Are Maintenance Costs Burdening The Common Man?

Homebuying is not a one-time affair. Once you are through with the purchase, the expenses to maintain the new abode become a constant. The equated monthly installments (EMIs) continue and so do the maintenance costs, which may be both internal and external especially in case of a property in a developer project. While the apartment culture helps you cut down on keeping a tab on the functioning of things or services you would have taken care of by yourself, in case of an independent house, you have to shell out money more money to enjoy this ease.

Who pays the cost?

At the time when the developer sells the apartment, the maintenance cost of the unit is mentioned in the allotment letter. Before the apartment is sold, the developer is responsible to pay the maintenance cost. Once the homebuyers' association is formed, the onus of devising rules and calculating costs as well as ensuring timely payment falls on its back. The homeowners have to comply with these norms and no developer can ask them to pay him the maintenance cost.

What if the apartment is rented?

In case a homeowner rents out his flat, the maintenance cost can be borne either by the owner or the tenant. However, the rental agreement should clearly mention who will be paying these charges. Do note that the final responsibility of paying these costs rests with the owner only.

Can you afford the maintenance cost?

The monthly payout for upgrading or maintaining the services and amenities such as generators, overhead water tanks, drainage and sewerage could start from Rs 3-4.50 per sq ft and could go up to Rs 60 per sq ft. This depends entirely on the stretch of landscape, whether an affordable or a luxury property, and even the number of facilities you choose to enjoy, including a clubhouse, manned entries, swimming pools, common library, multipurpose rooms, kids' play area, yoga parks, meditation kiosks, gardens etc. If you failed to calculate such recurring costs while purchasing a house, chances are that such charges may weigh you down.

Deepak Mehta, architect and planner at Deepak Mehta and Associates says, “On one hand we talk about Housing For All and on the other hand there are homebuyers who opt for affordable homes expecting that the overall charges would be minimum but are now unable to pay exorbitant charges for generators and lifts. Should it be free for such people? Going forward, this could create a big ruckus.”

“The Real Estate Regulatory Authority has three stakeholders ─ the buyer, the developer and the government. However, seemingly the government has kept itself away from encumbrances. As a stakeholder, it should intervene in such areas and take responsibility,” adds Mehta.

There have been many instances where those who planned to buy an apartment in a housing society, instead turned to builder floors. This cuts down their maintenance costs because the common areas are fewer and the amenities are less compared to that in a housing society. With matchbox living becoming attractive, even small-time developers are trying to provide an aspirational lifestyle for their homebuyers. Hence, most developers have agreed that the amenities are not luxury but necessary conveniences, says Gaurav Parag, broker, Astha Homes.

After GST, maintenance to cost more

After the implementation of the Goods and Services Tax (GST), residential welfare associations (RWAs) are now paying a GST in case the yearly turnover is over Rs 20 lakh. However, if the turnover does not cross the Rs 20-lakh threshold, it is exempted from the GST fold even if the occupants are paying more than Rs 5,000 per month.

What will be the impact? Those who were anyway paying more will need to pay higher pushing up the cost of one's lifestyle. Additionally, large housing societies too will face the heat as GST will further hurt the people who have been complaining about the high cost of owning a home today. The RWA members have been complaining that the association shouldn't have been brought under the GST purview gave that they operate on a no-profit-or-no-loss ground and do not have commercial interests either. Some are even discussing ways to divide large housing societies into smaller ones with separate housing association so that the turnover doesn't exceed Rs 20 lakh.

Practical ways to reduce the cost

Operating costs should be minimal to ensure that the overall cost of owning and maintaining a home is low, too. Energy-efficient fittings are one solution. Green initiatives have proven to be a boon over the long term, too.

A report by McKinsey Global Institute says that globally a third of urban dweller about 1.6 billion people, may struggle to secure decent housing by 2025. If affordability is not ensured at all levels, real estate sector may be jeopardising its very own ball game.