The decision to buy a house or an apartment is one of the most significant ones that we make during our life’s journey, and it evokes a maelstrom of emotions from elation to excitement to trepidation and anxiety and of course anticipation. For most people, this is the single largest investment they would make in their lifetime. So there’s an inevitable adrenaline rush, and it’s quite possible that in this blur of excitement and anticipation, you could forget to factor in the extra expenditure that comes as a corollary to buying a property. So here is a handy checklist of extra cost heads for your ready reference:
# Stamp duty: This is a mandatory levy payable to the state government on any property transaction. Stamp duty validates the sale agreement and is the official document of transaction that makes the property legally yours. The rate of stamp duty on property transactions varies from state to state in a band of 4 to 7% of the property value. So if your property value is around 50 lakhs, you will need to fork out another 2 to 3.5 lakhs as stamp duty.
# Registration fee: In addition to stamp duty, the government levies a 1% registration fee for registering the property in the buyer’s name. So you pay Rs 50,000 if your property cost is 50 lakhs.
# GST: In case you are purchasing an under-construction property, you will have to pay a goods and services tax, which varies according to the property price bracket. If your property falls within the affordable housing segment, priced below Rs. 45 lakhs and less than 60 square meters in metros and 90 square meters in non-metro locations, you will have to pay only 1% as GST. If not, the levy shoots up to 5% for residential properties. For commercial spaces, the GST is 12% on outright sale.
# Electricity charges: The developer charges the buyer for creating the infrastructure for external electrification for the entire complex as well as to bring power to your apartment. As a buyer, you will also have to pay for the meter installed and to the power distribution utility an amount towards application charges.
# Legal charges: A developer will charge the buyer legal fees for executing the sale agreement and the final conveyance deemed between the two parties. It’s a fixed one-time cost payable at the time of purchasing the property.
# Power back-up charges: The developer will charge fees to arrange for diesel generator backup in case of any power outage. The amount is charged either by KVA or is a fixed lumpsum amount.
# Preferential location charges: Sometimes developers slap an extra charge on any apartment or unit within the same gated complex for its better situation, which could be a lake-view or lawn view, or south-facing, or a showpiece villa with a porch and garden, a top-floor penthouse or any such “plus” that differentiates or enhances the value of that unit. This charge is not fixed by any parameters but guided more by the brand’s currency in the market.
# Floor escalation charges: For any high-rise property, there is an escalation of per sq ft charges as you go up higher. This is usually determined by the strength of the location or the brand equity of the developer, and is charged on per-sq ft, per-floor basis.
# Parking fees: Your parking space doesn’t come free in any housing complex. The developer will charge a one-time amount for your slot or collect periodic parking fees. If you have a second vehicle, you will need to buy or lease a second parking slot and so forth.
a) Maintenance deposit: Developers usually collect an advance maintenance deposit of 1 to 2 years to take care of the upkeep of common areas like parks, elevators and stairways, electricity, security and housekeeping, etc. This is an insurance deposit to safeguard against possible damages. The charges go up according to the number of amenities provided. For instance, if the housing society has a club and its usage is included in common area maintenance (CAM) charges, the deposit amount is likely to increase.
b) Sinking fund: The developer charges a one-time amount as fixed deposit from every consumer in a project as a sinking fund which is kept aside for major unforeseen expenses in building repairs, fire, or other accidents/structural damage from natural calamities.
c) Municipal deposits: This is an advance charge levied by the developer to take care of property taxes, which are usually charged on per sq ft basis, till the mutation of the respective units is completed.