When embarking on your journey to find the perfect property, you might be surprised by the myriad additional costs associated with purchasing a home or investing in real estate. You typically have two paths: acquiring a ready-to-move-in property or opting for an under-construction one. The majority of buyers tend to favor an immediate-occupancy home because it generally carries less risk compared to its under-construction counterpart. Let's take a closer look at a scenario where a property is priced at Rs. 3000 per square foot—this represents the basic rate, yet there are numerous additional charges that may elevate your total expenditure by over 40% to 50%. In this discussion, I'll outline these supplementary costs to ensure you're armed with the necessary knowledge before committing to a property purchase.
An Illustrative Example:
Consider a property with a basic rate of Rs. 45 lakhs. When you finalize the payment for this property, expect to pay between Rs. 58 lakhs and Rs. 67.5 lakhs—this total reflects both the base price and the additional charges incurred during the purchase process. Below, I’ll delve deeper into each of these extra charges:
Basic Charge
This initial price excludes any supplementary costs. Before the RERA Act was implemented, properties would often be sold based on super built-up areas. However, with the introduction of the RERA Act, properties must now be priced according to the carpet area. For instance, if you discover a property boasting a carpet area of 1500 square feet priced at Rs. 3000 per square foot, the total basic price will come to Rs. 45 lakhs. Keep in mind that this is just the foundational cost; various extra charges will still apply, as I will detail below.
PLC (Preferential Location Charges)
These charges apply based on your property’s location. For example, features such as corner lots, park views, or sea views can considerably impact pricing. Typically, properties with sea views attract higher PLC fees, which usually range between Rs. 150 to Rs. 200 per square foot.
Parking Charges
When acquiring a property, expect to pay between 5% and 7% of the flat's base price as a parking fee. For instance, if you purchase a property for Rs. 45 lakhs, anticipate a parking cost ranging from Rs. 2 to 2.5 lakhs.
Infrastructure Development Charges (IDC)
These charges encompass the complete internal infrastructure within a development project, covering necessities like water supply, electricity, and sewage treatment facilities. Developers often bundle these costs together for economic reasons. Generally, the IDC applies at around 6% of the property’s base price.
External Development Charges (EDC)
In certain areas, such as Gurgaon and Faridabad, there exist external development fees paid to the government. These charges help fund essential infrastructure elements like roads and utilities. Typically, the EDC is calculated at about 5% of the flat's base price, with combined IDC and EDC fees ranging from Rs. 300 to Rs. 400 per square foot.
Corpus Fund / IFMS
Builders collect a corpus fund or Interest-Free Maintenance Security (IFMS), which is akin to an emergency fund and not intended for regular monthly fees. For a property valued at Rs. 45 lakhs, builders usually collect anywhere from Rs. 50,000 to Rs. 1,00,000.
Power Back-Up
Charges for power backup in flats are calculated based on kilowatt-hour (kWh) units. Backup options generally vary from 3KVA to 5KVA, with costs ranging from Rs. 1 lakh to Rs. 1.5 lakhs.
Amenities and Club Charge
Exclusive properties with luxuries like a clubhouse, gym, and swimming pool will generally have associated charges. Expect to pay a one-time fee of approximately Rs. 50,000 up to Rs. 1.5 lakhs for access to these facilities.
Stamp Duty and Registration Charges
Stamp duty varies by state, meaning you'll need to be aware of localized rates. Usually, these charges range from 5% to 10% of the property's value.
GST
For under-construction properties, both stamp duty and GST are applicable, with GST being 18% on two-thirds of the property cost, resulting in an effective rate of 12% added as an extra charge before your purchase.
Brokerage
In most cases, transactions for resale or ready-to-move-in properties involve a real estate agent or broker, who typically charges between 1% and 2% of the final property price as their commission.