Buying new property is always an expensive task. The buyer often remains confused and afraid, when investing in a new house or a flat. In the process of finding a property that suits the demands of the buyer, one often misses out on the hidden costs that are sometimes included. The hidden costs, if identified, can save lakhs of money. The Real Estate Regulatory Authority (RERA) aims to ensure sale of properties and real estate projects in an efficient manner. RERA helps to protect the interests of the investors as well as the builders. Even after the help of these organisations, some builders find their way to earn extra profit from the buyers. These charges are called external development charges. According to RERA, the per square foot price set by the builders should include the total price of the property. Extra charges should not be taken from the customers.
There are two types of extra charges. One is called the EDC (External Development Charge) and the other is called the IDC (Internal Development Charges). After the strict action taken by RERA, the builders are including these charges into the price of the property, but indirectly. Let’s take a look at some of these hidden costs.
Maintenance Deposits
Builders ask for the maintenance deposits for the next 2 to 10 years in advance. This amount of money when added to your initial investment, makes the price go high. The same bulk of money helps them to regulate the work and earn extra in advance. The charges vary depending on the location, value of the land, and the type of home you are buying for.
Parking and Club Membership
Builders charge Rs 1.5 to 5 lakh from the customers as parking charges. Although, there are two types of parking options available. Huge amount of money is also demanded for taking club memberships. As per RERA, receiving money for providing these facilities is illegal.
Extra Charges For Electricity
The lights used in the common passages, parking lots, footpaths, internal roads and parks use electricity, the cost of which is not covered by the builders. The cost of these facilities are passed on to the pockets of the residents or buyers. The builder should inform the buyers about these charges when selling the property. One can refuse to pay these extra charges.
Value Added Tax
There are multiple instances when the tax is not included in the pricing. The builders ask for the tax after the payment is made. One should clarify the about the tax amount before and take proper understanding of why the mentioned amount of money is asked for payment.
Late Payment Penalty Clause
Most of the buyers invest money to purchase properties after availing a home loan. When the property is in the under construction phase, the customer applies for the home loan to make advance payments. The loan often does not get sanctioned in due time and the builder increases the price in this window of time. They also threaten to sell the property to other buyers, if the money is not paid soon. This troublesome situation and spending of extra money can be avoided with the Late Payment Penalty Clause. The clause can be added to the builder buyer agreement to avoid paying additional money.
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