We all know that the expenses of buying a house, don't just end at the purchase of the home. One needs to get the interior done and find suitable furniture, appliances along other decorative items to ultimately make that house the dream home you have always wanted.

However, a lot of first-time home buyers are not often aware of the maintenance charges that homebuyers have to pay.

For a seamless and comfortable living experience, maintenance charges play a pivotal role. These charges are contributed by owners or tenants of a property to fund the upkeep of the building or gated community, be it on a monthly or annual basis. They are essential to guarantee the longevity of the property and its amenities

To ensure matters are easy and transparent, RERA Karnataka has set forth rules. Understanding these rules as well as the legal precedents established by consumer commissions, empowers homeowners to make informed decisions. By following these regulations, both builders and residents contribute to a harmonious and sustainable living environment.

In this article, we will look at what maintenance charges are, the financial impact of maintenance charges, the benefits homebuyers get, and the RERA guidelines set by Karnataka for homeowners to plan their finances effectively.

What are Maintenance Charges and what do they include?

Maintenance charges include the expenses required for the regular maintenance, repair, and operation of a residential complex.

They cover a wide array of services and amenities, including but not limited to:

• Common area upkeep (gardens, lobby, corridors, etc.)
• Security services
• Cleaning and sanitation
• Water and electricity charges for common areas
• Lift maintenance
• Pest control
• Landscaping/Gardening
• Maintenance of amenities like gymnasiums, swimming pools, and community halls
• Service charges
• Car parking charges
• Non-occupancy charges
• Insurance charges
• Leases rent
• Non-agriculture tax
• Election fund
• Any other charges

The maintenance charge may also include salaries of staff for the upkeep of the society such as liftmen, watchmen, and society office.

How much is the maintenance charge?

The financial implications of maintenance charges can vary widely depending on the type of housing and the facilities offered. In India, these charges typically range from Rs. 2 to Rs. 25 per sq. ft. per month.

Affordable housing projects may charge as low as Rs. 2 per sq. ft., while more upscale developments with extensive amenities might charge up to Rs. 25 or more. Therefore homeowners need to factor in these costs when budgeting for their property.

What are the Criteria for Charging Maintenance?

Maintenance charges are determined based on several factors, including the number of facilities, their quality, and the size of the individual units within a residential society. The Residents Welfare Association (RWA) typically collaborates to decide on a maintenance schedule that aligns with the residents' everyday living needs and the facilities provided.

Is there any GST on Maintenance Charges?

Goods and Services Tax (GST) is a significant consideration when it comes to maintenance charges. An 18% GST is applicable on maintenance charges exceeding Rs. 7500 per month per flat, or if the annual turnover of the entire society from the supply of goods and services exceeds Rs. 20 lakhs. However, affordable housing projects with minimal facilities and smaller-sized homes are exempt from GST on maintenance charges.

Can Maintenance Charges be Waived?

Maintenance charges are mandatory for all residents, as they are essential for the overall upkeep of the property. Letting go of these charges is typically not an option, as it would compromise the quality and sustainability of the living environment.

Can Builders demand Maintainance Charges without receiving an Occupancy Certificate (OC)?

Builders are not permitted to compel residents to pay maintenance charges without obtaining the Occupancy Certificate (OC) as per The National Consumer Disputes Redressal Commission (NCDRC). The OC signifies that the property meets all the necessary safety and quality standards, ensuring that residents are not burdened with maintenance charges for incomplete or substandard amenities.

Regulation of Maintenance Charges under RERA

The Real Estate (Regulation and Development) Act, commonly known as RERA, plays a crucial role in ensuring fairness and transparency in the real estate sector. Under RERA Karnataka, specific guidelines have been established regarding maintenance charges. These guidelines aim to protect the interests of both builders and homeowners. Builders are obligated to provide a detailed breakdown of maintenance charges, giving homeowners a clear understanding of what they are paying for.

Here are some key points related to maintenance charges in Karnataka:

1) Builders and developers in Karnataka are required to specify the maintenance charges for common areas and facilities in their project's advertisements and agreements. This ensures transparency in cost disclosure. Maintenance charges should be divided among residents based on the unit's carpet area or super built-up area. The distribution must be equitable and fair to all residents.

2) Developers in Karnataka must maintain a separate bank account for the collected maintenance charges. This dedicated account is meant exclusively for maintenance purposes, ensuring that the funds are used solely for the upkeep of the project.

3) An annual audit of the maintenance account should be conducted by a certified chartered accountant, and the findings must be disclosed to the residents. This practice enhances transparency in the utilization of maintenance funds.

4) Any proposed changes in maintenance charges should be communicated to the residents and approved by the Resident Welfare Association (RWA) or a residents' meeting in tandem with Karnataka's RERA guidelines.

5) Developers are responsible for providing adequate maintenance facilities and services, which may include security, water supply, waste management, and common area upkeep.

6) Developers are generally responsible for maintenance for a certain period after the completion of the project, as defined by Karnataka's specific RERA rules. During this period, they must ensure the proper maintenance of facilities and common areas.

7) After a certain percentage of units have been sold and the RWA has been formed, the residents' association in Karnataka is eligible to take over the maintenance responsibilities from the developer.

Please note that RERA guidelines can evolve, so it's important to refer to the latest Karnataka RERA regulations for the most up-to-date information on maintenance charges and related matters.

How does Maintenance charge help homebuyers?

Property Maintenance

Maintenance charges are used to maintain common areas such as gardens, swimming pools, gyms, security systems, and common utility areas. This ensures that these facilities are well-kept and in good working condition. Homebuyers benefit from having access to these amenities without the hassle of individual maintenance responsibilities.

Safety and Security

Maintenance charges often cover the cost of security services, which can include personnel and surveillance systems. This contributes to a safer living environment for homeowners.

Aesthetics and Property Value

Proper maintenance of common areas and the exterior of buildings can enhance the overall aesthetics of the community. This, in turn, can positively impact property values, making it a good investment for homeowners.

Convenient and Cost-Effective

Homebuyers are relieved of the responsibility of personally maintaining common areas, which can be time-consuming and costly if done individually. The maintenance charge allows homeowners to enjoy these facilities without the stress of upkeep.

Maintenance charges distribute the financial responsibility for common area upkeep among all residents. This shared cost-sharing approach can be more cost-effective as well as convenient than each homeowner managing their maintenance individually.

Reserve Funds

Part of the maintenance charges is often set aside in a reserve fund for future repairs and upgrades. This ensures that when significant repairs or replacements are needed, there is a source of funds readily available without requiring homeowners to incur large, unexpected expenses.

Professional Management

Many housing societies employ professional management services to handle the administration and maintenance. This can lead to more efficient and effective management of the property.

Legal and Regulatory Compliance

Maintenance charges often go toward ensuring that the property complies with local regulations and safety standards. This can help homeowners avoid legal issues and penalties.

It's important for homebuyers to understand what is covered by the maintenance charge and to review the terms and conditions of payment. Additionally, they should be aware of any potential increases in these charges over time. While maintenance charges offer several benefits, they are an ongoing financial commitment that homeowners should factor into their budget.