How to han­dle those ‘hid­den’ costs

Ad­di­tional charges form 25% to 30% of the to­tal cost of your apart­ment and in­clude fee for club mem­ber­ship, park­ing and PLCs

HT Estates - - HTESTATES - Sachin Sand­hir

If you are a prospec­tive home­buyer, it is im­por­tant to un­der­stand the extra charges that you will need to pay to your developer and the gov­ern­ment. The ad­di­tional charges form al­most 25% to 30% of the to­tal cost of your prop­erty. Th­ese charges in­clude fee for club mem­ber­ship, park­ing charges, main­te­nance fee, and the pref­er­en­tial lo­ca­tion charges (PLC). Th­ese charges are in ad­di­tion to some of the manda­tory gov­ern­ment charges such as ex­ter­nal and in­ter­nal de­vel­op­ment charges, stamp duty, ser­vice tax and value added tax.

How­ever, as a home­buyer, you are of­ten mis­led due to am­bi­gu­ity of laws and loop­holes in trans­ac­tion. Some­times, dif­fi­cult le­gal lan­guage also be­comes a prob­lem. We all know, In­dia’s real es­tate mar­ket is under-reg­u­lated. And lack of reg­u­la­tion is vis­i­ble within prop­erty trans­ac­tions car­ried in the under-con­struc­tion prop­erty mar­ket. The for­mat and of­fer­ings within th­ese trans­ac­tions may vary from one pro­ject to an­other. An ex­am­ple of this dif­fer­ence is the ad­di­tional charges levied on buy­ers while buy­ing an under-con­struc­tion prop­erty.

The am­bi­gu­ity in charges

The biggest loop­hole are charges, other than de­posited with the gov­ern­ment, such as PLC, club charges and park­ing, are to be de­posited at the time of con­struc­tion. This is when, you are not sure whether the fin­ished pro­ject will have a club that re­ally suites your re­quire­ment and pur­pose.

An­other ex­am­ple of this am­bi­gu­ity is PLC charged within apart­ment projects. Among all the ad­di­tional charges, PLCs af­fect the cost of a prop­erty sig­nif­i­cantly. As the name sug- gests, a PLC is an ad­di­tional cost that one has to pay for pre­fer­ring to book a prop­erty with a bet­ter lo­ca­tion within the same apart­ment com­plex. So for the priv­i­lege of own­ing an apart­ment that faces the park or lies on the cor­ner, you pay an extra amount. PLC is charged as ru­pee per sq ft of the su­per area of your apart­ment. To find out how much you have to now the amount that you pay as PLC, you sim­ply mul­ti­ply the su­per area of the apart­ment (men­tioned in the sale brochure) with the rate spec­i­fied in the developer’s rate card. The big­ger your apart­ment, the higher would be your PLC. It de­pends on the size, lo­ca­tion and align­ment and con­struc­tion pa­ram­e­ters. Typ­i­cally, each floor has a dif­fer­ent PLC and floors closer to ground have the high­est PLCs. How­ever, there is no rule that gov­erns the ap­pli­ca­bil­ity of PLC above a cer­tain floor.

As a buyer, you have the right to ask for dis­counts and bar­gain hard for more dis­counts on th­ese ad­di­tional costs

You may come across schemes such as ‘pay 10% now and pay the rest at the time of pos­ses­sion’ or ‘pay just ₹ 2.4 lakh at the time of book­ing – rest on pos­ses­sion

The pricing in th­ese projects is such that you end up pay­ing extra on ac­count of such schemes. In this case, ne­go­ti­ate with your developer to for­mu­late a new dis­count rate or scheme for you in­stead of th­ese free­bies

Your apart­ment can have two or three PLCs ap­pli­ca­ble from var­i­ous as­pects of its lo­ca­tion within the pro­ject. But de­vel­op­ers of­ten charge two in­stead of three. And the rate of PLC de­creases as you move up in the tower. No rule or reg­u­la­tion sug­gests that de­vel­op­ers should charge one or none of the ap­pli­ca­ble PLCs!

What can be done?

As a buyer in need of a prop­erty, there is noth­ing much that you can do to bring a reg­u­la­tion. How­ever, you have the right to ask for dis­counts and bar­gain hard for more dis­counts on th­ese ad­di­tional costs.

Dur­ing the fes­tive sea­son too some de­vel­op­ers of­fer free­bies such as car, free gold and give re­lief on equated monthly in­stall­ments ( EMIs) through sub­ven­tion schemes. Thus, you may come across schemes such as ‘pay 10% now and pay the rest at the time of pos­ses­sion’ or ‘pay just ₹ 2.4 lakh at the time of book­ing – rest on pos­ses­sion’.

How­ever, the pricing in th­ese projects is such that you end up pay­ing extra on ac­count of such schemes. In this case, ne­go­ti­ate with your developer to for­mu­late a new dis­count rate or scheme for you in­stead of th­ese free­bies. If you are a se­ri­ous buyer, the developer should of­fer some­thing that suits you. It is in your favour to ne­go­ti­ate hard on the ad­di­tional charges men­tioned above.

THIS PHOTO IS FOR REPRESENTATIONAL PUR­POSE ONLY; FILE PHOTO

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