Plan for extra costs before buying a flat
Why does the payment schedule of your house read different from the figure you had in mind? Most probably because you have done your mental calculation by just multiplying the total area with the cost per square foot. However, the total cost of your flat is not just a function of the total square feet area of the house and the cost per square foot. There are certain fixed costs such as stamp duty, registration , property tax, service tax, etc, that also need to be factored in. Also, there are other costs that vary from developer to developer.
The exact cost and the area
To begin with, you should know the exact area of your house, which is used to calculate the cost of the house minus the taxes and other fixed costs. Today, most projects are sold on the basis of the super built-up area (SBUA). “The SBUA is usually 40% to 60% more than the carpet area. Which means that if you buy 1,200 sqft of space from the builder , it can be safely assumed that your net carpet area will be around 700-750 sqft,” says Akshay Kulkarni, executive director – India , residential services, Cushman & Wakefield .
Keeping account of every cost
The most common costs that are not taken into account are stamp duty and registration charges, floor rise, and the maintenance cost per square foot. “While some of the additional charges such as stamp duty and maintenance are known to most buyers, the less obvious ones – which often adds up to a considerable sum – are only communicated verbally. In other words, the buyer may not have a document to go back to establish when such add-on costs were mentioned. Therefore, the overall cost of buying a property can rise drastically above the originally quoted rate,” says Mrunal Duggar , vicepresident – Homebay Residential , Jones Lang LaSalle . In India, the cost break-up given by a builder usually does not include the stamp duty charges. In a way it is a hidden cost for most flat buyers, since they do not factor in this cost while working out their budgets. Also, since most homes in India are bought through home loans, flat buyers should also take into account the cost of an insurance policy to cover the home loan. Besides, a strata search of the property””””s legal antecedents may add up to quite an amount. “The registration of a new property with the local electricity board for the fitting of an electric meter involves a one-time expense . If a home is not fully furnished and outfitted, the buyer will incur the cost of furnishing, fittings and all other expenses involved in customising the property to individual needs and tastes,” says Duggar. “In the case of a resale standalone property, valuation of the property may be a prerequisite. This will be charges involved in using the services of a registered valuation agency. There may also be costs incurred on the transfer of the title of the property , which is also known as conveyancing ,” he says. “Society maintenance charges and a yearly property tax are among the other costs that most buyers do not factor in prior to purchasing a property.” For most under-construction projects, buyers agree on a price and the agreements are drawn up and registered, post which the bank starts to pay the cost. In most under-construction buildings , there is very little scope for any major negotiation on the costs to be borne by the buyer. Some of the components that should be checked are – floor rise, car park, PLC (preferential location cost), maintenance cost and fit-out cost, if any. “Even while buying a resale property, all the above costs will be involved. Besides, societies may ask for transfer premium, also known as voluntary contribution, which is rather involuntary. It can range from 2% to as high as 5% of the registered sale value. The actual cost as per the Societies Act is Rs 25,000. Any amount over this is shown as voluntary contribution ,” says Kulkarni.
The common area
Right from your fancy lobby to your elevator to the kid””””s pool, every square foot gets added to your bill under the common area head. There are several such parameters that come with a rupee value and get added to your final home price tag. What makes this component of the cost tricky is that there is no standard definition for common area. Usually, common areas would comprise the floor service areas of your apartment, stair cases, lift areas, floor electrical distribution rooms, lobby, swimming pool, etc. The logic a developer gives is that a home owner uses these facilities as much as his/her own house. Hence, check with your builder on the gross floor area, the difference between the super built-up area and the carpet area, and details about all that is included under common areas.
No free lunch
Builders provide facilities/ amenities like pools, gyms, health clubs, recreation areas, and yoga rooms. Some even provide spas, mini theatres, etc. However, none of these is free of cost. These facilities are included in the super built-up area, in addition to all the common areas over the carpet. In some cases, where clubs, etc, are being formed, there is a separate membership fee that is to be included in the price of the apartment . In some projects, however, the fee may be voluntary. In townships with facilities for healthcare and education, the premium over the basic rates will be higher.
Society maintenance charges
Most builders take the society maintenance charges for up to two years in advance. “This trend is due to the fact that it is easy to create the facilities but difficult to maintain as time goes by. Some people end up not paying as they don””””t see value in the facility provided. Hence, the best way is to take the maintenance cost upfront,” says Kulkarni of Cushman & Wakefield. As far as your developer is transparent about the pricing and terms and conditions, there is no reason to worry. But now you know all the the relatively unknown cost heads that can increase the cost of your house.
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