What are non-occupancy charges and who pays them?

Buying a house is not necessarily only for end-use for the owner. The other reasons why one buys a property include investing the surplus income, diversifying assets or may have bought for end-use but forced to live somewhere else or in another city. The home buyer leases it out and earns money from it.

After scouting through many properties, doing several rounds of back and forth and finally buying the perfect property and letting out on rent is the logical way in which a property investment buyer plans and executes plans. While most owners are aware of the maintenance charges that have to be paid to the housing society, what many house owners don’t take into account is the non-occupancy charges. In case the property is part of a housing society or a cooperative housing society (CHS), then the home owner is liable to pay non-occupancy charges to the society. These are over and above the maintenance charges. In this guide, we detail what non-occupancy charges are, who have to pay them, and how to calculate the non-occupancy charges.

What are non-occupancy charges ?

As the name suggests, a ready-to-move-in property that has not been occupied by the owner is a non-occupied property. All members of a housing society have to pay the society maintenance charges. This is mandatory irrespective of the property being occupied by the owner or not.

But, in case the property is not occupied by the owner nor by his family members and is used for commercial gains, then the housing society imposes an additional charge known as the non-occupancy charges. Through this way, the housing society gets some share from the financial gain that the landlord earns by way of leasing his property. The non-occupancy charges are included in the maintenance bill that a society raises quarterly.

Having a clear idea about the non-occupancy charges is important to avoid confusion and legal disputes between the society member and the managing committee.

However, note that according to the housing society’s bye-laws, non-occupancy charges cannot be levied if the property is being occupied by the owner’s blood relatives like parents or siblings.

When can housing societies charge non-occupancy charges?

Housing societies can charge non-occupancy charges for

• a vacant property
• rented out property
• property used for commercial purposes

Non-occupancy charges is applied when the property has been transferred to the owner by the cooperative housing society or the builder and is not occupied by the owner or his/her immediate family members.

However, the non-occupancy charges vary from state to state with some states even going ahead and removing it. For instance, while some states like Maharashtra, Delhi etc. levy non-occupancy charges, states like Karnataka have abolished it with the state government issuing strict guidelines against it.

Who pays the non-occupancy charges?

Non-occupancy charges are paid by the house owner or landlord who is also a society member. However, a landlord can also transfer the maintenance charges to the tenant if that is clearly communicated to the tenant while leasing the property. It is also recommended that this transfer of maintenance charges has a clear mention in the rental agreement for it to be enforced without any dispute.

When are non-occupancy charges not applicable?

Mentioned are cases under which the non-occupancy charges are not applicable.

• If a flat owner is himself residing in the flat, then he need not pay non-occupancy charges.
• If the flat in a housing society is locked at all times and the landlord stays elsewhere and pays the entire society maintenance charges without any discount, then non-occupancy charges are not levied. While some people may dispute this, an easier way is to ask your parents to shift in the property until you are away.
• As per bye-laws, non-occupancy charges won’t be levied if the property is being occupied by the owner’s family members such as husband, wife, father, mother, son-in-law, daughter-in-law, grandson, granddaughter, etc.
• Also, intermittent joint-stay of friends or family will not attract NOC.
• Non-occupancy charges on sinking funds are not include in addition to other repair funds and taxes.

How to calculate the non-occupancy charges in 2025?

The calculation of the non-occupancy charges depends on service charges and location of the property. Lack of clarity on how the non-occupancy charges have to be calculated has resulted in disputes between cooperative housing societies and members of the society.

As per the Supreme Court ruling, non-occupancy charges cannot be more than 10% of service charges. Based on this, the Maharashtra government issued a circular. Under Section 79A of the Maharashtra Cooperative Societies Act, 1960, the amount of non-occupancy charges cannot exceed 10% of the service charges of the society (excluding municipal taxes).
For example, if a maintenance bill is Rs 11,000 of which the service charge is Rs 10,000 a month, the monthly non-occupancy charges will be 10% of Rs 10,000, resulting in Rs 1,000.

What are service charges?

Service charges are the salaries of employees of the society, stationery charges, overhead costs, etc., that a society incurs. This along with utility charges like electricity charges forms the non-occupancy charges. This can be found in the monthly maintenance information. In case a landlord has a parking space inside the housing society then this is also considered while calculating the non-occupancy charges. But, in case the landlord doesn’t have a vehicle or a parking space, then this component need not be paid as part of the non-occupancy charges.

What are the implications of non-occupancy charges on owner, tenant and society?

On owner: This is the additional amount that the owner has to pay in addition to service charge and maintenance, if he is falling under the category where he can be charged for non-occupancy. This money will be used in the upkeep of the housing society. However, if the society charges the owner in an unlawful manner, he has the option to either pay or challenge the society legally.

On tenant: Sometimes, the owner may pass on the non-occupancy charges to the tenant and this will be over and above the rent he may be paying. Agreeing to pay extra will depend on how badly the tenant wants the house on rent. The tenant has to also weigh in options as to whether it makes sense for him to foot an extra amount and what he gets in return for that-this may be more than 2 parkings, access to clubhouse, amenities etc.

On housing society: The non-occupation charges are additional funds that the housing society receives and can be used for the various development activities in the complex.

Can tenants pay non-occupancy charges?

