Tag Archives: House

OTHER CHARGES WHEN BUYING A HOUSE

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When you start your property search, you will be amazed by the extra charges involved in buying a house or investing in property. There are two options: buying a ready-to-move-in property or an under-construction property. However, most people prefer to buy a ready-to-move-in property because it is less risky than an under-construction one. So, let’s assume that a property is coated at Rs. 3000 per square foot—this is its basic rate—but there are also other charges on top of that that people often fail to consider and that can be more than 40% to 50%. Let’s discuss all the additional charges so that you can make an informed decision about the total price of any given property before agreeing to purchase it. 

Let’s consider an example

Suppose a property’s basic price rate is Rs. 45 lakhs. When we make the final payment for this property, it will be around Rs. 58 – 67.5 lakhs—which includes the basic price of the property and the extra charges. We will discuss all these charges in detail below:

First comes the basic charge. It is the charge excluding all the extra costs. Before RERA Act came into force, properties used to be sold in the super built-up areas; after the enactment of the RERA Act, properties are supposed to be sold based on the carpet area. For example, if the property has a carpet area of 1500 square feet and the rate per square foot is Rs. 3000, then its total essential cost would be Rs. 45 lacks. And this is just the essential cost; you will also have to pay multiple charges for it, as mentioned below.

PLC (PREFERENTIAL LOCATION CHARGES) –  PLC is charged according to the property’s location. Like; a corner flat, park-facing, sea-facing, lower floors, or higher floors. For example, sea-facing view residences have higher PLC charges than non-sea-facing. Therefore, if you own any such property there is a PLC charge coated. Generally, PLC charges are Rs 150-200 per square foot. 

PARKING CHARGES – When you buy a property, you will be charged a parking fee of 5-7% of the base price of the flat. For example, if you purchase a property for Rs. 45 lakhs, you will be charged Rs. 2 to 2.5 lakhs for the parking facility. 

INFRASTRUCTURE DEVELOPMENT CHARGES (IDC) – An infrastructure charge usually consists of complete internal infrastructure within a complex. For example, water and electricity supply, as well as sewage treatment plants may be charged separately. Developers usually charge these services together because it costs less to do so. However, if we add them together in one place according to IDC’s input-demand curve, there will be an IDC charge added at around 6% of the base price of the flat or house. 

EXTERNAL DEVELOPMENT CHARGES (EDC) – In some cities, there is also an external development charge. For example, in Gurgaon and Faridabad. This charge goes to the government and includes the infrastructure of a complex—for instance; road facilities, sewage, water, and electricity. The EDC charges are applied to all these expenses so it is approx. 5% of the base price of a flat. And here if we talk about their total cost, IDC and EDC are charged about Rs. 300 to 400 per square foot. 

CORPUS FUND/ IFMS – Builders collect corpus funds, also called IFMS. It is interest-free maintenance security, similar to an emergency fund, and not like regular monthly maintenance. To purchase a property costing Rs. 45 lakhs, builders can collect from Rs. 50,000 to Rs. 1,00,000. 

POWER BACK-UP – The next charge for power backup is provided to each flat on a per KVA basis. The backup is provided from 3KVA to 5KVA, ranging from 1 lakh to 1.5 lakhs.

AMENITIES AND CLUB CHARGE – These charges apply to luxury flats with a clubhouse, swimming pool, and gym. The developer will charge you for these amenities at a lump sum of Rs. 50,000 to Rs. 1.5 lakhs.

STAMP DUTY AND REGISTRATION CHARGES – In this case, stamp duty varies from state to state. So you must pay the stamp duty according to the state. Therefore, stamp duty and registration charges are 5-10% of the property value.

GST – In an under-constructed property, both stamp duty and GST are levied where GST is 18% on ⅔ of the property cost. Therefore, the effective GST rate is 12%.

BROKERAGE – Most deals for resale property or ready-to-move-in property are closed through a real estate agent or broker, who charges a 1-2% fee on the property’s final value. 

Realtors upset with the policies of Bhubaneswar Development Authority.

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The real estate developers on Thursday reacted sharply to the Bhubaneswar Development Authority’s (BDA) move to change the definition of “apartment” and “group housing.”

Talking to reporters here, Confederation of Real Estate Developers Association of India (CREDAI) state president D S Tripathy said the new definitions are vague and will result in the harassment of people while constructing houses.

The draft BDA (planning and building standards) amendment regulations-2012 proposes to amend the definition of apartment as building constructed in one block having more than four dwelling units where land is owned jointly and construction is undertaken by one agency. Under the existing BDA regulations 2008, an apartment is defined as a building having six or more dwelling units.

Tripathy said under the new definition houses of joint families may become apartments. As a result, such families would have to meet the required road width of minimum nine metres, he said. Tripathy said certain apartments can never form societies for which at least seven members are required. Similarly, the new definition of ‘group housing,’ building with more than one dwelling unit, where land is owned jointly and the construction is undertaken jointly by one agency, is vague and don’t convey clarity.

CREDAI, which suggested its comment on the draft regulations, open for public suggestions, is of the view that creation of the new “settlement fund” and earmarking of 10% of all housing projects for economically weaker sections is not going to help the poor. “It seems impractical that BDA will construct EWS houses using shelter fund,” the CREDAI chief said.

The CREDAI, Odisha, suggested that the state government should formulate an affordable housing policy on the lines of Rajasthan, which looks more realistic, gives incentives to builders and subsidy to weaker sections.