Apartment living comes with the obligation of paying maintenance charges, which may be charged on a monthly, quarterly, or yearly basis, alongside property tax for owners. However, buyers looking for an apartment for sale often lack clarity on the structure and importance of maintenance charges. Being well-informed about the different applicable fees, calculation methods, default rules, and other key details is essential for anyone buying an apartment in a society. This knowledge equips owners to aptly handle their financial responsibilities. Here is a comprehensive guide to flat maintenance charges, which includes all the facets of maintenance that form an important part of apartment ownership and help ensure that you can budget accordingly.
Why Pay Apartment Maintenance Charges?
One might reasonably suppose that a builder or project developer should be responsible for repairing and maintaining the apartment or flat infrastructure. However, according to Section 6 of India's Real Estate (Regulation and Development) Act of 2016, apartment owners are legally obligated to pay maintenance fees. The law states that any individual who has entered into a sales agreement to buy an apartment, plot, or building must make the necessary payments on time as specified in the sales contract. This includes the fees for registration, municipal taxes, water and electricity charges, maintenance charges, ground rent, and any other applicable fees.
Important Aspects Covered Under Apartment Maintenance Charges
The charges for apartment or flat maintenance typically fall into the following categories.
Service Charges
Apartment maintenance service charges refer to the various fee that apartment owners are required to pay for maintain facilities and amenities that are utilised by all residents in an apartment building. The most significant service charge cost is usually salaries for support staff, like supervisors, gardeners, cleaners, security of the apartment, and common area maintenance, etc.
Repair and Maintenance Charges
Repair and maintenance charges refer to the fees collected from apartment owners to carry out routine maintenance and repairs of facilities used by all residents. These charges allow housing societies to fix, restore, or service common property and equipment as needed. For example, charges would be utilised as repair and maintenance charges for the lift in an apartment building. Funds may also go towards repainting faded walls, fixing leaks in overhead water tanks, replacing broken light bulbs in stairwells or renovating a damaged entrance gate. Periodic maintenance like servicing of generators, or polishing floors in the lobby would also be covered in this category.
Parking Charges
Many apartments have an area designated for residents' vehicles. To maintain these parking facilities, housing societies collect parking fees from residents who use the spaces.
Water Charges
Water charges refer to fees collected from apartment owners to pay for the water supply used in common areas within a housing society. These charges mainly go towards paying the community's water bills, which are typically based on the total consumption across the entire apartment building. The water is used for purposes like cleaning, maintaining gardens, supplying clubhouses and laundry rooms, operating fire safety systems, and other shared water needs.
Non-Occupancy Charges
Non-occupancy charges refer to fees that housing societies collect from apartment owners who are not living in their unit, even if it is vacant or rented out. These charges help recover the costs and overheads of maintaining facilities and providing services utilised by all residents, regardless of occupancy. For instance, expenses like staff salaries, utility bills, insurance premiums, property taxes and regular upkeep of common areas remain fixed and ongoing.
Sinking Fund
The sinking fund refers to charges collected from apartment owners to build long-term reserves for major repairs and replacements within the housing society. With time, facilities and equipment wear out beyond regular maintenance and require large-scale repairs or complete replacement. For example, ageing lifts may need overhaul or waterproofing of terraces may need renewal after years. Instead of special assessments when the need arises, sinking funds are for collecting regular contributions.
Property Tax
Property tax refers to the annual tax levied by municipal authorities on apartments and the land they are built on. This is an established tax that owners are obliged to pay. Several housing societies collect property tax contributions from individual apartment owners and remit the total tax due for the apartment to the municipal corporation on their behalf. The charges collected are based on the apartment size, flat rate, location, and other factors as determined in the property tax assessment. Societies ensure compliance with tax laws and avoid penalties by consolidating and paying this tax annually.
Outcome of Not Paying Maintenance Charges
Any member who repeatedly defaults on their maintenance fee payments faces disqualification from participating in the election for the Managing Committee members. Additionally, candidates contesting for a management committee position must not have any defaults in fee payments. Defaulting members may also be unable to sell their apartment units until outstanding dues are cleared, as the society can refuse to provide a NOC certificate in such cases. This emphasises the importance of regularly clearing any maintenance dues to avoid penalties.
Different Ways of Calculating Apartment Maintenance Charges
Once the housing association determines the total maintenance amount to be collected from members, the next step is deciding the suitable method for calculating each member's share. There are three primary methods societies implement for apportioning maintenance charges of flats:
● Per Square Foot Method: A popular apartment maintenance fee calculation method, here, the maintenance amount per member is calculated based on the square footage of their apartment unit. Members with larger homes pay more as compared to those with smaller apartments.
● Equal Division Method: In this method, the total maintenance amount is simply divided equally among all members, irrespective of their apartment size. Each member pays the same fixed amount.
● Per Person Method: Here, the maintenance is charged on a per-person basis, based on the number of residents in a member's home. Flats with more occupants pay higher shares as compared to those with fewer residents.
As demand for residential and commercial real estate grows, it is prudent for potential buyers to consider maintenance charges when reserving an apartment. Under the Real Estate Regulatory Authority (RERA) rules, maintenance fees are a recurring cost that owners must pay. As per the law for flat maintenance charges, under Section 6 of the RERA Act 2016, any allottee entering into a purchase agreement with a builder is legally obligated to remit maintenance payments on time.
While buying a home, there are basic things you need to know for a new apartment purchase before finalising a property, so there are no surprises later. It is also important to be familiar with RERA and GST laws to avoid any discrepancies when paying maintenance bills. Doing one's due diligence on applicable charges and regulations can ensure a smooth process when the time comes for monthly upkeep contributions.