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
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.