Flat Maintenance Charges: A Comprehensive Overview!
May 25th, 2023
Most gated communities provide their members with a variety of amenities to support a comfortable and tranquil lifestyle. Residents get these benefits and services in exchange for a maintenance charge that is routinely collected, either monthly or quarterly, sometimes even annually.
This charge often depends on the size of the unit. A buyer should also be aware of the amenities included in the fee. This fee ranges from Rs 2 to 25 per square foot. In certain cases, builders demand a one or two-year upfront maintenance fee at the time of ownership.
This blog aims to help you learn more about what is covered in these charges and how they are determined alongside RERA regulations and GST on the same.
Table of Contents
Different Ways Societies Calculate Maintenance Charge
1. Equal Maintenance Charge:
This technique of calculating annual maintenance fees is used when all the flats or apartments in a community are roughly the same size. The majority of societies compute these fees at the end of each month, and they are paid monthly.
2. Based on Area:
Societies with flats in various sizes mostly utilise this technique of calculating these charges. For instance, if a certain society charges Rs 6 in maintenance fees each month, the monthly maintenance fee for a 1,000-square-foot flat will be Rs 6,000.
3. Hybrid Maintenance Charges:
Some societies calculate these fees using a hybrid approach – amalgamating both the equal maintenance and the area calculation methodologies. Residents that use a partly equal maintenance system must pay the same fees for shared services like lifts, housekeeping, etc. The other aspect would be the charge calculated in the area of the flat owned.
Components of Maintenance Charges in Flats
The annual cost of building repairs and upkeep is 0.75 percent of the cost of building the flat. The tenants split evenly the costs of housekeeping, security personnel, equipment, power, and other expenses. Lift and repair expenditures are also divided.
The table below can help you understand the various costs included in the maintenance charges of flats/apartments :
|Type of maintenance charge||Applicability|
|Expenses on repair and maintenance of the building||0.75% per annum of the construction cost of each flat|
|Service charges (housekeeping, security, electricity for common areas, equipment)||Equally divided among the flats|
|Expenses on repair and maintenance of elevators||Equally divided among the flats|
|Sinking fund||Minimum of 0.25% per annum of the construction cost of each flat|
|Non-occupancy charges||For flats which are rented, calculated at 10% of service charges|
|Parking charges||By number of parking slots of each member|
|Property tax and water charges||Actual consumption of each flat, or number of water inlets|
Significance of Maintenance Charges
Maintenance Charges of flats are mentioned in the builder-buyer agreement as one of the mandatory payments that need to be made periodically. Every allottee who enters into a builder-buyer agreement is required by Section 6 of the RERA Act 2016 to pay these fees on time.
Another justification is that paying off these debts has several advantages, including the fact that you won’t have to handle everything on your own. For instance, the handymen will take care of telephone connections, electricity supply, parking allotment, water supply, and necessary security preparations in exchange for these fees.
Most individuals ask if they still must pay these charges even if they aren’t residing in their flat. The answer is yes because all the residents must still get facilities from the builder. You can opt to just pay the annual maintenance fees for the components that are absolutely essential in your society, though, if it uses the hybrid system.
The Consequence of Not Paying Maintenance Charge
Any member who has defaulted on paying the maintenance charge of the flat on multiple instances, is disqualified from participating in the society’s election for the members of its Managing Committee. Furthermore, any candidate contesting or wishing to contest for the management committee position, must not have defaulted in paying the fee. The high court even ruled that a frequent defaulter may be expelled from society. The defaulter may be unable to sell the flat or unit if the dues are not paid. The society has the right to refuse to give NOC if the dues are not paid.
Factors Influencing Maintenance Charges
It’s possible that the maintenance fee paid in one society may not be the same in another. The following list includes some of the numerous variables that determine these charges:
Repair Costs: One pays for drainage facilities and sewage management systems, the lift, security equipment or devices, generator facilities, streetlights and other comparable common amenities, before calculating this cost.
Service Fees: These costs include items like lighting in public areas, lift operators, upkeep of parks and gardens, security, and cleaners, among other things.
Parking Costs for Vehicles: If you own a car and have a preferred parking space, then those fees will apply as well. Prices for two and four-wheelers vary as well.
