Check the Hidden Costs before Booking the Flat
Buying a new flat is a big decision. It’s also a momentous occasion in your life. But hidden costs can take the zing out of your happiness. Here’s why you need to know more about them, before paying that booking amount.
Hidden costs can spring unpleasant surprises on you when you least expect it.
They can create a financial imbalance for which you’re not prepared.
Hidden costs also make it difficult to have a fair comparison or a proper estimate of the total cost of your flat.
Hidden costs change everything.
If you’re not careful, these hidden costs will ruin your happiness of buying a flat.
So, How can you avoid this? By learning more about these 5 hidden costs.
1. Registration and post registration charges:
Registration, the final seal in your deal, never comes cheap. Registration costs depend on the total worth of the flat you are purchasing and in Pune, it is 1% of the total or registered flat value.
Apart from this, there is 6% stamp duty of the registered flat value, as of now in Pune. The costs have to be taken into account when you are evaluating the total cost of your dream flat and planning to foray into buying flat.
Further, there are also costs related registration process (after all you are dealing with a Govt. Department) euphemistically called Legal fees. Often times, this also includes flat tax and obtaining khata.
2. Taxes and Parking Charges:
Most often, the price list of the flat you’re buying may not have all the costs included. So, the good deal you think you’re getting might actually come with these hidden costs.
For instance, you need to be clear about any taxes that might be levied on you, which the Builder or the sales representative may not have highlighted in the price list.
You also need to ascertain parking charges if they are detailed in the price list. You need to factor these costs as they are part of total flat cost. Avoid later-day hassles by making sure that the flat seller shows all these outgoes in the price list of the flat that you’re planning to buy.
3. Escalation and Penalty Charges:
Cost escalation clauses have become a regular feature of most agreements but many buyers are not aware about this. Often, builders hit the buyers at the last moment, usually just before registration with “escalation charges”, allegedly due increase in prices of raw materials like cement, steel, sand, etc. as well as the cost of labour.
Since this is already written in the Sale Agreement signed by the buyers, there is no choice but to comply.
However, a wise buyer will be aware of this clause and should check whether this clause will be invoked. i.e. whether the builder has levied escalation charges in his previous projects.
Otherwise, this can become a huge headache for you later on when you discover that the price of the under-construction flat that you bought has gone up significantly, making the flat loan that you may have taken, insufficient.
Penalty charges are also another cause for concern. If you’re unable to make a payment, you need to know if there will be any interest charged and if so, how much. Or if you decide to cancel the booking, you need to know – If there will be any deductibles while obtaining a refund, Whether the builder will wait till the flat is resold before refunding, Whether the builder will refund at all.
4. No Objection Certificate Charges:
When you’re trying to buy flat, there can be expenses where you least expect them.
Before handing over the keys to your house, the builder issues a No Objection Certificate, which is a document that states that the builder has no objection in the buyer occupying the house and that all payments are clear. Many reputed builders sometime charge the buyer to issue this “No Objection Certificate”.
5. Maintenance charges:
Though most of the builders collect maintenance charges for the first year during which they maintain the project, it tends to be minimal.
A year later, when the Residents Association takes over the maintenance, they may be compelled to hike the maintenance charges, which results is considerable cash flow and heartburn.
This is even more true, few years down the road, when the Association wants to repaint the building or make some significant repairs.
A wise home buyer would be alive to this fact of life and be ready for it.
Important Takeaways from this article:
Be aware that what a builder advertises is not the total cost of the possessing the flat.
As a smart buyer you ought to be aware of other not so visible costs, and be ready for them.
Then not only you will enjoy your piece of flat but also your peace of mind as well.