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Buying a home? Check for these 12 HIDDEN costs
You see an advertisement in newspaper about an apartment that the developer is selling at Rs 2,500 per square foot. The apartment's total advertised area is 1,200 square feet. You immediately calculate the cost as 1200 * 2500 = Rs 30 lakh.
Wow, Rs 30 lakh is what you were looking for and is very well in your budget. You want to call the developer and book the flat pronto!
But wait, this is NOT the actual cost of the apartment. There are many other un-advertised costs which are hidden and are added over and above the advertised price. And yes, do NOT make the mistake of underestimating these costs as they normally make upto 20 per cent of the advertised cost.
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Courtesy: Am22tech.com
Buying a home? Check for these 12 HIDDEN costs
Here are what all the costs a builder/developer will charge you when you actually buy the apartment/property and sign the buyer's agreement:
1. Basic Sale Price (BSP): This is actually the price which is advertised by developers and forms the main cost of your property.
2. Preferential Location Charge (PLC): Pay a higher price if you want your property at a location which is preferred by most people. For example, a villa on the corner of road or a flat on the first four floors of an apartment building are generally considered preferred locations.
The PLC charges are normally 4 per cent of BSP. So, add 4 per cent to to the total cost if you want a preferred location for yourself.
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Buying a home? Check for these 12 HIDDEN costs
3. External Electrification Charges(EEC): This is the price charged by developer to lay down wires and cables from electricity consumption meter to the Apartment.
4. Fire Fighting Equipment Charges (FFEC): This is pretty self explanatory. All projects residential or commercial are supposed to install fire safety devices and fire fighting equipment.
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Buying a home? Check for these 12 HIDDEN costs
5. Infrastructure Development Charges (IDC): These charges are paid direct to state government by the developer for developing the infrastructure for the project. The charges vary from state to state.
6. External Development Charges (EDC): These charges are again paid direct to state government by the developer for developing the external areas surrounding the project. The charges vary from state to state.
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Buying a home? Check for these 12 HIDDEN costs
7. Car Parking Space (CPC): Have you ever bought parking space in India? If this is the first time you are buying an apartment in a society, then this may come as a surprise to you.
But this is a fact that developers do sell car parking space inside the society.
There are generally two types of parking available. One is open parking and other is a covered one (in basement). The prices for both are also different. The open parking is cheaper than covered one. You need to purchase at least one parking with your apartment even if you don't have a car to park!
Also, if you want you can buy both covered and open parking.
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Buying a home? Check for these 12 HIDDEN costs
8. Club Membership: This has become a common norm these days to create a club inside a society itself for recreational activities. Your society may or may not have this facility but if it has, it does NOT come FREE. You need to pay a price for it and it is NOT optional.
9. Power back Up Charges: Power failure may be an alien term in developed countries but India certainly needs a good power back-up. There are charges for setting up the power back up plant inside your society and keep your air conditioners running even when there is a power cut from state electricity board.
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Buying a home? Check for these 12 HIDDEN costs
10. Electric Connection charges: Do not be under the impression that if you have paid the EEC and power back up charges, you are done with your electricity needs. EEC is an amount charged by developer only to set up the infrastructure for bringing electricity to your apartment.
You will have to pay the actual application fees for installing the electricity meter and a connection to the electricity board of your state for actually getting electricity.
11. Water, drainage and sewerage charges: Hmm...fed up of all the charges?
How can we forget the most precious resource on earth? You would be required to pay for water facility set up in the complex too. The charges are paid to government and will vary according to your state.
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Buying a home? Check for these 12 HIDDEN costs
12. Stamp duty and registration charges: These charges are paid to state government for registering property on your name. This fees is charged as a percentage of the registered value of the property and varies from state to state.
Please note that all the charges are calculated on the basis of SUPER BUILT UP AREA and NOT BUILT UP AREA. As per industry standards, the difference between super area and built-up area is approximately 18 to 20 per cent. That is, while you pay the price for 1,200 sq. ft. (super built up area), the actual built up area in your apartment would be somewhat 960 Sq. Ft. (1200 - 20 per cent of 1200).
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Buying a home? Check for these 12 HIDDEN costs
So, you can see yourself that the actual cost of the apartment has increased by Rs 7 lakh. Hence, the real rate is Rs 3,240 per Sq. Ft. instead of Rs 2,500 per Sq. ft. as advertised by developer.
So, you should enquire about the above mentioned charges before paying the booking amount to avoid any surprises later. Also, if you are looking to get your dream home financed by a bank, please do account for the costs of procuring a home loan too.