INVESTING IN PROPERTY? LOOK AT THESE 3 HIDDEN COSTS
The decision of investing a property is a big one! Most Indians spend their entire savings in investing in a property. At first glance, buying a property could seem a manageable prospect but only when you buy a property you will realize the actual costs to be incurred are way much more than expected. So before you make a decision you must know what are the costs involved in investing in a property!
While investing in a property, especially novice buyers calculate the total area with the cost per square feet, but apart from this, there are many other costs attached to buying a property, such as, registration costs, parking space, taxes, stamp duty etc…. So here we will discuss 3 hidden costs that you need to consider before investing in a property.
Parking, PLC And Maintenance Charges
Most builders charge an additional amount for parking space allotment. A hefty amount of 2 to 5 lacs is charged to you to provide for exclusive parking space. Also many builders charge an upfront maintenance deposit that could cover a period of 5 yrs, 10 yrs or lifetime. This comes as an overhead for the buyer and can drastically impact the affordability factor of the buyer. Most builders insist to take these payments initially itself as it provides a very huge capital for them. PLC means preferential location charges, which is levied to you on as per the floor you choose and on square foot basis. Depending on your city the charges would vary as per the floor you choose, the view the property provides etc.
EDC, IDC, Club Membership & Civic Amenities
When purchasing a house, most builders charge you for the facilities being provided such as electricity back-up, fire safety and water supply. These costs are in addition to the property cost. These charges are levied to you under the title EEC - External Electrification Charges and FFEC - Fire Fighting Equipment Charges. Apart from these, the builder will also charge you for EDC – External Development Charges and IDC - Infrastructure Development Charges. These are charges that are to be paid by the builder to the state govt. but are eventually passed on to the buyer.
Registration Costs
While the above costs are levied to you by the developer, there are other costs that are charged to you in the form of taxes and registration. Registration costs are based on the actual cost of your property. You will pay about 6 to 10% of your property costs in the form of legal charges which is your stamp duty, registration fees etc. An additional 1-2 % of the property cost will be payable at the court for registration. Apart from these, you will also need to pay some additional fees to the notary and lawyers who will do your job in court!
Having this knowledge of all the hidden costs that has to be incurred by you, while investing in a property, will help you plan your finances accordingly. It will help you save yourself from an ugly situation, lest it happens!