In this article we will discuss 11 hidden charges while buying a house in India. This is what you may have to pay while buying an apartment or a property for yourself.
Buying a house for the family is one of the most cherished dreams for most of us, isn't it? It is a significant investment of a lifetime, and therefore, we are willing to go that extra mile to acquire a decent property.
In the search for our dream home, we often set a budget for ourselves and forget to add the hidden costs in buying a property. These add-ons can raise the final price by almost 20 to 60 percent, which later becomes extremely difficult to handle. That's why it's imperative to consider the hidden charges while buying a property in India.
Let's take an example to understand this better. Suppose you are looking at a 2 BHK home worth 50 lakhs. Now let's consider these 11 hidden charges when you buy a home in India.
- PLC (Preferential Location Charges): If the 2 BHK House is located in a prime area like Koramangala in Bangalore or has special features like a corner plot, park-facing view, or higher floor preference, the builder may add preferential location charges. These charges can vary but may range around 5 to 10 percent of the property value, which is approximately 2.5 to 5 lakhs.
- Parking Charges: While buying 2 BHK Bedroom apartment many residential projects charge separately for parking spaces. Depending on the location and type of parking (open or covered) and how many parking spaces you require, the charges can range from 1 to 3 lakhs.
- IDC charges (Internal Infrastructure Development Charges): IDC charges cover the cost of developing internal amenities within the project, such as landscaping, common areas, clubhouses, and other facilities. These charges for a Two BHK Flat can be around 2 to 4 percent of the property value, which is approximately 1 to 2 lakhs.
- EDC (External Infrastructure Development Charges): EDC charges are imposed by the government for the development of external infrastructure such as roads, water supply, and sewage systems. These charges can be around 2 to 5 percent of the property value, which is approximately 1 to 2.5 lakhs.
- Corpus Funds or IFMS (Initial Facility Management Services) charges: Builders often collect these charges for the maintenance of the project for a specific period, typically ranging from 2 to 10 years. These charges can vary but may amount to around 20,000 to 50,000 per year, totalling 40,000 to 5 lakhs over a specific period.
- Power Backup Charges: Some builders provide power backup facilities at an additional cost. The charges for power backup can range from 25,000 to 75,000 or more, depending on the capacity and duration of the backup.
- Club and Amenities Charges: These are also common in residential complexes with facilities like swimming pools, gyms, and sports amenities. These charges may vary but can range from 1 to 3 percent of the property value, which is approximately 50,000 to 1.5 lakhs for a 2BHK Apartment in India.
- Stamp Duty and Registration Charges: These are government fees that need to be paid during the property registration process. These charges are typically a percentage of the property value and can vary from state to state. As an estimate, they can be around 5 to 8 percent of the property value, which is approximately 2.5 to 4 lakhs.
- GST (Goods and Services Tax) Charges: which is applicable on under-construction properties. The GST rate is 5 percent for residential properties and 1 percent for affordable housing properties. For a 2 BHK flat in India worth 50 lakhs, the GST can be around 2.5 lakhs.
- Legal Fees: Engaging a lawyer for legal documentation and due diligence is essential when buying a property. The legal charges can vary but may range from 0.5 to 1 percent of the property value, which is approximately 25,000 to 50,000.
- Interior Costs Charges: These are also a significant factor. The cost of interior designing, furnishing, and customization is not included in the base price of the property. Depending on the extent of interior work required, these charges may vary significantly. As a rough estimate, interior costs can be around 10 to 20 percent of the property value, which is approximately 5 to 10 lakhs.
In this article, we took an example of a 2 BHK properties in India with a cost of 50 lakhs. However, it's important to note that there are additional hidden expenses that need to be taken into account.
After discussing these costs, it becomes evident that an average of 15 to 20 lakhs would need to be spent in addition to the initial cost of the property. Therefore, the total cost of the property would amount to approximately 65 to 70 lakhs.
Please note that these charges are only indicative and can vary depending on the location, builder, project, and other factors. It is essential to consult with the builder and review the agreement carefully to understand the exact charges applicable to your specific property.
You need to consider these hidden costs before deciding your final budget for purchasing a property. Factoring in these hidden fees when buying a house will ensure a smooth and hassle-free property buying experience for you and your family.
Well, if you found this article information helpful, do share with your friends and family. We will keep educating you with more home buying tips in our next topic. Thank you for your time reading this article.