Know all about ‘The Other Charges’ while buying your home
November 22nd, 2017
In today’s time, buying real estate, or as they say ‘the dream home’, is by far the biggest and the most important investment that one makes in their life. That’s why buyers today are ready to stretch their financial budget to get their dream home, be it a villa or an apartment. But they are willing to walk that extra mile, as well, to get the property of their liking and most importantly in their budget.
Buyers are influenced by four major factors:
- Affordable prices
- Easy housing loans
- Low EMIs
- Property location
However, what surprises buyers the most when buying a villa or flat is the ‘additional cost’ involved, both big and small, which comes as a part and parcel of the deal. These additional costs add up to the total value of the property, and when the buyer comes across this at the last minute it often complicates the buying process for them.
Many a times, as most of these additional charges come default with the property, even the sellers or developers fail to recognize them as additional costs. As a result, they quote the base price, the down payment and the EMIs that have to be paid within a pre-defined time. It thus becomes imperative for home buyers to know about the nitty-gritty of property cost or ‘the other charges’ before making any investment.
What are these hidden extras?
Mentioned below are the various costs that one must look at before finalizing their dream home:
Registration Fees & Stamp Duty
Registration fee and stamp duty is compulsory. Buyers bear this cost and it is paid directly to the state government for transferring the ownership of the property to their name. While the fee may vary from state to state, it generally ranges between 5-10% of the property cost. Court fees, including lawyer fees, notary charges, etc., are an additional cost which comes up to about 1-2% of the property cost.
While Goods & Services Tax in the real estate sector is yet to be finalized by the central government, GST payable on cement, bricks, steel, etc., has been determined. As a result, prominent real estate developers have already begun charging GST on properties under construction, which ranges from 12% to 28%.
Be it a large and luxurious residential complex or be it a budget apartment complex, owning a house anywhere without a dedicated parking space is unimaginable. But what buyers might not know or not notice is that even the parking space comes at an additional cost, which post-RERA is included in the total cost of the property.
Before RERA came into effect, buyers had to shell out anywhere between 1-5 lacs for their parking space. But now, even though the cost is included in the total value of the property, it is advisable that the buyer specifically finds out about these costs and understands them well before buying the home.
Many developers and builders demand a hefty maintenance deposit upfront for maintenance of amenities such as garden areas, elevators, lights, security, etc. The deposit may vary from one developer to another, one location to another, and it can range from a deposit for 2 years to 25 years. Maintenance deposit is bound to increase if the apartment complex boasts of luxury amenities like swimming pool and club house.
Interior Designs & Decor
It’s not a dream home if the interior design and the décor of the house are not as per the buyer’s taste. Hence, the cost involved in interiors and décor is as necessary as the registration fees, and it is always advisable to earmark a certain amount for it. Be it the lighting, furniture, linens or any other element, the cost of the décor is directly proportional to the taste and requirement of the buyer. However, a luxurious décor and interiors can cost as much as 30 lacs. So it is only wise to consider this cost beforehand.
Preferential Locality Charge (PLC)
Based on the locality of the house or the apartment, the buyer needs to pay an extra amount to the developer known as Preferential Locality Charge. The amount usually varies depending on the builder and the locality. For example, the buyer will have to pay extra for booking a penthouse that enjoys lake view.
Apart from the points mentioned above, there are other costs involved too like brokerage fees. And any delay in the project can cost the buyer dearly too, as they might be collectively paying for the rented house that they are currently living in and also the EMI for the house that they have booked and not occupied yet. The more the project gets delayed the more the buyer loses out on tax rebates in home loans. Therefore, a buyer must always be cautious and probing until the project is completed and the keys are handed over.
While there are bound to be ugly add-on costs that cannot be predicted, being prepared mentally and financially will only bring one’s dream home closer to them.