7 Hidden Costs that comes along when buying a Home

So finally you decided to invest in a home. You sketched out the housing loan, interest rates and other things. But what about the hidden costs that is involved during the apartment buying process. These hidden costs raise the quoted price, which the buyer ends up shelling out a lot of money than planned. You need to sit with your agent or do some online research regarding the hidden costs.

Real Estate is the biggest investment you do and you need to ensure that everything is planned to avoid any big hole in your pocket. Let us now check the add-on costs that you may face while buying a property.

1) Stamp duty, taxes & registration fees:

The registration costs forms a sum amount depending on the total worth of the property. Different states have different approach towards the registration costs. In general, the stamp duty cost is 5% to 7%, which means if you're buying a property of Rs 50,00,000/- then the stamp duty work will cost Rs 3,60,000/-. Addition to this, you also need to pay registration fee payable to the court amounting to 1% of the property cost. All other cost of notary and other miscellaneous expenses need to be considered. If you are buying a property that’s under construction, you will have to pay the VAT and service tax also.

2) Maintenance Deposit:

When you buy a property, you need to pay an extra sum to the builder as a deposit for two-to-three years for attending facilities like parking, common area, club house etc. If the society is old, then the payment has to be made to the society members. Many societies too include housing charges as a part of maintenance.

3) Cost of Parking Space:

Many builders and even old societies charge an additional upfront payment for exclusive parking space. The amount may vary as per the society and type of parking space allotted. The sum is between Rs 2 lakhs to Rs 10 lakhs per car parking slot. The amount needs to be paid to the seller or the builder. Though the Supreme Court of India has ruled against charging an additional cost for the open parking space, a few developers might still charge you for the same. 

4) Preferential Location Charges (PLC):

The PLC charge is fixed by the builder on the preference floor or direction like east-facing, corner flat or any other direction. In many cases, builders also charge amenities facing units and garden facing home. So you need to clear with your builder what PLC are allotted as per the amenities offered. PLC varies from 1 Lacs to 40 Lacs.

5) Brokerage Charges:

If you're investing in a property using the assisting of an agent, then you'll surely need to pay the agent his brokerage fees. Usually, the charges depend on the experience and can be around 1-2% of the total cost of the house. It is better to research well and check out the price from the market before hiring. It is advisable to finalize the amount of brokerage fee before entering into the transaction with the broker.

6) Cost of Interiors:

Interior design is an important part of the house and should be complete before you head to reside. Many luxury apartments carry modern amenities; however, you may not find them as per your need. So you need to change certain part which will certainly add up the cost. The entire cost can go up to Rs 5 lakh to Rs 1 cr. You need to check out with the interior designers who will have different charges as per the requirement you have. On an average, approximately 2% of the cost of property, if not more, is spent on the interiors.

7) Service and Value Added Tax:

This is the most important part to consider if buying under-constructed property. Similar to registration charges, the service tax and VAT is a fee that needs to be paid to the government. Different states have different charges for these two taxes, which you need to calculate according to property value. For instance, if the cost of the property is Rs 3 crore, the VAT and service tax will be around Rs 20-Rs25 lakhs.

Conclusion:

These hidden costs are an important part of home investment and need to be dealt with planning and right calculation. Seek out assistance from property advisors to gain knowledge about the investment and hidden costs.