Non-occupancy Fees: You will be charged this cost, which is also included in 100% of the service price on vacant flats.
An emergency reserve known as a sinking fund is money set aside for unanticipated circumstances. The governing committee of the housing organisation decides how much money will be in the fund.
These are only a few of the many elements that affect a flat’s maintenance cost. Make sure to inquire about the costs associated with that specific complex from your apartment builder (for a building that is still being built) or the RWA (for a project that has already been finished).
Transparency And Accountability
Maintenance Charge is paid in two methods – one to the builders, for keeping up with the project over a period, the other to the RWA in monthly instalments or at periodic intervals. The details of this will be in your builder-buyer agreement, do ensure you read it carefully.
Listed below are some of the points pertaining to the transparency of collecting these charges:
These payments for building upkeep cannot be viewed as a source of income for the builder.
Any interest on the fees collected will be deposited into the same bank account.
The builder must create a separate bank account that will collect the maintenance fees, which shall be maintained and operated by a chartered accountant.
On behalf of the Residents Welfare Association, builders only keep the payments account for a little time.
The constructor is required to provide a thorough Income and Expenditure account, verified by a Chartered Accountant, along with all the specifics of the remaining amount when turning control over to the Residents Welfare Association.
GST on Apartment Maintenance Charge
Buyers occasionally are unaware of the components of this fee that are subject to GST taxes. Housing societies must adhere to the following rules in order to collect GST on their maintenance costs, according to a circular released by the Finance Ministry on July 22nd, 2019. GST is implemented after the annual maintenance cost turnover totals Rs. 20 lakh.
RERA Rules for Apartment/Flat Maintenance Fees
According to the Real Estate Regulatory Authority (RERA), the buyer must sign an agreement that details the cost and frequency of maintenance charges. In order to prevent buyers from being unpleasantly shocked, RERA has stipulated that these costs be mentioned in the agreement.
RERA also has a provision for builders to maintain the project for a few years. The allottee must then pay the stipulated sum either in instalments or lump sum, depending upon what has been mutually agreed. The builder chooses how frequently the payments will be collected. He is allowed to ask for 12 or 24 months in advance, at the moment of possession.
The builder is liable for the upkeep of the society and the collecting of dues from homebuyers up until the formation of the Resident Welfare Association. After the booking cost has been paid, the buyer receives an allocation letter that may contain fees from the RESIDENT WELFARE ASSOCIATION. Residents are not compelled to pay any ad hoc charges at the builder’s discretion thanks to the RERA Act of 2016.
Demand for both residential and commercial property is rising steadily. Given that maintenance charges are recurring monthly fees under RERA, it is usually preferable to be aware of them when making an apartment reservation.
In a nutshell, it can be argued that maintenance fees are a necessity and that each owner of a flat or flat is responsible for paying them. It is crucial since these fees are applied to a number of services you are entitled to as the property’s legal owner, and it guarantees a calm and pleasant existence while you stay in an apartment.
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1. How are flat maintenance charges calculated?
Here are a few common approaches to figuring it out: per-square-foot calculations, equal apartment calculations, and hybrid calculations.
2. How much maintenance should I pay for the apartment?
In India, property developers impose a maintenance fee that can range from Rs 2 to Rs 25 per square foot (per square foot).
3. Is paying the annual maintenance fees required?
Your contract with the builder includes these fees, making them one of the costs you must pay in full.
4. Why is maintenance calculated based on square feet?
Charges for the upkeep of common spaces are often established based on a per-square-foot tariff so that maintenance costs are distributed equally among the flat sizes.
5. How can we reduce society's maintenance charges?
All owners and tenants are liable to pay maintenance fees. If necessary, the general body may decide to reduce or request a concession on it for vacant or unsold apartments and put that decision into effect.
6. Is GST applicable on apartment maintenance charges?
If the maintenance charges exceed Rs. 7,500 per month or Rs. 20 lakh per year, they must pay GST at a rate of 18%.
7. How often are maintenance charges levied?
The invoicing schedule for this fee structure varies according to the builder/RWA, the cycle of society’s bill payments, etc.
8. Who pays the maintenance fees?
The owner is liable for all maintenance fee payments following the transfer of ownership. If they are included in the lease (owner-tenant agreement), the renter is liable for paying them.