10 Hidden Fees to Watch Out for When Buying an Apartment in India

June 3rd, 2024

Hidden Fees to Watch Out for When Buying an Apartment in India!

Anyone planning to buy an apartment in India must be aware of the hidden costs that can add up quickly and turn a good deal into an expensive endeavour. Here are 10 hidden fees that homebuyers should watch out for – including legal fees, stamp duty, GST (Goods and Services Tax), parking charges, and more.

Imagine finally finding your dream apartment where you envision the future unfolding. You have meticulously planned the budget by factoring in the price of the apartment, your current savings, current & expected income and expenses, and more. However, just as you are about to make the big purchase, a slew of unexpected fees begins to surface, threatening to derail those carefully laid plans.

This scenario is all too common for many homebuyers, as hidden fees for apartments in India can significantly inflate the closing price of an apartment. Understanding these hidden fees is crucial for any prospective homeowner. It helps take informed financial decisions and prevents budget overruns that can strain your finances.

This blog will guide you through the 10 most common hidden fees to watch out for, when purchasing an apartment in India, ensuring that financial surprises do not overshadow the excitement of buying your new home.

10 Hidden Fees to Watch Out When Buying an Apartment in India

Buying an apartment in India can be an exhilarating journey filled with hopes and dreams of a new beginning. However, hidden fees can catch even the most meticulous planner off guard, beneath the surface of property prices and loan rates.

Understanding these fees helps you calibrate the budget accurately and navigate the purchasing process with eyes wide open. From legal intricacies to developer charges, these hidden fees can significantly affect your investment. Let us explore these hidden costs, helping you secure a new apartment and ensuring a sound financial future.

  1. Stamp Duty and Registration Charges

    Stamp duty is a tax imposed by the state government on transfer of property, including apartments. This fee is calculated as a percentage of either the agreement value or the property’s market value, whichever is higher. Registration charges are additional fees paid to register the property in your name, making the transaction official in government records.

    The charges for stamp duty and registration fees may differ across various states in India. For instance, Maharashtra might have rates different from those of Karnataka. These charges range from 5% to 8% for stamp duty, and about 1% for registration. However, it is essential to check the specific rates applicable in the state where you are buying the property.

    Recent changes in these rates can also impact your budget. For example, some states may temporarily reduce stamp duty to boost property sales during specific periods, such as post-pandemic economic recovery phases.

  2. Maintenance Deposit & Advance Maintenance Charges

    When buying an apartment in India, you will encounter two maintenance-related costs: the maintenance deposit and advance maintenance charges. The maintenance deposit is a one-time security fund paid to the building’s management for significant repairs and the upkeep of common areas, such as gyms and gardens, in the future.

    On the other hand, advance maintenance charges are regular payments, which may be monthly or annually, for the daily operational costs of the gated community, such as cleaning and routine maintenance. These fees are usually based on the size of the apartment, with larger spaces incurring higher charges, especially in complexes with extensive amenities. Understanding these charges is essential as they ensure your property’s maintenance and value retention.

  3. Brokerage Fees on Property Purchase in India

    If you hire a broker to facilitate the transaction, you may need to pay a brokerage fee when purchasing an apartment in India. The commission rate for brokers usually falls between 1% and 2% of the property’s purchase price. However, this percentage may differ depending on the property’s location, the services provided by the broker, and the total property value.

    It is crucial to note that these charges are open to negotiation. You can discuss lowering the fee with the broker, especially if you are buying a high-value property or if the broker is handling multiple transactions for you. Effective negotiation can save money, so discussing rates and services upfront is advisable.

  4. Parking Charges in Apartments in India

    Among the hidden fees in apartments in India, it is important to be aware that the parking space cost might be excluded from the property’s base price. This separate charge can be a substantial addition depending on several factors. The cost of parking spaces can vary depending on whether the spot is covered or uncovered, with the former typically costing more due to the added protection from weather elements.

    The location of the parking space within the complex also influences the price; spots closer to the entrance or elevator are often priced higher due to the convenience they offer. Homebuyers should clarify these details and consider them in their budgets to avoid surprises.

  5. Preferential Location Charges (PLC)

    These refer to additional costs for apartments, based on their location within a building or housing complex. Preferential Location Charges(PLC) is typically charged for units with more desirable attributes – such as better views, more privacy, or easier facility access. For example, apartments facing parks / water bodies /amenities, those on higher floors / in the corners might incur a higher PLC due to their enhanced living experience.

    To illustrate, if an apartment faces a serene lake, is located on a higher floor, and offers panoramic views of verdant greenery, the PLC could significantly increase its cost compared to other units in the same complex that do not have these desirable features. This charge is separately added to the base price of the apartment and can vary widely, depending on the specific advantages associated with its location.

