Understanding All Maintenance Costs
Understanding All Maintenance Costs- Each residential community charges a maintenance fee to cover the cost of facility maintenance. The fees may or may not be disclosed at the time of home purchase. But they have a substantial impact on the cost of living as a whole. Therefore, you must understand what you are agreeing to in the long term before you finish the contract.
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Both purchasing a property and residing in a gated community are expensive endeavours! The cost of a home does not include all expenses. Additional facilities and amenities come with the need to maintain them. Residential societies ask tenants to pay ‘maintenance charges’ for this reason, which can range from Rs 1 to Rs 3 per sq ft and add up to a significant monthly sum. Most of the time, when consumers are purchasing a unit, developers do not disclose these fees to them. However, delaying maintenance payments dramatically raises the expense of living. Therefore, it is essential to understand all the subtleties of maintenance fees, which are assessed either monthly or yearly, if you’re looking for a property in a residential community.
What exactly does maintenance entail?
The upkeep of a society includes some of the amenities provided to the citizens. For the routine maintenance of essential services and infrastructure, such as parks, elevators, fire safety, parking, common spaces, power, and water supply, among others, the Residents’ Welfare Association (RWA) or the builder may charge a small fee.
The maintenance cost is often charged up front for the first year after the project is delivered by the developer. Who also takes care of any societal duties. When the RWA is established, the developers turn over the running of the organisation to the functioning body. So that they can collect fees and carry out maintenance procedures in accordance with their specifications.
Maintenance guidelines
The Real Estate (Regulation & Development) Act of 2016 (RERA) has made it mandatory for developers to disclose all fees, a payment plan, and an accurate breakdown of all charges in the builder-buyer agreement in order to prevent any misunderstandings. Additionally, RERA has held the developers accountable for any structural problems relating to building quality within the first five years of the project delivery & requires them to provide free of charge remedies in such circumstances, protecting the interests of the buyers. Developers may be subject to legal repercussions for failing to adhere to the RERA regulations.
Norms for calculating maintenance charges
The ideal maintenance fees are assessed per square foot for each flat or unit. Each unit’s occupants split the costs equally for services including cleaning, rubbish collection, equipment use, repairs and maintenance of shared facilities like the lift. However, the utility bills (for water and electricity) are based on individual consumption.
Interest-Free Maintenance Security (IFMS) – what is it?
When booking an apartment, you could have seen the phrase Interest-Free Maintenance Security (IFMS) in the price breakdown. The developer charges IFMS in lieu of sustaining the society up until the formation of the RWA. If there was any money left over at the time the RWA was formed. It was given to the organisation to use for maintenance purposes. The IFMS assists builders in resolving problems that arise after a project is completed or improves societal amenities by, for example, enlarging a park or adding an additional layer of protection.
In certain high-end communities, developers also collect a sinking fund that is solely used for unplanned expenses and emergencies, while the IFMS is set aside to pay for guards, contractors, modest repairs, etc. on a daily basis.
GST’s effects on maintenance charges
Prior to the implementation of the Goods & Services Tax (GST), maintenance fees were subject to a 15 percent service tax, a 0.5 percent non-agricultural tax, and a 0.5 percent Swachh Bharat Cess. However, under the GST system, residential societies that collect a total of more than Rs 20 lakh in maintenance fees must charge the property owners an 18% GST. GST is not applied to maintenance fees per month that are less than Rs 7,500.
Residential society maintenance fees are subject to the 18 percent GST rate. Residents in the same State as the project, however, must pay an I-GST of 9%. For instance, you would pay 9% GST on maintenance fees if you were a resident of Haryana and purchased a property in Gurgaon. However, if you are a resident of Delhi and acquire or occupy real estate in Gurgaon. You would be subject to an 18% GST charge. Finally, once you’ve decided on a property, it’s critical to double-check the maintenance fees. And other costs associated with the property because they will invariably have an impact on your budget.
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