Buying a house in a gated society? 10 major expenses you need to keep in mind before finalising the deal

Purchasing a house in India offers stability & potential investment growth. It provides a sense of ownership, security, and a place to call home. Additionally, it can be a valuable asset that can appreciate over time, contributing to financial security and future generations.

In India, purchasing a house is emotional due to cultural significance, family expectations, and the desire for stability and security. Home ownership represents a sense of achievement, pride, and a place to build memories and establish roots within a deeply rooted society.

Buying a new flat in a gated society in India involves several expenses. These expenses can vary depending on the location, size, amenities, and other factors. Here are some common expenses associated with buying a new flat in a gated society in India:

1. Base Price - This is the basic cost of the flat, which varies based on the size, location, and developer. There are many types of flat available like 1RK, 1BHK, 2BHK, 3BHK, 4BHK and so on. One should purchase as per their individual needs.

2. Stamp Duty and Registration Fees - Stamp duty is another government charge that is paid to legalise the property transaction. It’s compulsory for the buyer to pay as only then, the house is registered under his/her name else it will not be registered. The stamp duty is calculated as a percentage of the property value and varies from state to state. Registration is the full and final legal agreement between the buyer and seller indicating change of ownership, and the court charges a registration fee for it, which is generally 1-2%.

3. Good and Services Tax - Goods and Services Tax was introduced on July 1, 2017, by the Government of India. Any under-construction property that is purchased within India is charged with Goods and Services Tax. The GST on the under-construction property is 5% while the affordable housing projects are exempted from GST. There is also a zero GST tax on the sale of a complex or building and ready to move-in flats where the sale takes place after the issue of completion certificate.

4. Legal Fees - You may need to engage a lawyer to help with the property documentation and legal work. Their fees will vary based on their experience and the complexity of the transaction. If there is any due diligence to be done in addition to the registration and stamp duty fees, a builder may require the customer to cover the costs of a surveyor or lawyer. All charges are computed according to the RERA on the basis of the carpet area.

5. Home Loan Charges - Sometimes, property owners pay their property amount by loan, if you are taking a home loan to finance your flat purchase, there may be charges such as processing fees, loan origination fees, and valuation fees.

6. Brokerage Fees - Brokerage is the fee charged by the broker, the person who is the middleman between the buyer and the seller. If you used a real estate agent or broker to find the property, you may need to pay them a commission fee, typically a percentage of the property value.

7. Preferential Location Charge (PLC) - It is an additional fee imposed on buyers when purchasing a flat in India. It is levied based on the location of the flat within a residential complex or society, with higher charges applied for units situated in prime or desirable areas. If the borrower wants to purchase a property preferred by most of the people then he/she should pay a higher price for that property. For example, a villa on the corner of the road or a flat in the first four floors of an apartment building are generally considered the preferred locations.

8. Car Parking Charges - With such a shortage of space in our country, sadly, many times parking space is not included when you buy the house. Depending on the area you live in and the size of the available parking space, this fee can be higher or lower. This fee has to be paid to the seller and comes as a separate cost.

9. Maintenance Charge - Gated societies usually have common facilities and amenities such as security, landscaping, clubhouse, and maintenance staff. The developer or the residents' association may charge recurring maintenance fees for these services. This may seem like a small amount but sums up to a lot. Sometimes, builders charge an advance maintenance deposit of up to 2 years.

10. Interior and Furnishing Costs - There might be a situation where you buy an unfurnished flat and you may have additional expenses for interior designing, furnishing, and appliances for it. In case you buy a fully furnished flat, you don’t need to spend that much on furnishing.

There could be other expenses which may have to be settled based on area or preference or changes to be made in the apartment. However, the above points cover the major areas of expenditure which should be considered while buying a residential apartment.

Rohit Gyanchandani is Managing Director at Nandi Nivesh Private Limited.