Risks and Real-Life Examples
Buying a flat or apartment is one
of the most significant financial decisions a person can make. For many,
purchasing an under-construction property seems like an attractive option—lower
prices, flexible payment plans, and the promise of a brand-new home. However,
the risks far outweigh the benefits. Delays, fraud, poor construction quality,
and even project abandonment are just a few of the nightmares buyers face.
This article explores why you should avoid buying under-construction flats, backed by real-life examples and expert insights.
Endless Delays and Broken Promises
One of the most common
issues with under-construction properties is indefinite delays.
Builders often cite reasons like funding shortages, legal disputes, labor
issues, or government approvals to justify postponements. What was promised as
a 3-year project can easily stretch to 5, 7, or even 10 years.
Real-Life Example:
Unitech’s Gurgaon Nightmare
Unitech, once a
leading real estate developer in India, left thousands of homebuyers in
distress. Projects like Unitech Grande in Gurgaon were
launched in 2007 with a promised delivery by 2012. However, as of 2024, many
buyers are still waiting for possession. Legal battles, financial
mismanagement, and corporate fraud led to massive delays, with some projects
completely abandoned.
Why It Happens:
- Builders divert funds to new projects
instead of completing existing ones.
- Regulatory hurdles and environmental
clearances cause unexpected delays.
- Economic downturns (like COVID-19)
exacerbate financial troubles.
Result: Buyers pay EMIs on home loans while also paying rent, facing severe financial strain.
Risk of Builder Insolvency and Abandoned Projects
If a developer goes
bankrupt, buyers are left in limbo. Unlike ready-to-move-in properties,
under-construction flats carry the risk of never being completed.
Real-Life Example:
Amrapali Group Scam (India)
The Amrapali Group, a
major real estate developer, collapsed in 2019, leaving over 42,000
homebuyers stranded. The Supreme Court of India found the company
guilty of siphoning off ₹3,000 crores (~$400 million) of
homebuyers’ money. Many projects, like Amrapali Silicon City in
Noida, remain incomplete years later.
Why It Happens:
- Builders misuse funds instead of
completing projects.
- Poor financial planning leads to
insolvency.
- Legal battles freeze assets, halting
construction indefinitely.
Result: Buyers lose their life savings with no hope of recovering their investment.
Poor Construction Quality and Hidden Defects
When you buy a
completed flat, you can inspect the quality before purchasing. With
under-construction properties, you blindly trust the builder’s promises—only
to discover substandard materials, structural flaws, or safety hazards after
possession.
Real-Life Example:
Supertech’s Illegal Towers (Noida, India)
In 2021, the Supreme
Court of India ordered the demolition of Supertech’s twin
40-story towers in Noida due to violation of building codes.
Nearly 600 homebuyers who had invested in these
under-construction flats lost their money overnight.
Why It Happens:
- Builders cut corners to maximize profits.
- Lack of oversight during construction
leads to violations.
- Buyers have no recourse once the project
is completed.
Result: Buyers inherit unsafe or illegal
properties, facing costly repairs or even demolition.
Price Escalation and Hidden Costs
Builders often lure
buyers with "low initial prices", only to later
impose additional charges (parking, club membership, GST
hikes, etc.). The final cost can exceed the original quote by 20-30%.
Real-Life Example:
Jaypee Infratech’s Price Hikes (India)
Jaypee Infratech,
another troubled developer, repeatedly increased prices for buyers in its Wish
Town project. Many buyers who booked flats at ₹50 lakhs ended up
paying ₹70+ lakhs due to arbitrary cost revisions.
Why It Happens:
- Builders use ambiguous contract terms to
justify extra charges.
- Inflation and rising material costs are
passed onto buyers.
- Buyers have no choice but to pay or
forfeit their investment.
Result: Budgets spiral out of control, forcing buyers into financial distress.
Legal Disputes and Title Issues
Under-construction
projects often face land disputes, litigation, or unclear titles.
If the builder doesn’t have full ownership of the land, buyers risk losing
their property to legal battles.
Real-Life Example:
Lavasa Corporation’s Failed Dream City (India)
Lavasa, India’s first
private hill city, was marketed as a luxury destination. However, due to environmental
violations and land disputes, the project stalled indefinitely. Thousands
of buyers who invested in under-construction villas saw their dreams collapse.
Why It Happens:
- Builders start projects without proper
approvals.
- Land ownership disputes arise after
construction begins.
- Environmental or zoning laws halt projects
midway.
Result: Buyers are stuck in legal limbo with no possession in sight.
No Rental Income or Resale Value
Unlike ready
properties, under-construction flats generate no rental income and
have poor resale value until completion. If the market
crashes, buyers are stuck with an illiquid asset.
Real-Life Example:
Dubai’s Property Crash (2008-2010)
During the global
financial crisis, Dubai’s real estate market collapsed. Buyers who had invested
in off-plan properties saw prices drop by 50-70%. Many were forced
to sell at huge losses or abandon payments, losing their deposits.
Why It Happens:
- Market fluctuations affect
under-construction property values.
- Buyers cannot rent or sell until
possession.
- Economic downturns make financing harder.
Result: Buyers lose liquidity and face negative equity.
Stress and Emotional Toll
The constant
uncertainty of delays, legal battles, and financial strain takes a heavy
emotional toll. Many buyers suffer from anxiety, depression, and family
disputes due to the stress of an unfinished home.
Real-Life Example:
Noida Extension Buyers’ Protest (India)
Thousands of buyers in
Noida Extension (Greater Noida West) have been protesting for years due
to 12+ year delays in projects like Logix Blossom
Greens and Ace Divino. Many have paid EMIs for a decade
without getting possession.
Why It Happens:
- Builders exploit buyers’ lack of legal
awareness.
- Weak consumer protection laws in real
estate.
- Buyers feel helpless against corporate
giants.
Result: Financial and emotional devastation for families.
Always Prefer Ready-to-Move-In Properties
While
under-construction flats may seem cheaper, the risks are far too high.
From endless delays to outright fraud, buyers face financial ruin with little
legal protection.
Key Takeaways:
✔ Ready properties offer
immediate possession, no delays, and clear quality checks.
✔ Resale homes are often cheaper, with no hidden costs.
✔ Avoid pre-launch
schemes—they are the riskiest
of all.
If you must buy
under-construction, choose only RERA-registered projects from reputed
builders and consult a legal expert before signing. Otherwise, wait
and buy only what you can see and touch.
Your dream home
shouldn’t become a lifelong nightmare. Buy smart, stay safe.
Comments
Post a Comment