Guide to Real Estate Charges and Fees

Whenever you purchase a property, there are several charges you encounter from scratch to end. Sometimes the buyers get confused about these charges and their complex structure. If you are not well aware about what you are paying you might get cheated. Today, we will talk about all the charges associated with real estate and why they are levied.

During Construction

1. Car Parking: When buying an apartment still being built, you usually have to pay for at least one parking spot. A covered parking space is more expensive than an open one, often costing 5-10% of the property's introductory price. If you need more parking spots, you’ll have to pay extra.

2. Preferential Location Charges (PLC): Builders often charge extra if your apartment is in a particular spot, like overlooking a park, the sea, or on a higher or lower floor. For example, in Delhi-NCR, you might pay more for lower floors; in Mumbai, higher floors cost more.

3. Infrastructure Charges (EDC & IDC): These are fees for building infrastructure like roads, water, and electricity. The developer pays these charges, but they usually pass them on to you based on the size of your apartment.

4. Power Backup: If you want backup power for an outage, you’ll be charged based on your needed backup power.

5. Club Membership: If the building has a club or swimming pool, you might need to pay a one-time fee to join.

6. Utility Connection Charges: You’ll pay extra for connecting your apartment to essential services like water, electricity, gas, and sewage.

7. Water and Sewage Treatment: In some places, the builder might use groundwater instead of municipal water. They may also install plants to treat water and sewage; you’ll be charged separately for these facilities.

8. Maintenance Deposit: The builder may collect a maintenance deposit before you move in. This money helps care for common areas and services until the residents' association takes over.

9. Taxes: You must gst on the property. These taxes combined can add 5 percent on residential and 12 percent on commercial property.

After Completion

10. Stamp Duty and Registration: When the house is ready, you’ll pay stamp duty and registration fees to make the sale official. These fees vary by state and can be 4-10% of the property’s value.

11. Legal and Documentation Fees: Extra-legal paperwork and documentation charges may exist.

12. Interior Costs: After moving in, you might need to spend money on things like wardrobes, kitchen fittings, and other home improvements. This can be 5-20% of the property's cost.

Other Possible Costs

13. Interest, Rent, and Tax Rebate Loss: If construction is delayed, you’ll have to pay extra interest on your home loan and cover rent until you move in. Also, you can’t claim tax benefits on your home loan until you’ve moved in.

14. Transfer Charges: If you buy a property from someone else, you might have to pay a fee to transfer the booking to your name. It’s a good idea to discuss this cost with the seller beforehand.

15. Loan Processing Fee: When you apply for a home loan, you’ll usually need to pay a processing fee of up to 0.5% of the loan amount.

16. Home Loan Insurance: Some lenders require you to get insurance for your home loan, which will be added to your monthly payments. If you already have other insurance, you can skip this.

17. Broker’s Fee: If you use a real estate agent, you’ll need to pay them a fee, usually 1-2% of the property’s value. It's best to negotiate this fee before starting your home search.

18. Interest-Free Maintenance Security Charge (IFMS) is a fee that helps keep common areas and shared amenities in good shape in housing societies and commercial buildings. It's a way to make sure the places everyone uses are well-maintained without any extra interest charges.

19. Sinking fund is like a savings account for property. Investors use it to make sure their money stays safe and doesn’t lose value over time. The money in a sinking fund can be used for things like fixing and maintaining the property.

20. External electrification charges are fees that developers charge to set up the electrical system for your apartment. This covers the cost of running wires and cables from the main power source to your apartment.

21. External Development Charges (EDC) are fees developers pay to cover the cost of building infrastructure outside of a real estate project. This includes things like roads, water supply, sewage systems, and electricity. These charges help in developing the surrounding area and are paid to local authorities.

22. Internal development charges: IDC fees are charges that local governments put on real estate developers. These fees help pay for things like building or upgrading roads, sewer systems, parks, and utilities. Developers usually have to pay these fees before they can start building or when they get permission to build.

Conclusion

When buying a property, you’ll encounter various charges from start to finish, which can seem overwhelming. These fees include things like parking, infrastructure costs, and utility connections. Once the property is complete, you’ll also face costs such as stamp duty, registration, and interior improvements. Additional expenses may include loan fees, insurance, and potential broker's fees. 

Understanding these charges helps avoid surprises and ensures you’re prepared for the total cost of purchasing and owning a property. Always check with your developer and real estate agent to get a clear idea of all possible fees before finalising your purchase.