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True cost of buying a home

“Your dream home is now within your reach! 2-3 bhk available at never before prices! Book today at affordable rates!” Sounds familiar, does it not? You receive such messages in your inbox almost every day and at times it does sound too good to be true! If you have been living on rent for the longest time and are constantly worried about moving ever so often, it’s quite tempting to give in to such offers! But wait! Don’t go by the advertised price by the realtor for it does not reveal the true cost of your home. Before you make a decision to make the final purchase, you have to take the following into consideration. The following is what goes into the calculation of the total cost of your property:


Nature of cost


(Approximate figures)

Basis of calculation

Basic sale price (BSP) The main price advertised by real estate developer [A]

Rs 2,40,00000 (as an example)

1200 sq. ft. x Rs 20,000

Preferred location charge (PLC) If there is any particular flat you want, say the corner flat overlooking the children’s park, you will have to pay a premium for it.

Rs 9,60,000

It usually comes to 4% of the BSP. You however have the option of not having any preferred location.

External Electrification charges (EEC) the charges the developer levies on you to lay down the cables and wires for electricity consumption in your society.


Firefighting equipment charges (FFEC)- Each building must have its stock of equipment that can be spurred into action in case a fire breaks out

Rs 60,000

1200 sq. ft. x Rs 50 per sq. ft.

External Development Charges (EDC)+Infrastructure Development Charges (IDC)- Both these taxes are directly paid to the state for developing the external area and infrastructure projects around your society

Rs 1,20,000

1200 sq. ft. x Rs 100 per sq. ft.

Car parking space

Rs 1,25,000 (open)

Rs 2,00,000(closed)

Fixed amount

Club membership – Most new residential complexes have a club house within their premises for recreational activities, and you need to pay a fee to become a member.

Rs 45,000

Fixed amount

Power back up- Unfortunately in India power failure is rampant, so having a good power back up is necessary

Rs 30,000

Fixed amount

Electricity connection charges (EEC) This is the application fee you need to pay for setting up the meter and getting electricity connection.

Rs 3000


Water, sewage and drainage- These are paid to the government and vary from state to state.

Rs 3000


Stamp duty and registration fee- These are the fees that you pay to register the property in your name.

Rs 9, 31,200

Rs 30,000

Total=Rs 9, 61,2000

Stamp duty will vary from state to state. There is also the registration fee which is either is 1% of BSP or capped at Rs 30,000.

Advance Maintenance Charges (Rs 3-10 per sq. ft. depending upon the builder which is taken 12-24 months in advance)

Rs 57,600

Approximation (we have assumed Rs 4 per sq. ft. taken 12 months in advance)

Advance Maintenance Deposit (Rs 50,000 – 1,00,000)

Rs 50,000


Other costs [B]

Rs 24,14,800



[A + B]

Rs 2,64,14800



And that’s not all. In fact before you buy your home, you will also have to take the following the other hidden costs into consideration while you are in the home buying process.

  •  Home appraisal cost (if applicable)
  • Legal fee (if you are hiring the services of a lawyer)
  • Broker’s fee
  • Repair and reconstruction costs
  • Furniture and other decorative costs
  • Moving costs

Thus as you can see, the true cost of buying a home can be anything between Rs 25,00,000 to Rs 30,00,000 over and above the advertised price that the developer tries to bait you with.