Even though purchasing a property is a critical procedure, it is a vital decision of everyone’s life! Buying a Flat is already a financially challenging step. If it’s coupled with some additional costs of buying a flat, the entire process becomes even more draining!
Although, if you are well aware of the costs to check before buying a property, you can save and be well prepared in time to incur all the house purchase costs.
But before knowing about the costs of buying a house, you must be aware of the basic expenses and the general terms that the developer charges.
But first. Let’s start by understanding
What is BSP?
In general terms, the Basic Selling Price in real estate is the base rate per sq. ft. at which a property is being sold by the owner/developer. It usually does not include any additional charges such as taxes, parking, preferred location charges, and other maintenance dues.
BSP is composed of two major parts!
- One of them is UDS (Undivided share of land), the share of land in the Society or community in which the Apartment is built. And the other is,
- The cost of construction materials or raw materials.
So basically, the buyer will have to pay the cost for both land and materials.
Apart from the Basic property prices, many little costs add to the total expenditure of buying a house and increase your overall budget.
And now we will talk about,
What are the additional costs When buying a Flat
There are extra costs that tag along with the BSP and ultimately lead to an increment of almost 25% in the total expenditure.
The additional costs of buying a flat come in two ways; one is the cost that developer/builder charges. The second is what the government levies in the form of taxes.
Mentioned below is the list of other costs that I had to pay when I Bought a 2 BHK flat in Jaipur
PLC (Preferential location charges)
Each flat has some location advantages such as close to entry/exit, facing east or south directions (which is also a matter of vastu compliance for few) or is a corner flat with slightly more carpet area. So, the flats with these additional perks are preferred by the buyers and hence, have a higher cost than others.
For instance, in India, people prefer flats on lower floors; thus, the flats’ price is slightly higher of the apartments below or on the 2nd floor and thus the house purchase cost increases.
The PLC is calculated ‘per floor, per square feet’ basis according to the developer.
On 31st August 2010, the Supreme Court of India ruled that a builder or developer cannot sell open or stilt parking areas once the owners’ Society is formed, as the said space becomes a part of “common areas and facilities” of the Society.
Despite the above-stated fact, the builders continue to charge substantial amounts of 2-5 lakh on parking space.
It depends upon the builder whether he includes it in the BSP or charges extra for the covered/uncovered parking spaces.
Every well-maintained housing society, apartment, or township charges maintenance costs from their residents. In smaller societies, the charges are collected monthly. In some, these charges are taken quarterly to manage lifts, paints, cleanliness, and more.
If the maintenance charges are more than 7500 per month, 18% GST is levied on the same!
Usually, when people set out to buy a property, they only take the BSP and some other tax charges into consideration. Still, they tend to forget about the broker fee and the additional costs of buying a flat.
Brokers are generally the middlemen who help you find a property and stay with you until the deal is finalized. They charge 1-2 % of the price of the property.
Thus, if you want to skip this step of expenditure, it would be better to get in touch directly with the builder!
Goods and service tax on the under-construction residential properties of above 45 lakh is 5%, and those below 45 lakh is 1%.
Previously, service tax and VAT were also charged individually, but now they have been merged in GST.
There are two charges in the registration charges levied by the government; Stamp duty and registration fees.
Stamp duty is charged on the transfer of the assets and is 3-5%. While registration fees is the processing for getting the Apartment registered and is 1-3%
Stamp duty charges are low for females and in rural areas!
Remember when buying a flat
It’s important to go through all the additional costs before purchasing a property. The awareness of these charges will help you define the budget, and you will have enough time to make up your mind for the upcoming expenses!
And here’s what I think
While setting out for a property purchase, I relied upon the Online sources to check the property and its specifications.
Hence, in my opinion, it is wise to choose a developer/builder who chalks out the expenses for you along with the BSP rather than charging extra afterward!