Rekha and Prakash had been looking to buy an apartment in Sarjapur Area, Bangalore for quite a while. They were particular about Sarjapur Area as it was close to their places of work and there were good schools in the vicinity for their four-year-old daughter. They found a nice looking apartment complex, which had advertised three bedroom “luxury” apartments for 75 lakhs! The glossy brochure they got from the builder’s office had photographs of beautifully decorated apartment with “world class amenities”. Both Rekha and Prakash were excited and decided to take the plunge and invest in a three BHK flat. What both of them overlooked was the asterisk and conditions apply in small print. When they decided to make a down payment on the apartment, they were in for a rude shock – there were many hidden costs that were not accounted for in the initial costs!
A few hidden costs can escalate the total cost of the apartment significantly. It is important for potential buyers to be aware of the some of the hidden costs mentioned below and be prepared for the additional expenditure when buying an apartment.
Registration Costs and Stamp Duty Costs
Registration costs and stamp duty costs are mandatory while getting your property registered and depends on the total cost of your apartment. In Karnataka, the Stamp Duty and Registration costs are approximately 5% and 1% of the total registered property value respectively. In addition to this, the buyer has to pay 10% cess and 2% surcharge of the Stamp Duty. In Bangalore Urban Area, the Stamp Duty is approximately 5.6% and in Bangalore Rural, the Stamp Duty is 5.65% as the surcharge in Bangalore Rural is 3%.
In some cases, parking spaces are not included when you buy an apartment. Depending on the locality of the apartment complex, the charges for parking spaces vary. These charges can vary from a lakh to almost five lakhs depending on the type of property, locality and size of the parking space provided,
Many developers charge at least one-year maintenance charges upfront for the maintenance of common facilities like lifts, landscaped areas, water, electricity in common areas, swimming pools and club houses etc. These charges are significant in apartment complexes that offer so called “world class and luxury amenities.”
Apartment buyers have to cough up for security deposit costs for electricity and water from infrastructure providers like BESCOM, BWSSB, etc.
There have been many instances where developers have hit the buyer just before registration with escalation charges. These charges are allegedly due to increase in prices of materials such as cement, sand, steel, etc. This clause is often a part of the Sale Agreement, which most buyers tend to ignore.
Preferential Location Charges
If you a looking for an apartment with a view to the landscaped garden or swimming pool be prepared to pay Preferential Location Charges. These premium charges depend on the location, size, and orientation of the apartment. These charges can range from an additional Rs 25 to Rs 100 per square feet.
While the glossy brochures show you apartments with beautifully constructed interiors, the apartments are sold with minimum amount of interior work and finishes. Owners have to spend considerable amount of money in getting the interiors done. This includes all the woodwork, for the bedrooms and living spaces, cabinetry and tile work for kitchens and electrical fittings for the apartment. This expenditure can cost one a fortune depending on the type of interior finishes and work undertaken. It is safe to assume that a minimum of 8% to 10% of the total cost of the property will need to be shelled out for interior work.
As you can see, there are more costs involved than meets the eye. Make sure you factor these costs into your budget before embarking on searching for your dream home!