When you are thinking of buying an apartment or an independent house for residential purpose, just paying for the property price, tax and interior designing is not all of it. There are other charges like the maintenance charge that has to be paid by the homeowner for their lifetime or as long as they are staying on the property. These are generally called as CAM charges (Common Area Maintenance). Although most buyers are aware of the maintenance charge but are often uninformed of how much the amount would be. That is because the maintenance charge amount is not decided by the builder, but set forth once the association of the community is formed.
In addition to the monthly maintenance charge, a secondary charge called user charge is applicable to apartment owners using certain amenities. This is called a user charge and it differs from the maintenance charge. The user charge is usually a part of a huge gated community apartment complex where there are many luxurious amenities.
In some apartment complexes it so happens that in the initial few years you might not have to pay any maintenance charge since it is a new apartment but then as the amenities, infrastructure, and relevant approvals start falling in place, the maintenance charges start to sneak in and it is ultimately paid by the home-buyer at an extra cost monthly. Though a first-time home buyer might feel cheated that a builder did not inform about an extra incurrence of maintenance charge (they may also call it a hidden charge as mentioned before, however, it is far from the truth!), but it is an inevitable cost that all the apartment owners must incur to maintain the appearance and wellness of the community.
Also Read: Advantages of living in a Gated Community
How a maintenance charge differs from user charge, we’ll give you insights about both.
Here is a guide for you that will help you understand every small detail about the maintenance charge and you can well prepare yourself if you are a first-time buyer.
Know the costs that maintenance charges cover
Maintenance charge covers the infrastructure and regular maintenance of some amenities:
- Lifts / Elevators
- Lighting and Maintenance of Common Areas
- Emergency exits
- Fire and Fire Security systems
- Watch & Ward, CCTV
- Children’s play areas
- Parking facilities
- Cleaning costs of common areas like the lobby and terrace
- Centrally controlled facilities like water and Sewerage treatment
- Diesel Generator Maintenance
- Landscape maintenance charge
- Sewage treatment cost
- Amenities like Swimming pool, Gym etc. (user charges may also apply)
- Annual Maintenance Charges (AMC) of assets
- Insurance Charges (Optional)
- Electric Transformers etc.
The maintenance charge amount either depends on the individual flat or calculated on the basis of per square feet of the flat. In the initial few years, this cost is collected by the builder till an association forms. The newly formed association may change the costs or introduce new rules consistently for improvement of maintenance. Also, the maintenance charges does not give the users right to use the amenities, there might be user charges for the same. For eg: An amenity like Swimming pool consumes lot of electricity for continuous circulation and purification of water and hence it will be levied on all the residents irrespective of whether they use it or not since it is a community asset. However, if they want to use Swimming Pool, they might have to pay user charges.
Are maintenance charges compulsory?
Maintenance charges are compulsory in every new apartment complex. It is an integral part of the contract between the builder and the buyer. After the buyer pays the booking amount for the apartment, the builder issues an allotment letter by mentioning the maintenance charge. Though the exact amount is not revealed, the builder can help the buyer with an average estimate of the maintenance charge if asked when discussing a potential purchase.
How is the maintenance charge calculated?
The structure of the maintenance charge differs from one society to another. Your friend might be living in a neighboring society but pay a higher/lower maintenance charge than you for the same square feet area of flat. In some apartment societies, the rates are flat and fixed per household, however in others; the maintenance charge depends on the total area of the apartment.
The maintenance charges range anywhere between Rs. 2 to Rs. 25 per SFT or maybe even higher depending on the city, locality and the status of the apartment. At the time of possession, the builder may ask you to pay the maintenance charge for 12 or 24 months or till the society is handed over to the RWA (Residents Welfare Association). After the RWA takes charge of the society, it decides whether to collect the maintenance charge on a monthly or annual basis.
Housekeeping and cleaning, maintaining common areas, usage of equipment and other charges are included in the maintenance. An additional charge for repairing services and upkeep of common facilities like lights in the lobby areas and landscape maintenance may be divided equally between each flat. Also there will be AMC charges for assets like Diesel Generators and Elevators for periodic maintenance and service that will be collected by the Manufacturer that is part of warranty and service terms agreed at the time of purchase. However, the cost of Diesel for DG’s shall be collected per unit consumed based on actual consumption from each resident /user/ apartment unit.
Resident rights and defaults regarding maintenance charge
It is often a common concern among residents if the amount paid for the maintenance charge is used appropriately. Regarding that, you can take a look at the maintenance copy. The residents may have the right to scrutinize the way their money is spent by the builder till RWA is formed. However, if the charges are fixed, then the builder may ask for revision of Charges if the charges are not covering the costs incurred.
However, if the flat has been put out on rent it stays at the owner’s disposal to pay the maintenance charge or settle it with the tenant in the agreement. If the flat remains unoccupied, the owner is solely responsible to pay the maintenance charge.
Besides the maintenance charge, there is another charge in gated community apartments with multiple amenities called ‘User Charge’. This charge is often the cost that home-owners consider as hidden charge though it is not the case. Let us now explain why these are not hidden charges and are expected of the owners to pay. Here are a few instances for you to understand.
Suppose you are enrolling in a gym that is not a part of your apartment, you have to pay the admission charges, the caution charge and the monthly fees. Similarly, if you are registering in the community gym, you have to pay the monthly charges which might be a tad lower than what you would have paid outside. Another instance would be that of a restaurant. When you are dining out, don’t you pay the cheque at a restaurant after you finish eating? Similarly, if your apartment community has a restaurant, you must pay the food charges. It is completely normal contrary to what you consider it as a ‘hidden’ charge.
Also Read: Factors to consider while buying a property
However, buyers often question why they would have to pay for any amenity considering the fact that they have already paid a considerable large amount of money as part of the purchase price of the apartment. Here’s what it is. The amount that you paid for under the ‘Amenities’ category while purchasing the apartment is the cost for building and setting up of the amenities. Whereas the amount that is paid later as you started off living as a resident of the property is the cost for maintaining those amenities.
The user charge is the same for every apartment owner irrespective of the square feet area of their apartment and is chargeable if you are using the amenities.
It is therefore fair advice to always have a better idea of the maintenance charge when buying an apartment in the first place. If you are not aware of the details, it may catch you by surprise during the possession of the apartment. So make sure that you know all the specifications of the maintenance charge as they are a recurring monthly expense and you cannot avoid it after the handover of the apartment.
The user charge which is otherwise considered as a hidden cost by apartment owners is very much legitimate and most of the builders are transparent about the charges that flat owners have to incur later once they start living as a resident of the community.
If you are looking for a large gated community luxurious apartment near Gachibowli, Honer Homes in Gopanpally Is the answer. With 2 & 3 bhk well-designed apartments in the community, there is a sense of trust and transparency among builder and customers. It is one of the best living spaces where you can invest your finances.