BACK TO THE BASICS
HOME BUYERS’ ADVANTAGE
BACK TO THE BASICS
IDENTIFY ADDITIONAL COSTS WHILE BUYING A HOUSE roads etc. These charges are paid by developers to the government and are passed onto the home buyers based on the builtup area. Such charges are always laid down in the agreement. EDC can account for almost 3-4 percent of the property cost.
Maintenance Charges
Buying a house is one of the most crucial decisions for any consumer in India. In fact, it is a lifetime investment for many buyers especially for first-timers. Therefore, it becomes imperative to be aware of all the additional expenses that come along with the purchase of a property.
Registration and Stamp Duty
These costs are associated with ownership transfer of property to the buyer. The registration and stamp duty costs differ in each state. Normally it is 6-7 % of the property value.
Preferential Location Charges( PLC)
PLC is optional and is charged if buyers choose a prime location in the project vicinity. Prime location of the unit could be a garden or lake facing, a pool side view etc.
Interior Cost
Most builders offer projects with the basic interior work. However, additional cost is charged to home-buyers for carrying out interior works as per their taste and lifestyle. It is important to keep a check on such expenses, as they are usually unplanned and go haywire. Usually interior cost can be in the range of 10 lakh or 1 to 2 % of the price of the house.
External Development Charges( EDC)
Usually, these charges are taken in advance for up to two years. Maintenance charges are levied on account of certain amenities provided within the project. These are typically the power back up, swimming pool, lift, gymnasium, play area, clubhouse etc. Some developers may accept a deposit from customers post project completion to take care of the property till the time Residential Welfare Association( RWA) is formed.
Parking Space
This is a fee charged by developers to offer an exclusive area for parking of vehicles within the apartment complex. While quoting price of a property, developers do not include this area. Parking fee also depends on factors such as availability of space, the location of the property etc. It can range between 1 lakh to 5 lakhs.
Service Tax and Value Added Tax( VAT)
These are charges that a home buyer is required to pay to the government for an under-construction property. Both these taxes are likely to increase the price of the house anywhere between 4 to 7 percent. Service tax is charged at 14 percent( additional 1 percent is levied as Krishi Kalyan Cess and Swach Bharat cess) on the 25-40 percent value of the under construction house. VAT, on the other hand, is calculated on the construction cost of the property. This can vary from state to state. However, it is safe to assume that it may be anywhere around 3 to 6 percent of the property cost.
Owning a house in India is not just an important investment decision but an equally emotional one. If these important pointers are kept in mind, buying a house can become a smooth process.
EDC, similar to PLC charges, are added by the developers on account of facilities such as drainage system, water, electricity,
36 / INNERVE / OCTOBER 2016