Protections for Under-Construction Buyers
- Mandatory RERA registration: Builder cannot sell without registering project with state RERA authority
- 70% escrow: 70% of all collections must go to a dedicated project escrow account — preventing fund diversion
- Fixed possession date: Builder must declare and adhere to a possession date registered with RERA
- Delay compensation: If builder delays, buyer can claim interest at SBI MCLR+2% for every month of delay
- Full refund option: If builder delays beyond agreed date, buyer can exit and claim full refund with interest
- Carpet area guarantee: RERA mandates pricing on carpet area — any reduction in actual carpet area entitles proportional refund
- 5-year structural warranty: Builder is liable for structural defects for 5 years post-possession
What to Verify Before Buying Off-Plan
Pre-Purchase Off-Plan Checklist
- Verify RERA registration number on your state RERA portal — check possession date and escrow bank
- Research builder's last 3–5 projects — were they delivered on time? What do residents say?
- Check RERA complaints against the builder on the RERA portal
- Confirm land title is clear — builder owns or has valid development rights for the land
- Verify commencement certificate is in place before paying anything
- Read the builder-buyer agreement carefully — especially possession date, penalty clause, and specification schedule
- Choose Construction-Linked Payment plan wherever possible
- Confirm project has tie-up with reputed banks for home loans — bank approval indicates basic due diligence is done
Related Terms
Frequently Asked Questions
Off-plan property (called under-construction in India) is a property bought before construction is complete. Buyers commit at the project launch stage based on floor plans and sample flats. The main attraction is a lower entry price — typically 10–25% below ready-to-move equivalent — with the risk that the actual unit may differ from promises, or the project may be delayed.
It is significantly safer since RERA 2016. RERA mandates project registration, a 70% escrow account, fixed delivery dates, and interest compensation for delays. However, the key differentiator is the builder — buy only from RERA-registered projects by builders with a proven delivery track record. Always check the builder's past project delivery history and RERA complaint count before committing.
CLP (Construction-Linked Plan) ties your payments to actual construction milestones — you pay only when the builder completes a verified stage like foundation, slabs, or finishing. TLP (Time-Linked Plan) ties payments to calendar dates regardless of construction progress. CLP is significantly safer for buyers because you are not paying for work that hasn't been done. TLP benefits builders when construction is slow but is riskier for buyers.
Under RERA, if the builder delays possession beyond the date registered with RERA, you can: (1) claim compensation at SBI MCLR + 2% interest per month on all amounts paid for every month of delay, or (2) exit the project and claim a full refund with the same interest rate. File a complaint with your state RERA authority. The builder cannot avoid this liability as the possession date is a registered commitment.
Yes. GST of 5% (without input tax credit) applies on under-construction properties. For affordable housing (carpet area up to 60 sq m in metros, 90 sq m in non-metros, value up to ₹45 lakh), the GST rate is 1%. Ready-to-move properties with Occupancy Certificate are exempt from GST — this is one of the financial advantages of buying ready property over under-construction.
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