You see an advertisement in newspaper about an apartment that the developer is selling at INR 2500 per square feet. The apartment’s total advertised area is 1200 square feet. You immediately calculate the cost as 1200 * 2500 = 30 lakhs.
Wow, 30 lakhs is what you were looking for and is very well in your budget. You want to call the developer and book the flat as soon as possible.
But wait, this is NOT the actual cost of the apartment. There are many other un-advertised costs which are hidden and are added over and above the advertised price. And yes, do NOT make the mistake of underestimating these costs as they normally make upto 20% of the advertised cost.
Here are what all the costs a builder/developer will charge you when you actually buy the apartment/property and sign the buyer’s agreement:
Basic Sale Price (BSP)
This is actually the price which is advertised by developers and forms the main cost of your property.
Preferential Location Charge (PLC)
Pay a higher price if you want your property at a location which is preferred by most people. For e.g. a villa on the corner of road or a flat in first four floors of an apartment building are generally considered preferred location. The PLC charges are normally 4% of BSP. So, add 4% to to the total cost if you want a preferred location for yourself.
External Electrification Charges(EEC)
This is the price charged by developer to lay down wires and cables from electricity consumption meter to the Apartment.
Fire Fighting Equipment Charges (FFEC)
This is pretty self explanatory. All projects residential or commercial are supposed to install fire safety devices and fire fighting equipment.
Infrastructure Development Charges (IDC)
These charges are paid direct to state government by the developer for developing the infrastructure for the project. The charges vary from state to state.
External Development Charges (EDC)
These charges are again paid direct to state government by the developer for developing the external areas surrounding the project. The charges vary from state to state.
Car Parking Space(CPC)
Have you ever bought parking space in India? If this is the first time you are buying an apartment in a society, then this may come as a surprise to you. But this is a fact that developers do sell car parking space inside the society.
There are generally two types of parking available. One is open parking and other is a covered one (in basement). The prices for both are also different. The open parking is cheaper than covered one. You need to purchase at least one parking with your apartment even if you don’t have a car to park!!
Also, if you want you can buy both covered and open parking.
This has become a common norm these days to create a club inside a society itself for recreational activities. Your society may or may not have this facility but if it has, it does NOT come FREE.
You need to pay a price for it and it is NOT optional.
Power back Up Charges
Power failure may be an alien term in developed countries but India certainly needs a good power back-up. There are charges for setting up the power back up plant inside your society and keep your air conditioners running even when there is a power cut from state electricity board.
Electric Connection charges
Do not be under the impression that if you have paid the EEC and power back up charges, you are done with your electricity needs. EEC is an amount charged by developer only to set up the infrastructure for bringing electricity to your apartment.
You will have to pay the actual application fees for installing the electricity meter and a connection to the electricity board of your state for actually getting electricity.
Water, drainage and sewerage charges
Hmm…fed up of all the charges? How can we forget the most precious resource on earth? You would be required to pay for water facility set up in the complex too. The charges are paid to government and will vary according to your state.
Stamp duty and registration charges
These charges are paid to state government for registering property on your name. This fees is charged as a percentage of the registered value of the property and varies from state to state.
This is an absolute killer as far as buying a property is concerned. Government charges you GST tax (Earning service tax was charged) on under-construction property at the current prevailing rate on the total cost of the apartment.
The charge of service tax on under-construction property has been question in court and a decision is pending at the time of writing this article. If court decides in favor of public, then we may be saved from paying this senseless fees.
Please note that all the charges are calculated on the basis of SUPER AREA and NOT BUILT UP AREA. As per industry standards, the difference between super area and built-up area is approximately 18-20%. i.e. while you pay the price for 1200 sq. ft. (super area), the actual built up area in your apartment would be somewhat 960 Sq. Ft. (1200 – 20% of 1200).
|Nature||Amount (in Rs.)||Calculation Basis|
|BSP||30 lakh||1200 Sq. feet * 2,500|
|PLC||1.2 Lakh||4% of BSP. You may or may NOT opt for a PLC location.|
|EEC & FFEC||60k||1200 Sq. ft * Rs. 50 per Sq. ft.|
|EDC & IDC||1.2 Lakh||1200 Sq. ft. * Rs. 100 per Sq. ft.|
|Open Car parking space||1.25 Lakh||Fixed amount|
|Covered parking space||2 Lakh||Fixed amount|
|Club membership||45k||Fixed amount|
|Power back-up||30k||Fixed amount|
|Electric Connection charges||3k||Fixed amount (Approximate value)|
|Water, Drainage and Sewerage||3k||Fixed amount (Approximate value)|
|Stamp Duty and Registration fees||1.8 Lakh||6% of BSP. Need to be paid to government|
|Total (advertised cost)||30 Lakh|
|Total (Extra and hidden costs)||8.86 lakh|
|Grand Total||38.86 Lakh|
So, you can see yourself that the actual cost of the apartment is increased by Rs. 7 lakhs. Hence, the real rate is Rs. 3240 per Sq. Ft. instead of Rs. 2500 per Sq. ft. as advertised by developer.
So, you should inquire about the above mentioned charges before paying the booking amount to avoid any surprises later. Also, if you are looking to get your dream home financed by a bank, please do account for the costs of procuring a home loan too.