What are Maintenance Charges?

Maintenance charges are one of the most common future burdens that home buyers fail to take into account, while buying a house. Some builders often announce projects, as soon as they acquire the land for the same, and before obtaining the relevant approvals. They launch these projects at attractive rates and investors rush to make the most of it. Therefore, there is absolutely no clarity on what the future maintenance charges will be.

Maintenance charges are decided, only after the builder finalises the amenities, quality and finish of the building and value added services that he intends to provide in the project. Consequently, the amount of money that buyers have to spend on monthly maintenance charges, comes as an unpleasant surprise. In some buildings, in south Mumbai, for instance, the maintenance charges are as high as Rs 27 per sq ft. End-users and investors should bear this in mind and keep a contingency fund, when calculating the investment versus benefits.

Types of maintenance charges

Maintenance charges are applicable as soon as the property is occupied by the buyer.

Maintenance charges cover the costs incurred on amenities, such as common areas, elevators, terraces, parking areas, expenses for building repair (covering all the charges for new additions and other structural changes), water charges, parking charges, property tax, insurance premium charges, common electricity charges, non-occupancy charges, service charges and other miscellaneous charges that may vary from society to society. They can be charged on a per flat basis, or on the basis of per sq ft area.

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

Maintenance charge in the absence of a society or welfare association

Experts point out that in the absence of a society or welfare association, the developer is usually in charge of the overall maintenance, and it is his responsibility to disclose this cost to the buyer, at the time of buying the property. Before the project is completed, the developer has to take charge of maintenance expenses and subsequently, transfer it to the society/association.