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Maintenance Charges Definition, Calculation & Advantages
Maintenance Charges Definition, Calculation & Advantages
Maintainance charge is the amount a homebuyer has to pay for the upkeep of all the areas and amenities which are common to residents such as parks, elevators, emergency exits, fire and safety, parking facilities, common areas, and centrally controlled services like electricity and water among others.

Buying an apartment entails a lot of paperwork along with miscellaneous charges;however, it does not mean that once your dream home is handed over to you, you no longer have to pay any charges or deal with paperwork. Most buyers do not pay much heed to maintenance charges in the initial stage of booking, but it comes back to haunt them as the possession date nears.

So, what is a maintenance charge? Here, in this article, we try to detail every aspect of maintenance charges.

Maintenance Charge:

Maintenance charge is the amount a homebuyer has to pay for the upkeep of all the areas and amenities common to residents such as parks, elevators, emergency exits, fire and safety, parking facilities, common areas, and centrally controlled services like electricity and water among others.

Before the flat is handed over to its owner, the builder is responsible for collecting the maintenance fees from the residents. However, once the Residents Welfare Association is formed, the duty falls on them and the builder can no longer claim the charges. The resident association also has leeway to introduce new rules in orderto improve maintenance.

Is the maintenance charge compulsory?

Every home buyer is responsible for paying the maintenance charge. It is a part of the buyer and the developer's agreement. Once the building is handed over to the buyer, the charge is paid to the resident association.

How is the maintenance charge calculated and how much can the buyer be charged?

The charge does not have a fixed method of calculation, it often varies from resident association to association. However, it is generally based on the area of the flat.

Service charges like housekeeping, garbage collection, cleaning, as well as the expenses required for repair and upkeep of common facilities like elevators, are divided equally among the flats. Water and electricity charges would be as per the consumption of each flat. Often uninformed home buyers are wary of being heavily charged by the builders, which is valid given not all builders give a clear picture.

Hence, it is of utmost importance for buyers to know of every detail before the booking of the flat. A maintenance charge can be disclosed upfront by the builder, however certain charges are variable like water charges, upkeep of services, some unforeseen repair which can not be foreseen at the time of booking, etc.

Once the Resident Association comes into the picture and the maintenance charges are altered, the buyer can still look up the actual amount that the society is spending on maintenance. The owner has the right to check into the books of the association.

Is Maintenance Charge regulated by any law?

Even as there is no regulatory mandate regarding maintenance charge, the Real Estate Regulatory Authority clearlystates that the builder must recover a maintenance charge from home buyers.However, in order for homebuyers to have transparency, the law clearlymentions the breakdown of the fees and how the builder should charge it. Except for Maharashtra, no other state has developed any clear rules for the same. Maharashtra has a clear set of rules for builders and what home buyers can expect when they buy a property under the Maharashtra Ownership of Flat Act of 1963.

However, the disputes arise either due to the developer's greed to charge more or the residents' resistance to paying. In the wake of this, some developers in Bengaluru market have now started collecting a one-time maintenance charge during the time of purchase to avoid any future confrontation.

What if the flat is put up on rent?

If the owner of the flat has rented out their flat, it does not mean that both the owner and the tenant do not have to pay maintenance charges. He can ask the tenant to pay the maintenance charge after putting it in the agreement letter. However, the final responsibility even if the flat remains unoccupied is of the owner.

In the case of a default the defaulter isdenied basic services like water, electricity, lights in passage etc by the resident association until the dues are cleared.

What about taxes?

With the Goods and Service Tax in place, the tax slab of maintenance charges is at 18%. Earlier, the rate covered a service tax of 15%, a Swachh Bharat tax of 0.5% and a non-agriculture tax of 0.05%.

It is very important for home buyers, especially new home buyers to have a clear understanding of the amount and how the maintenance charge is calculated right at the time of booking. Residents should also actively participate in deciding any change in maintenance charges during residential association meetings.

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