Stamp Duty & Registration
When purchasing a new flat, the advertised price is just the beginning. A substantial addition to this figure comes in the form of stamp duty and registration
fees. These statutory charges, which vary by Indian state, can collectively add between 5% and 8% (or even more) to the property's base value. For instance, on a flat costing Rs 1.5 crore, this could translate to an immediate additional outlay of Rs 7 to Rs 12 lakh. These payments are typically required upfront and are not easily incorporated into a home loan unless specifically arranged. Many prospective homeowners overlook factoring these significant upfront expenses into their initial savings calculations, leading to potential budget shortfalls.
GST on Under-Construction
For those opting for an under-construction property, the Goods and Services Tax (GST) becomes a crucial consideration. Currently, this tax is generally levied at 5% for most residential units that do not qualify for input tax credit. This percentage represents a noteworthy increase to the overall purchase price. It's important to note that GST is not applicable to ready-to-move-in flats that have already obtained their completion certificate. This distinction can significantly influence the decision between purchasing an under-construction unit versus a completed one, impacting both cost and timeline.
Maintenance Deposits
Developers often require buyers to pay advance maintenance charges, typically covering one to two years, at the time of taking possession of the flat. Beyond this, there can be other associated costs such as contributions to a corpus fund, charges for amenities like clubhouses, fees for electricity meter installation, water connection charges, and deposits for a sinking fund. While individual charges might seem minor, their cumulative effect can amount to several lakhs of rupees. These payments usually fall due around the time of possession, a period when buyers are already managing significant financial commitments.
Parking & Add-ons
In many residential projects, the cost of parking spaces is not bundled into the base property price. Buyers may find themselves paying extra for covered or basement parking slots. Furthermore, developers might charge premiums for specific unit locations or features, such as corner flats, garden-facing units, or those offering superior views. These 'add-on' charges, while seemingly minor individually, can progressively inflate the final bill, moving the cost far beyond the initial per-square-foot rate quoted.
Home Loan Expenses
Securing a home loan, while essential for many, also comes with its own set of ancillary costs. Banks typically levy processing fees, and there may be additional charges for legal and technical evaluations of the property. Home insurance is usually mandatory, and some lenders might also require a linked life insurance policy. Over the long term, the interest paid on the loan is arguably the most significant hidden cost. For instance, a Rs 1 crore loan at an 8.5% interest rate over 20 years can result in paying nearly as much in interest as the original principal amount, especially if strategic early repayments are not made.
Interiors & Finishing
New flats are frequently handed over with a basic level of finishing, necessitating further investment from the buyer. Essential additions like wardrobes, modular kitchen installations, upgraded lighting fixtures, curtains, appliances, and air conditioning units often need to be purchased. The cost of interior work can range widely, from Rs 5 lakh to Rs 15 lakh or more, depending on the flat's size and the desired standard of finish. Many buyers tend to significantly underestimate the expense involved in making a new flat habitable and aesthetically pleasing.
Ongoing Society Fees
Once you move into your new home, recurring expenses begin. Monthly maintenance charges are a primary ongoing cost, which can be substantial in larger complexes offering amenities like swimming pools and gyms. In addition to maintenance, buyers must also account for property tax, water charges, and potential future contributions towards society repairs and upgrades. These are commitments that extend well beyond the initial purchase and possession date.