While as per the new model bye-laws, the owner should pay the non-occupancy charges of a housing unit, there is an informal arrangement between the owner and the tenant where the tenant pays the non-occupancy charges- over and above or as part of the rent component.

What is illegal to charge as non-occupancy charges?

Any amount charged under any additional head, apart from the fixed charges of 10%, is illegal. In such a case, the society can be prosecuted under the Consumer Protection Act, for deliberate negligence and deficiency in services and overcharging of the amount with abuse of power and harassment. The lessee is required to adhere to the due procedures and submit relevant documentary proofs while initiating legal action.

What are the non-occupancy charges for NRIs?

When investing in Indian properties, NRIs should be aware of their rights, understand how non-occupancy charges are calculated, and maintain transparent communication with the housing society. NRIs owning a property in India have to necessarily pay non-occupancy charges if the property is on rent or locked. This can be avoided only if the NRI property owner’s blood relative stays in the house.

While non-resident Indian (NRI) property owners are drawn to invest in India due to the attractiveness of the real estate market, many have faced steep non-occupancy charges in the past. As these owners were often abroad, housing societies charged substantial non-occupancy fees, sometimes amounting to several lakhs. This practice continued until the Maharashtra government intervened and placed a cap on these charges to 10% of the service charges.

What are the effects of not paying non-occupancy charges?

The implications of not paying non-occupancy charges are serious. Non-occupancy charges are to be paid every month. The housing society starts with the following steps to make the owner pay the non-occupancy charges.

1. Reminder notices: When landlords don’t pay the non-occupancy charges on time, the housing society sends reminder notices to the defaulters.
2. Declaring owner as defaulter: Even after repeated instances, if the owner doesn’t pay the non-occupancy charges, the society will declare the landlord as a financial defaulter.
3. Not giving no-dues certificate: Since the landlord has been defaulting on payment of non-occupancy charges, the society has the right to hold the no-dues certificate that the landlord may ask for. This will have a negative effect if the landlord at any time wants to sell his property. As a result, the landlord may not be able to sell his property unless the pending non-occupancy charges along with the penalty are paid.

The calculations and exemptions of the non-occupancy charges depends on the state the property is located in. It is recommended that the property owner has complete and free title to his apartment, complies with all regulations and pays the non-occupancy charges without any default. It is recommended to keep track of the regulations yourself or use professional help from lawyers and brokers.

Should non-occupancy charges be collected after society formation or wait until developer exits the project?

A common occurrence in new residential complexes is that owners are required to pay maintenance (typically for 18 months) to the developer before the society is formed. One question many people have is whether the society should wait for the developer to exit (after the 18-month period) or begin collecting non-occupancy charges once the society is formed and the handover is complete.

According to advocate Neelam Mayuresh Pawar, “Since the developer has already collected maintenance for 18 months, there is no immediate need for the society to impose non-occupancy charges during this period, unless the collected funds prove insufficient. It is advisable for the society to seek a proper handover of accounts from the developer, ensuring that any remaining maintenance funds are transferred to the society’s account. Non-occupancy charges, if applicable, should ideally be levied after the 18-month maintenance period ends, unless an urgent financial need arises. The society should pass a resolution in the upcoming general body meeting to ensure collective decision-making on this matter.”

Does the non-occupancy charge attract GST on housing societies?

Non-occupancy charges are not taxable according to the Income Tax rules. However, according to the official government document – GST on housing societies, sinking fund, repairs and maintenance fund, car parking charges, non-occupancy charges, or simple interest for late payment attract GST as these charges are collected by the RWA/Co-operative Society for the supply of services meant for its members.

Malpractices related to non-occupancy charges

A case in point is the one in which Section 79A of the Maharashtra Cooperatives Societies Act was challenged by Mont Blanc Cooperative Housing Society where the society mentioned circular violated Article 19 of Indian constitution.

The housing societies mentioned that the government by capping the NOC restricted their freedom. Thus, the final bylaws of the Maharashtra Cooperatives Societies Act 1960 was revised that includes Non-Occupancy Charges calculation and collections guidelines.

Excessive charging

There are housing societies that don’t follow the 10% cap and charge around 20-30% that are listed under heads such as convenience charges for tenants,  facility usage charges etc.

Double charging of non-occupancy charges

Some societies charge both owner and tenant for using services in the society such as lifts, amenities etc. citing that tenant is one of the reasons for wear and tear of things in the complex.

Not follow 79A directive

Some societies don’t follow the 79A mentioning that it is not binding but just an advisory and hence levy non-occupancy charges as they want. But, courts have always mentioned that it is mandatory to follow 79A.

What should be done in case housing society levies illegal non-occupancy charges?

• The affected house owner can file a complaint with the deputy registrar of cooperative societies.
• The affected house owner can file a complaint with the cooperative court.
• File a grievance with housing federation or local consumer forums.

Note that malpractices in levy of non-occupancy charges is a grave governance issue that compromises the trust that the members of the society have in the managing committee.

Housing.com POV

Today, non-occupancy charges levied by housing societies cannot exceed 10% of the service charge component of the monthly maintenance bill. These charges can be levied the moment the flat is given on leave and license, or goes vacant. It is recommended for a resale flat purchaser to check for such arrears, if any, before he purchases the flat as the society may not give an NOC to the buyer or may ask the buyer to pay the non-occupancy charges for the deal to fall through.

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