Owning a home is no mean feat and with it comes a sense of security and freedom. Also, the fact that you don’t have to pay a significant amount as rent and shifting to a new apartment every time your rent increases is a huge relief to many.
As the demand increases, developers, who need to survive amidst tough competition, come up with attractive offers and discounts. New marketing strategies such as ‘buy now, pay later’ or ‘no payment till possession’ are only encouraging more people to buy properties.
When it comes to buying a property, the process doesn’t just end with down payments and monthly EMIs. Developers often throw in some extra charges when you are least expecting it. Eventually, buyers find themselves shelling out more than what was quoted. To help you understand what adds up to the extra cost that mysteriously empties your pocket, we have listed the six hidden costs in buying a property.
Advance maintenance deposit
When signing on the dotted line, the builder may ask you to pay a maintenance deposit for a specific period of time, in advance. This could be for a year, two years or even up to 10 years, in some cases.
Depending on the location of your property and the cost of services offered, the maintenance price per square feet might vary. Though some people are still debating on whether maintenance should be paid in advance, builders make it a point to collect it as these deposits offer a stable influx of funds.
Location matters
"Call today for the best lake view properties in town" or "An apartment with a view" - sounds familiar? Who doesn’t love a view? Even if you don’t get a lake, you would still settle for a park or pool view.
But once you choose a property with a view, the price shoots up. These are Preferential Location Charges or PLC in real estate terms. This increases your property price by a good 5-10%. You know what they say. It’s all about location.
Parking space
Nowhere will you see a board that says, "Book your flat with us and get a complimentary parking space".
Parking is a vital element, and your own closed parking space increases the value of your house during resale.
Although this ‘additional’ expense is not a hidden cost any more, many people still assume their property comes with free parking.
Depending upon the type of the property, location and other factors, developers can charge you anywhere between Rs 1 to 5 lakhs for a parking space. If you need additional space, they will gladly allot you a convenient spot, provided you shell out a few lakhs more. So if you are planning to buy a house, make sure you add in a couple of lakhs extra to your estimate.
Registration costs
Well, this one is a no-brainer. When you buy a property, you will have to register it for legal reasons, and that comes with a price tag.
Stamp duty usually varies between 7-8% of the property value. 1-2% of the property value has to be paid as registration fee to the court. This figure varies with each state.
Also, you have to include the fee for the lawyer or notary who will inspect all the necessary paperwork, verify if the developer has the required approvals, and have the paperwork in place for you. In addition, you may also have to shell out a little extra to cover home insurance (optional), property tax, and bank inspection costs.
Interior design
Your property budget should definitely include an additional interiors cost. This might vary, depending on the type of interiors you want for your house. Plumbing costs, electrical work, painting charges, new furniture, additional design work and fixtures that you may want to install – account for all these and more. Interior design charges could be anywhere starting from 2 lakhs to a blank cheque, depending on how you want your home to look and the type of the materials you choose.
Miscellaneous charges
Other costs that you probably won’t be prepared for when you are saving up to buy a property are the moving charges. When you move to a new house, you will have to pay the movers and packers a reasonable chunk of money.
If you are buying a house with the help of a broker, then 1-2% of the property value has to be paid as brokerage. This price isn’t fixed though. Additionally, you will also have to take into account any new tax reforms in the real estate sector. If there is an elevated tax mandate, your cost might go up.
Buying a property is undeniably something to be proud of. For many, buying a house translates to achieving a huge milestone in their lives. But it does come with its own risk factors, concealed costs and terms and conditions. Taking a leap without knowing the entire process can throw you into a tizzy. Homeownership is an exciting feeling. When you get down to the brass tacks of buying a property and plan your savings accordingly, you might avoid unwanted confusions and headaches later on.
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