Purchasing A Property? Look Out For These Hidden Costs

There are many hidden costs involved in home buying that could increase your expenses significantly. As a smart buyer you should be aware of all such expenses and need to think beyond the Basic Sale Price (BSP).

Sample this- 

You see an advertisement in a newspaper or magazine, flashing a premium property by some leading developer at INR 5,000 per square feet having a total area of 1200 square feet. It grabs your attention immediately and you instantly do your mathematics i.e. 5000 x 1200, which comes out to be just 60 lakhs.

Great! This is well in your budget and you want to call the builder as soon as possible and book your flat. 

Beware, this is not the total price of the property.

Check out the list of hidden costs you have to pay while buying a property:

Infrastructural Charges-

These are one of the most prominent hidden charges and you can find them in your cost sheet as either lease rent/EDC or IDC costs. These are generally charged at Rs. 50 to Rs. 70 per

These are one of the most prominent hidden charges and you can find them in your cost sheet as either lease rent/EDC or IDC costs. These are generally charged at Rs. 50 to Rs. 70 per sq. ft.

Administration/Club Membership Charges-

Depends upon the kind of housing society and generally varies between 1 -3 lakhs.

Depends upon the kind of housing society and generally varies between 1 -3 lakhs.

Preferential Location Charges (PLC):

These costs are to be paid for the unit that has a certain location advantage over other units in the project. For example PLC in a housing complex could be for an apartment that is in the corner or the one that faces a

These costs are to be paid for the unit that has a certain location advantage over other units in the project. For example PLC in a housing complex could be for an apartment that is in the corner or the one that faces a park / swimming pool. The prices charged for it are calculated per square feet of the super area of the flat and depends on the builder, project type, number of floors in the complex, location of the city, climatic conditions etc. If you are not fanatic about a particular location then you can save on this aspect of hidden costs.

Parking Space:

Asking for additional charges for a parking space in big residential complexes has become a trend nowadays. Even after the March 2012 Supreme Court ruling that no additional cost for parking could be charged, many builders still ask for it by adding the amount in the property itself. The price asked for it depends upon

Asking for additional charges for a parking space in big residential complexes has become a trend nowadays. Even after the March 2012 Supreme Court ruling that no additional cost for parking could be charged, many builders still ask for it by adding the amount in the property itself. The price asked for it depends upon type of real estate property and kind of space being allotted to you (covered/non-covered/semi-covered).

Registration Costs:

It marks a very substantial additional amount borne only by the buyer. Registration costs depend upon the total worth of the property purchased and is the sum of stamp duty and registration fee. Typically stamp duty is 5-7 percent (for most states) and registration fee is about 1 -2 percent of the property cost. This is not all; the legal counsel assisting you in the registration formalities could also charge you a hefty amount. So you can see that all these charges can actually add a staggering 10 percent on your budget.

Service Tax: –

Like essential commodities, service tax is levied on under construction properties at the rate of 3.09 % of the total value. This rate is for those properties whose square feet area is less than 2000 or are priced less than a crore. Properties that don't fall in this category are charged at 3.71 percent.

Are these expenses giving you a headache? There could actually be more to it, like the expenses for doing your interiors etc. In addition, if you are buying a second hand house you need to take care whether the property tax, water and electricity charges and society maintenance fee is duly paid by the previous owner. If not, then these liabilities would automatically be inherited by you once you sign on the dotted line.

Have such extra expenses influenced your property buying decision ever? Please share your experiences with us.