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While making decisions to buy a house, your decision solely depends on location, accessibility to and from, quality of construction, cost, reputation of builder etc… Almost all the builders or sales manager often get successful to impress potential buyers by giving promises of very high end products with all those sugary words. Potential buyers always get trapped and completely forget about the hidden cost that brochure is generally silent on and below are the points, which one must clarify with the builder, so that your budget is not hit and you don’t enter into any disputes with the builder later on:
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01. Share capital towards society: The share capital like equity shares remain in your or your heir’s name. This amount will get reflected in society’s bank account, when you take possession of the society.
02. Stamp duty and Registration charges: The rate of stamp duty should be known in advance. Like other taxes, it has also be borne by you as an end user.
Also Read: What are the Points that I should Check in the Construction Permission while Buying a House?
03. Deposit to be paid to the local authority for construction permission: This is an expense towards construction and it should not be claimed from buyer. The authority also refunds it to the builder once there is no deviation from approved plan.
04. Advocate’s fee: This is a small amount. Further the professional builder has all such drafts ready. Hence a good and reputed builder should not demand it from you.
05. Expense / deposits for water supply and drainage connections: The deposits if any to be paid to local authority may be claimed from you, as it will remain in your name. But the expenses in this connection cannot be claimed from buyer.
06. Deposits to be paid for electricity Co.: The deposits if any to be paid to electricity supply company may be claimed from buyer, as it will remain on your name. But the expenses in this connection cannot be claimed from buyer.
07. Maintenance fund after completion of the project: Many builders collect one time funds from the buyer, so that subsequently all normal maintenance can be carried out, out of interest of such amount. Even some members become financially weak at a later date, than also there would not be any problem.
But you must be careful and vigilant so that such amount is deposited in society’s bank account when you take over the possession of flat/society.
08. Transfer fee in case of readymade house in the society: If you are buying a readymade flat in an existing old building from some other owner, you may have to pay transfer fee to the society. Such transfer fees vary from society to society and from town to town and hence its first hand clarification is very important.
09. Service tax: Service tax ofcourse has to be borne by the end user. But its incidence must be known to you for making budget provision.
Many builders generally maintain silence on such costs just by specifying that legal and incidental charges shall be extra. Sometimes such expenses are actually to be deposited with Government authorities permanently as deposit and hence the builder is also not going to get it. But ultimately it is a cash out flow and one need to plan and arrange for it.