Beyond price tag: The hidden costs of owning a home

The quoted price is only a part of the actual cost of owning a property. Several costs arise during the purchase process and some continue long after the transaction is complete. Here are some additional costs buyers need to consider to properly evaluate the actual costs and returns of a property investment:

● Stamp Duty and Registration Charges: They vary across states and depend upon property value and applicable state government rules.

● GST: It is charged on under-construction projects @ 5% for normal residential property and 1% for affordable housing.

● Brokerage & Legal Fees: Buying through a broker may incur brokerage fees. Engaging a property lawyer, particularly in resale transactions, may incur legal fees but it is important to get the title, encumbrances, society documentation, property records and loan documents etc., independently checked.

● Infrastructure Development Costs (IDC) and External Development Costs (EDC): These may be passed onto the buyers by the developers.

● Floor Rise & Preferred Location Charges (PLC): Extra costs for prime units such as park-facing, corner houses, higher floors etc.

● Cost of Capital: In case of a home loan, the total cost must include the total interest paid over the loan tenure, loan processing fees, GST and any applicable legal and technical evaluation fees.

● Possession & Other One-Time Charges: These can include society formation fees, clubhouse membership fees, security deposits and installation charges for electricity, water and gas connections, parking space charges etc. Some of these charges may already be included in the cost sheet so buyers should read the cost sheet carefully before treating them as additional expenses.

● Interiors & Furnishing: Homes require wardrobes, lighting fixtures, appliances, furniture etc. and the costs of furnishing a home can substantially add to the base price of the property.

● Recurring Expenses: Property taxes, insurance premiums and maintenance charges can increase over time. Owners may have to incur unexpected expenses for repair and upkeep. Leasing a property may incur costs in the form of brokerage and advertising fees but vacancies can prove more costly as there is a loss of rental income while recurring expenses continue.

● Transfer Premium: In some resale transactions, a transfer premium is payable to the society to change the name of the owner in society records and share certificate.

● Cost of Selling: Costs could include brokerage, legal fees, documentation charges and capital gains tax may apply.

It is important to take all additional costs associated with owning a property into consideration while buying property. It is not necessary to buy an entire property to invest in real estate, with digital real estate platforms such as Alt DRX, investors can own fractional stakes in premium real estate across India, for amounts as low as Rs. 10,000.

(This article is from the Brand Desk. User discretion is advised.)