While buying a house, we should take care of certain things. A point in everyone’s life comes when they want to invest in property.
Once you start looking for property you get a lot of options.
First, you should decide your budget for investing in property. In case of buying a house, you should be aware and keep in mind a few things like the additional charges the price of the property is excluded.
At times, homebuyers jump into a deal considering only the base price quoted by the builder or seller without thinking about various hidden home charges such as car parking charges, preferential location fees, power back up, club membership, stamp duty and registration fees, maintenance deposits, goods and service tax and interior costs.
These additional charges increase the price of the property by 20 – 40% of its actual price.
Additional charges can be more expensive in case of project delays.
So, to avoid all these types of problems, you should be aware of these additional charges.
- Preferential location charges (PLC):
When you start searching for buying a house and tell a builder your preference such as ‘park facing’, ‘corner unit’, ‘lower or upper floor’, the builder will charge extra as per your preferences.
The fee will increase as you go to the upper floors.
In case of hilly areas, PLC increases according to height as well as floor. Properties on higher height will be charged more.
PLC is charged per square foot. On the super built-up area of your apartment. Thus, you can calculate the PLC by multiplying the super built-up area of the apartment with the rate specified in the cost sheet of the project.
PLC usually varies from Rs 40-150 per sq. ft.
2. Car parking:
While buying a house keep in mind that covered car parking and open car parking have different charges.
When you book an under-construction property you have to take a mandatory car parking in the open area or in the covered area.
Usually covered car parking charges are higher than open car parking charges.
These charges are also dependent on the type of property and the locality of the property.
3. Club membership:
After buying a house, if any residential complex has a club and swimming pool, you will have to pay the builder an additional fee for membership.
4. Utility connection charges:
Each builder charges for utility connection for water, electricity, gas and sewerage connections.
5. Power back up:
Power back up charges are accurate on the amount of power back up provided to each flat on per KVA basis.
6. Maintenance charges:
Builders always accumulate additional maintenance charges before handing over the property to the client.
This includes maintenance of infrastructure such as maintenance of water and electrical services, cleaning and maintenance of common areas at an early stage just after the occupation.
7. Goods and Service tax (GST) and VAT:
Goods and Service tax (GST) and VAT are charged on under construction properties.
GST is 14% of the 25% value of the property under construction and VAT is charged on the construction value of the property.
After completion: After the builder obtains his completion certificate, these taxes cannot be imposed on the properties purchased.
8. Stamp duty & Registration charges:
Stamp duty & Registration charges are levied by the government to register the sale/Conveyance deed.
Sale Deed: A sale deed is a document through which the seller handovers his rights and interest to the buyer, which in turn acquires full ownership over the property.
Stamp duty charges are varied between 4% to 10% of the assessable value of the property.
In most states of India, 5% to 7% of the total market value of the property is taken as stamp duty while 1% is taken as registration fee.
9. Legal and Documentation charges:
Mostly Builders charge separately for all legal and documentation services.
Bank loan charges: Many banks or financial institutions insist that you buy your home loan as well as home loan insurance. Insurance premium will be added to your EMI.
If you already have other life insurance policies, you can avoid such loan insurance schemes and save some money there.
10. Interior costs:
Once you are done buying a house and taken the ownership of the house you will have to spend a significant amount on the interior.
Without a nice interior no matter how big your home is still it feels quite dull.
Therefore, it is important to take good care of the interior.
Around 5-20% of its total property cost may be incurred.
Watch out for these hidden and additional charges while buying a house. I hope this article can help you in some ways.