When it comes to India, buying property in any form- land, house, or apartment is one of the biggest ambitions. People are extremely motivated and consider the goal of buying a house a once-in-a-lifetime move. Sadly, buying property in India or investing in the real estate sector is also an expensive affair and remains out of reach for a huge part of the population. Since finance is a huge part of property investment, dealing with hidden costs can get very tough.
Why do we have to deal with hidden costs when buying a property?
When you are buying a property, the price reported by property developers in Chennai does not include any add-ons. Hence, in the later stage of the buying process, you might find some additional costs. But in order to avoid this situation, you need to have a clear understanding of the cost of buying property.
Let’s take a closer look at the cost factor of a property in India.
Preferential Location Charges (PLC)
PLC is charged on the basis of floors and square feet and on every unit at various locations that are at an advantageous place than others. For example, you are looking at a unit that is in the corner, or is facing a park, is on the main road, or a golf course, these factors contribute to a hike in its price. Depending on the state and neighbourhood where you buy the property, the price also varies. For example, higher floors are preferred in Mumbai whereas lower floors are costlier in the Delhi NCR region.
Parking
Although the Supreme Court of India ruled out any additional parking charges to be levied, many developers continue to charge a hefty amount for covered car parking spaces. Hence, when you are on the lookout for a property, make sure to discuss it with property developers in Chennai about the cost of parking spaces. At times many sellers prefer to include the amount into the basic selling price of the property.
Maintenance deposits and monthly charges
Let’s take a look at this example- Tanya has selected an apartment that has a number of modern facilities namely a swimming pool, a gym, and a park. She is happy with her purchase because she can enjoy these amenities within the boundary of her residential apartment. But after a while, she realises that she needs to pay a good deal of money every year in the form of maintenance charges for the amenities that come along with her luxurious apartment.
Unfortunately, this happens far too often, especially with first-time homeowners. Property sellers lure in homebuyers with amenities available at various apartments and residential complexes. But they do not necessarily talk about the monthly maintenance charges that the owners of a property need to shell out to enjoy the benefits. The deposits are at times taken in a period of a year, or are paid every month. Either way, it is a recurrent expenditure that might affect your monthly budget in the long run. The best way to avoid such a situation would be to find out about the charges when you are browsing through properties. Remember that you also need to pay an additional GST at 18 per cent if the maintenance charges are more than Rs. 7500 per month.
Club Membership
While a club in a housing society is quite a lucrative offer and hard to leave out, you must consider the membership fee as a recurring cost. It could be a one-time membership fee that you need to pay or it can divide into quarterly payment slabs. Subsequently, club membership fees are a recurring cost.
Charges for civic amenities (External Electrification Charges and Fire Fighting Equipment Charges)
When you are looking for a house on sale in Mogappair or an apartment, facilities offered by any kind of property developer in Chennai charge homeowners for civic amenities. Fire safety equipment, water, and electricity back-ups are part of this cost. Filed under EEC along with FFEC, these charges are to be paid at the time of purchasing the house. Apart from the EEC, you need to pay additionally for getting an electric connection.
Charges for Development and Infrastructure
EDC and IDC (External Developmental Charges and Infrastructure Development Charges) are charges that a developer is mandated to pay to the State government. For example, when property developers in Chennai invest in the construction of a residential project, it leads to a development in the adjacent areas. This cost is later passed on to the buyer of the property as well.
Apart from the above-mentioned charges, there are some taxes that you need to pay as a homebuyer. Let’s take a look:
Goods and Services Tax or GST
If the flat for sale in Mogappair costs more than Rs. 45 lakhs, then you are liable to pay GST at 5 per cent, while homes costing less than Rs. 45 lakhs attract a GST of one per cent.
Registration Cost
Registration cost and stamp duty are levied on the basis of the market value of a property in a particular area. This is the minimum price at which any property is sold and it is calculated by the local government.
Bottom Line
Buying a house is no easy feat. For many people, it is only possible with the help of home loans. However, without proper knowledge about the actual cost of buying a house, homebuyers can quickly find themselves in a tight spot. Remember that your bank will only issue a loan based on the price of the house. The rest of it comes straight from your pocket.