  6. Goods and Services Tax (GST)

    This applies differently to under-construction and ready-to-move-in flats in India. For under-construction properties, buyers are required to pay GST, which is charged on the builder’s sale of the property. This tax covers the builder’s supply of services and goods during the construction phase. However, ready-to-move-in flats that have received a completion certificate before the purchase do not attract GST, as there is no supply of services or goods at the time of sale.

    The current GST rate for under-construction properties is typically 5% without input tax credit (ITC) for non-affordable housing and 1% without ITC for affordable housing. This rate has been designed to simplify the real estate tax structure and reduce the burden on homebuyers. Buyers should confirm the applicable GST rate and how it impacts the total cost of the apartment, as this can significantly affect the overall budget of the purchase.

    Read More: GST Rate on Real Estate, Flat Purchase, Plot Sales!

  7. Club and Amenities Charges

    These are additional fees associated with access to specialised facilities within a housing complex, such as swimming pools, gyms, multipurpose halls, and sports courts. The cost of these amenities varies based on their luxury and range, with more extensive and high-end facilities naturally incurring higher charges.

    While these features enhance lifestyle and property value, they can significantly affect the purchase price. Some developers may allow buyers to opt out of specific amenities, potentially reducing costs. While considering different properties, homebuyers should clarify these charges and the options available for opting out, ensuring they can align their lifestyle preferences with budget constraints.

  8. Property Inspection Charges

    Property inspection is crucial to identify potential issues that need rectification before finalising the purchase. Some builders in India may charge a fee for conducting a structural inspection of the apartment before possession. This fee covers the cost of a detailed assessment performed by professionals to ensure that the property is in good condition, adheres to safety standards, and complies with the advertised specifications. Homebuyers should be aware if these charges are a part of their overall budget and consider the importance of a thorough property evaluation to safeguard their investment.

  9. Interior Design and Renovation Costs

    When purchasing an apartment, it is important to understand that the base price typically only covers the cost of the structure itself, not any interior design or renovations. New homeowners often wish to personalise their space – which can involve additional costs for interior design services, furnishings, and renovations to tailor the apartment to their tastes and needs.

    These modifications include anything from painting & installing custom cabinetry to complete layout changes. Homebuyers should budget for these expenses separately, as they can be significant depending on the extent and quality of the desired alterations. The cost for interior design can even shoot up to 20% of the total cost of the apartment. This awareness ensures that they are fully prepared for the financial commitment required to turn their new bare-shell apartment into the home of their dreams.

  10. Other Miscellaneous Charges

    When buying an apartment in India, it is important to factor in various miscellaneous charges that can significantly impact the overall cost. These include loan processing fees on home loan in India, which cover the costs of evaluating and approving your loan application.

    Deposits for electricity and water connections are required to secure these essential utilities for your new home. While often overlooked, these charges are crucial for ensuring that all administrative and utility needs are seamlessly met, helping avoid unexpected expenses and ensuring your new apartment is ready for occupancy without any unforeseen financial hurdles.

    Read More: 8 Things To Know Before Buying An Apartment in Bangalore


Purchasing an apartment in India involves more than the listed price; hidden fees can affect your overall budget. It is important to be aware of these additional costs – such as stamp duty, brokerage fees, and maintenance deposits – often overlooked during the initial excitement of buying a home.

Proper budgeting for these fees is essential to avoid financial strain and ensure a smooth transaction. To effectively manage these additional expenses, carefully go through the list in this article and estimate the numbers in your case with the help of an expert or professional. Negotiating with builders and brokers can also lead to significant savings.

Furthermore, consider the long-term financial implications of regular charges like maintenance fees. Being well-prepared and informed enables you to make a sound investment decision, leading to a more enjoyable and financially secure homeownership experience.


1. Are there any ways to avoid hidden fees?

Yes, there are ways to avoid hidden fees, such as conducting thorough research, asking detailed questions, negotiating fees such as brokerage or preferential location charges.

2. Can I estimate the total cost of hidden fees?

Yes, you can estimate the total cost of hidden fees to a certain extent. Research the stamp duty and registration fee rates for your state. Society maintenance charges and parking costs can usually be obtained from the builder. Brokerage fees typically range from 1-2% of the property price. For other fees, ask the builder for specific details.

3. What if the builder asks for a fee, I wasn't aware of?

If the builder asks for a fee that you were not aware of, verify it with independent sources or a lawyer, and check the paperwork thoroughly. Do not hesitate to walk away if unexpected fees significantly affect your budget.

4. Is it advisable to get a lawyer involved when buying an apartment?

Yes, it is advisable to get a lawyer involved when buying an apartment. They can review the sale agreement, clarify legalities of fees, and ensure your interests are protected.

5. What happens if I don't factor in hidden fees while budgeting?

If you do not factor in hidden fees while budgeting, it can lead to financial strain and unexpected costs later. By carefully considering hidden fees, you can take informed financial decisions and avoid surprises during the buying process.

You might also like