What you need to know about maintenance charges


By: Kishor Pate, CMD – Amit Enterprises Housing

Kishor Pate, CMD, Amit Enterprises Housing, Pune real estate, India real estate news, Indian realty news, India property market, India investment, Track2Media Research, Track2RealtyTrack2Realty: While buying a home in India, stamp duty and registration charges are the most significant additional costs above the base price of the property itself. Close on the heels of this expense come the costs involved in registering with the local electricity board and having a meter fitted.

Yet another burden which home buyers do not always factor in is the cost of insurance to cover the home loan. Of course, all this is in addition to the brokerage payable to the property agent, for which the industry standard is 2% of the base price (but can often be negotiated).

If we take 5% as payable towards toward stamp duty and another 5-7% for the other initial charges, the added expenses incurred at the actual time of home purchase can come to as much as 10-12% of the base price of the flat or the amount availed for via a home loan. However, these are one-time expenses and do not imply a recurring financial burden on the home buyer once they are cleared.

Two recurring expenses that a property owner will face are the annual property tax and the maintenance charges. While the property tax is predictable, maintenance charges are a different matter altogether.

Recurring maintenance charges

This is an area where the quality of construction plays a big role. Many home buyers in cities like Mumbai and Pune are drawn to the lower property prices of projects by small-time developers, only to regret it later on. Such developers often use inferior construction materials which do not stand the test of time. The first step towards ensuring that one is not burdened by huge maintenance costs in the future is obviously to buy homes in projects from established developers with a reputation for quality construction.

Another good reason for buying properties from reputed developers is that many of them provide very reliable and accountable maintenance services via qualified external agencies. Nevertheless, existing home owners who have not taken this primary precaution are not completely helpless.

Preventing escalating maintenance charges

Flat owners must ensure that the annual maintenance charges are used optimally by the housing society. A majority of housing society offices have a separate fund for maintenance towards which all property owners contribute. However, the onus of responsibility on flat owners does not end with merely paying these charges. They must ensure that proper preventive maintenance is actually undertaken and that maintenance funds are used for the specified purpose only.

Especially in the case of older buildings, another important step towards preventing huge maintenance charges is to identify the most problem-prone areas within a particular apartment building. To do this, the flat owners should order an inspection of the premises by a qualified agency. The problem areas must be identified, and appropriate remedies must be established.

In many cases, property maintenance undertaken by the housing society’s administrative body is symptomatic. In other words, problems are tackled only as and when they arise. If the flat owners in the building feel that the housing society is not sincere in its efforts and that property maintenance will become a major issue, they must take appropriate action.

The best course of action is to pass a resolution that the maintenance of the premises be entrusted to a professional agency under an annual contract. This will ensure that money meant for the purpose of building upkeep is accounted for, and is being utilized for its intended purposes.

It must be remembered that recurring property maintenance expenses can be quite heavy if the building or project is not well looked after. This also reflects in future resale value of a flat, which is why units in older projects which have not been maintained well do not fetch the expected prices.


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