Buying a new home is a big decision. It’s also a momentous occasion in your life. But hidden costs can take the zing out of your happiness. Here’s why you need to know more about them, before signing the dotted line.
- They can spring unpleasant surprises on you when you least expect it.
- Create a financial imbalance for which you’re not prepared.
- Hidden costs also make it difficult to have a fair comparison or a proper estimate of the total cost of your apartment.
This changes everything.
If you’re not careful, these hidden costs will ruin your happiness of buying a property. How can you avoid this? By learning more about these 5 hidden costs.
1. Registration and post registration charges
Registration, the final seal in your deal, never comes cheap. Registration costs depend on the total worth of the property you are purchasing and in Bangalore, it is 1 percent of the total or registered property value.
Apart from this, there is also stamp duty which amounts to 5.65 percent of the total or registered property value, as of now in Karnataka.These costs have to be taken into account when you are evaluating the total cost of your dream home and planning to foray into buying property.
Further, there are also costs related registration process (after all you are dealing with a Govt. Department) euphemistically called Legal fees. Often times, this also includes property tax and obtaining khata.
2. Taxes and Parking Charges
For instance, you need to be clear about any taxes that might be levied on you, which the Builder or the sales representative may not have highlighted in the price list .
You also need to ascertain parking charges if they are detailed in the price list. You need to factor these costs as they are part of total property cost. Avoid later-day hassles by making sure that the property seller shows all these outgoes in the price list of the home that you’re planning to buy.
3. Escalation and Penalty Charges
Cost escalation clauses have become a regular feature of most agreements but many buyers are not aware about this. Often, builders hit the buyers at the last moment, usually just before registration with “escalation charges”, allegedly due increase in prices of raw materials like cement, steel, sand. etc. as well cost of labour.
Since this is already inked in the Sale Agreement signed by the buyers, there is no choice but to comply.
However, a wise buyer will be aware of this clause and should check whether this clause will be invoked.i.e. whether the builder has levied escalation charges in his previous projects.
Otherwise, this can become a huge headache for you later on when you discover that the price of the under-construction apartment that you bought has gone up significantly, making the home loan that you may have taken, insufficient.
Penalty charges are also another cause for concern. If you’re unable to make a payment, you need to know if there will be any interest charged and if so, how much. Or if you decide to cancel the booking, you need to know –
- If there will be any deductibles while obtaining a refund
- Whether the builder will wait till the flat is resold before refunding
- Whether the builder will refund at all.
4. No Objection Certificate Charges
Before handing over the keys to your house, the builder issues a No Objection Certificate, which is a document that states that the builder has no objection in the buyer occupying the house and that all payments are clear. Many reputed builders sometime charge the buyer to issue this NOC.
5. Maintenance charges
A year later, when the Residents Association takes over the maintenance, they may be compelled hike the maintenance charges, which results is considerable cash flow and heartburn.
This is even more true, few years down the road, when the Association wants to repaint the building or make some significant repairs.
A wise buyer would be alive to this fact of life and be ready for it.
- Be aware that what a builder advertises is not the total cost of the possessing the property.
- As a smart buyer you ought to be aware of other not so visible costs, and be ready for them.
- Then not only you will enjoy your piece of property but also your peace of mind as well.
Arsalan has 5+ years of experience in the Real Estate industry. During the course of his career he has interacted with hundreds of home buyers and helped them choose their dream home. His expertise lies in understanding customer needs and guiding them through their home buying process.
Arsalan is a commerce graduate from Bangalore University and is currently working in Vakil Housing as a Property Advisor