Buying Under-Construction Property in Coimbatore: RERA, Risks & Checklist

Under-construction properties remain popular in Coimbatore's growth corridors like Saravanampatti, Kalapatti, Kovaipudur, and Thudiyalur. Here is what makes them attractive:

**Lower entry price:** Under-construction properties are typically priced 15–25% below ready-to-move properties in the same locality. Builders offer early-bird pricing to fund construction — the earlier you book, the lower the price.

**Price appreciation during construction:** By the time the project is completed (2–4 years), market prices typically rise. Buyers who entered early capture this appreciation — it is effectively a built-in return even before occupying the property.

**Payment flexibility:** Construction-linked payment plans allow you to pay in stages tied to construction milestones — foundation, slab completion, plastering, etc. This reduces the immediate cash burden compared to a ready property where you pay the full amount upfront.

**Customization:** For pre-launch or early-stage bookings, builders often allow interior customization — choice of flooring, kitchen layout, wall colours, electrical point placement, or minor plan modifications.

**Modern amenities and specifications:** New projects typically feature contemporary design, modern amenities (swimming pool, gym, clubhouse, EV charging), earthquake-resistant construction as per current BIS codes, and better energy efficiency compared to older buildings.

**GST input tax credit:** For commercial under-construction purchases, builders can pass on ITC (input tax credit) benefits, reducing the effective cost in some scenarios.

Balancing these advantages against the risks described in the next section will help you make the right decision.

The same flexibility and lower pricing come with real risks that every Coimbatore buyer must assess before committing:

**Delivery delays — the most common risk:** Project delays are endemic in Indian real estate. Even with RERA, builders frequently miss possession dates by 1–3 years. During this period, you are paying both rent (for your current home) and EMI pre-possession interest on the home loan — a significant double financial burden.

**Builder default or financial trouble:** If the builder runs into financial difficulties, the project may stall entirely. In severe cases (builder insolvency), buyers can face multi-year delays and costly legal battles. RERA's 70% escrow rule mitigates this, but imperfect enforcement means risks remain.

**Specification downgrades:** What was promised in the brochure — granite flooring, imported tiles, specific brand fittings — may be substituted with cheaper alternatives at handover. Always verify that the sale agreement specifies materials and brands, not just generic descriptions.

**Plan changes:** The approved floor plan may change during construction — a corridor becomes narrower, a window disappears, a promised amenity is dropped. Under RERA, major changes require 2/3 buyer consent, but minor changes sometimes slip through.

**Quality issues:** Quality control during construction is difficult to monitor remotely. Common issues: uneven flooring, leaky plumbing, poor waterproofing, weak concrete, misaligned tiles. A professional snag inspection before possession is essential.

**Longer wait:** For buyers who need to move in soon, under-construction is not suitable. A 2–4 year wait before possession makes financial planning more complex.

The Real Estate Regulation and Development Act (RERA) provides substantial protection for under-construction property buyers in Tamil Nadu. Know your rights under TNRERA before you book.

**Mandatory project registration:** All projects above 500 sqm or 8 units must be registered with TNRERA (rera.tn.gov.in) before any marketing or sale. Always verify the RERA registration number on the portal before paying any booking amount.

**70% escrow account rule:** Builders must deposit 70% of all collections (booking amounts + installments) into a dedicated project escrow account. This amount can only be withdrawn for construction-related expenses, ensuring your money is used for the project and not diverted.

**Carpet area transparency:** Builders must quote prices in carpet area (usable floor area, excluding walls). This prevents the common practice of inflating "super built-up area" to make properties appear larger.

**Penalty for delayed possession:** If the builder misses the RERA-committed possession date, they owe you interest at SBI MCLR + 2% (approximately 10–11%) for each month of delay. You can choose to stay in the project and claim this interest, OR exit and get a full refund with interest.

**5-year structural defect liability:** After possession, any structural defects reported within 5 years must be rectified by the builder free of charge within 30 days.

**Quarterly progress reports:** Builders must upload construction progress updates to the TNRERA portal quarterly. Track your project's progress at rera.tn.gov.in — it is publicly accessible.

RERA registration is necessary but not sufficient to assess a builder's reliability. Do additional due diligence on the developer before committing.

**Check completed projects:** • Visit 2–3 completed projects by the same builder in Coimbatore • Talk to actual residents: Were there delays? Were promises kept? How is maintenance quality? Is the RWA (Residents' Welfare Association) functional? • Compare what was promised in the brochure for those projects vs what was actually delivered

**TNRERA complaint history:** Search the builder's name on rera.tn.gov.in — look at the Complaints section. Multiple complaints, especially unresolved ones, are a red flag.

**Financial health indicators:** • Is the builder funding construction from collections or have they tied up a construction finance loan? (A bank-funded project has the bank's skin in the game too — an additional quality control layer) • Is the project already under construction (foundation complete) or are they selling on renders alone? • How many units have been sold vs total project size? Very low sales may indicate financial distress.

**Construction site visit:** Visit the construction site during working hours. Active construction with workers, material stocks, and visible progress is reassuring. A stalled site with no activity is a warning sign.

**Google and online reviews:** Search the builder's name with "review", "delay", "complaint" on Google and housing forums like MagicBricks and 99acres. Real buyer experiences are often documented online.

**Track record with banks:** Check if the project is on the approved list of at least 2–3 major banks (SBI, HDFC, Indian Bank) in Coimbatore. Banks do their own due diligence — their approval is a positive signal.

Under-construction properties in Coimbatore are typically sold under two payment structures. Understanding the difference helps you manage cash flow and negotiate better.

