A common advertisement of a property project reads something like this- 2 BHK starting from Rs 1.8 crore, 3 BHK starting from Rs 2.6 crore etc. This means that the property cost for a 2 BHK unit may be anything starting from Rs 1.8 crore, depending on the buyer preferences. One of the reasons why property prices differ from unit to unit is because of the many cost components that are added to it. Sometimes, depending on the location and the demand, the developer also adds a premium to these cost components. Over and above this price is the stamp duty and registration charges that the buyer has to pay. And in case the buyer invests in an under-construction property, he will also have to pay the Goods and Services Tax (GST). In this guide, we talk in detail about the various premium costs that add to become the total property cost.
What is the basic selling price (BSP)?
Before proceeding with the total cost of a property, we will detail what the basic selling price of a property is. This is the property’s base cost that does not include taxes, maintenance costs etc.
BSP= undivided share (UDS) of land + cost of construction and materials
Where UDS is the share of each property unit that is allotted in a housing society and cost of construction is building the property in that land. Thus, a person when buying a property pays for the land, the construction material and the labour.
Premium charges to be paid by home buyer
In addition to the BSP, there are charges that a home buyer has to pay. Listed below are the same for you as a home buyer to know.
Preferential Location Charges (PLC)
These are charges that are levied based on the floor and the square foot (sqft) on housing units that have an added advantage as compared to others. For example, a housing unit facing the podium, swimming pool and kids play area etc. will command a higher price than a flat that will be facing the flyover with no particular view to look forward to. A terrace flat with sun decks will command a premium over a flat with only open balconies.
PLC also depends on what the trend is based on people’s preferences. Similarly, in Chennai and Delhi, people prefer lower floors and hence the PLC here is high. Similarly, in Bengaluru, a lake facing view may command a premium of around 10% of the base price.
Floor rise prices
In Mumbai real estate market, people prefer housing units in higher floors. The price of property increases with the higher the floor chosen. This is known as floor rise prices. In Mumbai, typically, the floor rise price begin after 5th floor in a building. According to industry reports, a Mumbai apartment facing the Arabian Sea may charge a floor rise price of around 25-30% of the base price of the project.
Parking charges
When buying a property, parking is one of the important things to consider. While previously, people used to choose between buying a house with or without parking (to save the premium amount), today, it is inevitable to buy a property with parking. In fact, developers provide more number of parkings, the bigger the housing unit is. For example, while a 2BHK may get a single parking, a 3 BHK may offer 2 parkings and a 4 BHK may offer 3 parking spots.
Parking fee may range from 3-5% of the total property cost and will depend on location of property, type of parking etc. stilt parking, open parking, tandem parking etc. This cost of parking, ups the property price. At most times, the parking costs are added to the basic selling price of the unit. This cost further increases if the home buyer wants to buy extra parking.
External Development Charges (EDC) and Infrastructure Development Charges (IDC)
The EDC and IDC are charges that the developer has to pay the state government. These are for developing areas around the project and physical infrastructure such as roads. While the developer pays this cost, eventually this is added to the total cost of the property and is billed to the buyer.
Maintenance charges
Nowadays, a project offers huge podium gardens, parking going up to two basements, service lift etc. and these facilities add up to the maintenance fee that the home buyer has to pay. When investing in an under-construction or a ready-to-move-in purchase from the developer, the home buyer has to keep an amount aside that will become the initial maintenance deposit. This is an interest free maintenance deposit that has to be given to the developer. These will be for a period of 1 year or 18 months depending on when the residents welfare association (RWA) is formed and the handover is done by the builder to the housing society. Once the society is transferred, the funds are also transferred to the RWA’s account.
Note that if the maintenance charges are above Rs 7,500 per month, property owners will have to pay a GST of 18% on this. The GST is applied on a per apartment basis.
Clubhouse membership
One of the reasons why people invest in gated communities is because of the availability of the various amenities. So, while the developer will promise to offer 50 plus amenities as part of the project, the cost of maintaining these belongs to the homebuyer. A one-time clubhouse fee has to be paid for a certain amount of time to the developer. Thus, a homebuyer has to remember that more the number of amenities, more will be the maintenance charges.
Facilities in the complex
There may be facilities available in the complex such as a banquet hall or a mini theatre which will be on chargeable basis upon use. These will have to be paid by the home buyer whenever the facility is used. For instance, to avail the service of a banquet for a family function one may have to pay Rs 8,000 for four hours + GST (charges vary across projects).
FAQs
Do you get a home loan for down payment of a property?
No. A home buyer has to arrange for down payment on his own or take a personal loan for that.
Does a home buyer pay GST for ready-to-move-in property that he will purchase from a developer?
No. GST is only levied on properties that are under-construction.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
