Maintenance charges: Importance, calculation, Rera guidelines

Both purchasing and residing in a gated community can be expensive endeavors. The cost of buying a house is just the beginning of the expenses. Maintaining additional amenities and facilities is the responsibility of all. Residential societies use maintenance charges, which are collected to keep the community running in a good state always.

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When a buyer purchases a unit, developers rarely disclose these fees to them. But these fees have a big impact on living expenses overall. Therefore, you need to understand what you are getting into long-term before you seal the deal. In this article, you will learn about the detailed significance, way of calculation, etc. This will help you to know the maintenance charges in a better way.

What does maintenance charges include?

The maintenance charges have a few elements. Based on these elements, the charges can differ from one property to another. So, here are the basic elements of the maintenance charges:

The building’s maintenance and repair costs
Service fees (equipment, electricity for common areas, security, and housekeeping)
Costs associated with elevator maintenance and repairs
Water bills and property taxes
Charges for non-occupancy
Parking fees

Maintenance charges: Importance

The builder-buyer agreement lists flat charges as one of the required payments that must be made on a regular basis. As per Section 6 of the RERA Act 2016, tenants who engage in a builder-buyer agreement must ensure that they pay these fees on schedule.

Another significance of the maintenance fees agreement is that there are many benefits to paying off these expenses. One of these benefits is that you won’t have to manage everything alone. For example, if as a buyer you pay the fee, you do not need to think about the maintenance of various sides like securities, water tanks, motors, electric supply issues, etc.

How to calculate maintenance charges?

Learning the calculation details of maintenance charges is very vital for the buyer. In this way, buyers can easily understand the exact price they should pay. There are three major procedures based on which the maintenance charges are calculated in every society. Let’s have a look at these procedures.

Equal maintenance charge: This process of figuring out annual maintenance costs is applied in communities where each and every apartment or flat has a uniform size. Most societies calculate these charges at the end of each month. So, the maintenance charges are received on a monthly basis from the residents.
Per square feet method or area based charge: This method of figuring out these fees is mostly used by societies with different-sized apartments.
Hybrid maintenance charge: Certain societies calculate these fees by combining the equal maintenance and the area calculation techniques into one hybrid method. When using a partially equal maintenance system, residents are required to pay the same fees for common amenities. Common facilities are elevators, a kid’s zone, a swimming pool, housekeeping services, gardens, etc.

Maintenance charges: Rera guidelines

The Real Estate Regulatory Authority (Rera) has mentioned some of the guidelines that both parties must know while dealing with a real estate property. These guidelines are as follows.

The builder and the buyer both should sign the maintenance charge contract to avoid any dispute.
Both parties should pay the maintenance charges either monthly, annually, or in some cases quarterly.
The maintenance agreement of the property should contain all the details of fees, any additional fees, exceptional cases, duration of the agreement validation, etc.
Until there is a complete handover of the property, the builder will continuously pay the maintenance fees.
During possession, the builder can discuss and demand the maintenance fees for up to 12 or 24 months.

Maintenance charges: GST

Real estate maintenance charges come with a new GST amount. Though sometimes, buyers are not properly aware of this GST amount, it is their responsibility to learn more about the amount before proceeding. There are two scenarios where GST is mandatory.

In case the total turnover for per year maintenance fees is more than Rs 20 lakh, the GST will be applicable.
Also, in case the housing association contributes to the maintenance service provider more than Rs 7500 per member, 18% GST will be added to the charge.

Maintenance charges: Things to remember

Residents of any real estate property have the right to claim a detailed breakdown of the maintenance charges. It can be per month, quarterly, or on an annual basis.
The residents and the service providers must use several modes of maintenance charges payment options.
It is the responsibility of the resident to pay the maintenance charges always on time. Besides, demanding a receipt is also important for further proof.
Usually, commercial real estate properties charge higher maintenance fees compared to residential properties.

FAQs

What is the full form of RERA?

RERA stands for Real Estate Regulatory Authority.

Are common amenities fixed with the maintenance charges?

Yes, the maintenance charges are used to uplift all common facilities.

Can anyone pay the maintenance charges?

Only community buyers or apartment buyers and the builder need to pay the charge.

What are the procedures for equal apartment calculating maintenance charges?

The maintenance charges are calculated based on three processes: area-based, equal apartments calculation, and hybrid maintenance charges.

Where should I find the maintenance charges details?

When you are buying an apartment, you should sign a buying contract. You can find the detailed maintenance charges on that contract.

Should the builder need to pay the maintenance charges?

Yes, both builders and residents must pay these charges.

Is GST applied to the maintenance charges?

Yes, GST is mandatory on the maintenance charges.

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

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Saswat Kumar

Saswat Kumar, a real estate writer, keeps up with the latest trends in residential real estate. He simplifies complex real estate jargon, making it accessible to all. Saswat’s data-driven analysis empowers buyers and investors to make informed choices in the housing market.