**Construction-Linked Plan (CLP):** Your payments are tied to specific construction milestones: • Booking (5–10%): On agreement signing • Foundation completion (10–15%) • Ground floor slab (10%) • Each subsequent floor slab (5–8% per floor) • Plastering and brickwork completion (10%) • Flooring and finishing (10%) • Possession (5–10%)

Advantage: You pay only when work is done — natural protection against builder inaction. If construction stalls, your next installment does not fall due.

Disadvantage: Some milestone definitions are vague — "super structure completion" can mean different things. Ensure milestones are clearly defined in the agreement.

**Time-Linked Plan:** Payments are based on a calendar schedule (e.g., 20% on booking, 20% after 6 months, 20% after 12 months) regardless of construction progress.

Advantage: Often offered with a slightly lower price — builders prefer the cash flow certainty.

Disadvantage: You pay even if construction lags behind schedule. Risky if the builder has cash management issues.

**Home loan bank preference:** Most banks disburse home loans for under-construction properties as CLP — they release funds in tranches as construction milestones are certified by their technical valuer. This aligns well with the construction-linked payment plan.

**Recommendation:** Always prefer CLP over time-linked plans for under-construction properties in Coimbatore — the protection it offers is worth more than any small price discount on time-linked plans.

Home loans for under-construction properties work differently from ready-to-move properties. Understanding the disbursement structure prevents cash flow surprises.

**Stage-wise disbursement:** Banks do not disburse the full loan amount upfront for under-construction properties. The loan is released in installments as construction progresses: • Disbursement 1: After foundation and sub-structure completion • Disbursement 2: After slab completion up to a certain floor • Disbursement 3: After brick work and plastering • Disbursement 4 (final): On possession/completion certificate

Before each disbursement, the bank's technical valuer visits the site to certify the stage completion. Processing each disbursement request takes 5–10 working days — plan this timeline with your builder.

**Pre-EMI interest:** During construction, you pay "pre-EMI" — interest only on the disbursed loan amount, not the full EMI. As each installment is disbursed, your monthly pre-EMI amount increases.

Example: Total loan ₹50 lakh at 9%. After Disbursement 1 (₹15 lakh), monthly pre-EMI = ₹15,00,000 × 9% ÷ 12 = ₹11,250. After full disbursement, full EMI (principal + interest) = ₹44,986.

**Full EMI commencement:** Full EMI (principal + interest) begins after the final disbursement — typically at possession. Some banks start full EMI 6 months after the first disbursement regardless of construction stage — check your loan agreement carefully.

**Tax benefit on pre-EMI:** Pre-EMI interest paid during construction is not deductible in those years. It is aggregated and deductible in 5 equal installments from the year of possession under Section 24(b). Plan your tax projection accordingly.

GST (Goods and Services Tax) applies to under-construction properties but not to ready-to-move properties with a Completion Certificate. This is an important cost to factor into your budget.

**Current GST rates (as of 2026):** • **Affordable housing** (carpet area ≤ 60 sqm in metro cities; ≤ 90 sqm in non-metro cities like Coimbatore; value ≤ ₹45 lakh): **1% GST** without Input Tax Credit (ITC) • **Non-affordable residential** (above the affordable housing thresholds): **5% GST** without ITC • **Commercial under-construction**: 12% GST with ITC

**What "without ITC" means:** Before April 2019, builders could pass on input tax credit from construction materials to buyers — this reduced the effective GST rate. Since April 2019, the reduced rates (1% and 5%) come without ITC, meaning the builder absorbs input costs within their pricing.

**Affordable housing in Coimbatore:** For Coimbatore (a non-metro city), an apartment qualifies as affordable housing if carpet area is up to 90 sqm and the value is up to ₹45 lakh. Many 1BHK and 2BHK apartments in areas like Sulur, Kalapatti, and Thudiyalur fall within this band, attracting only 1% GST.

**GST is on construction value only:** GST applies only to the construction portion of the sale — not to the land value. When a composite sale agreement specifies the split between land and construction, only the construction portion attracts GST. If no split is mentioned, 1/3 of the total price is treated as land value (excluded from GST) per GST notification.

**GST is not payable on ready-to-move:** Once the builder obtains the Completion Certificate (CC/OC), the property is "ready" and subsequent sales attract zero GST. This is why some buyers prefer ready properties to avoid GST outflow.

Before you accept possession of an under-construction property in Coimbatore, go through this checklist systematically. Builders are more responsive to snags before possession than after.

**Legal documents to receive from builder:** • Occupancy Certificate (OC) / Completion Certificate (CC) from DTCP or CCMC — this is mandatory. Do not accept possession without OC. • Allotment letter, sale agreement, and registered sale deed • Original RERA certificate • Building plan approval copy • NOC from water board, electricity board, and fire department • Society or apartment association formation documents (or builder's commitment to form one)

**Physical inspection — apartment:** • Measure carpet area with a tape — verify against sale agreement. Report shortfall before signing possession letter. • Check all windows and doors — they must open, close, lock smoothly • Test every electrical switch, socket, and light fitting • Test all taps and check water pressure on each floor • Flush toilets, check for leaks and drainage speed • Check for cracks in walls, floors, and ceiling — especially near structural columns and beams • Test the lift (with and without load) • Verify parking slot — physically marked and accessible • Walk through all promised amenities: gym, pool, clubhouse, children's play area — confirm completion

**Defects Liability Period:** Under RERA, you have 5 years from possession to report structural defects. Report every snag in writing (email + WhatsApp + hard copy letter) before and on possession day. Verbal reports are not enforceable. The builder has 30 days to fix reported defects.

**Power and water connections:** Ensure the electricity meter (TANGEDCO for Coimbatore) and water connection are in your name before moving in.