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Tips for First-time home buyers

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Budget for 30% additional expenditure along with property cost

WHEN investing in an apartment or a house, the first time buyers should be careful about additional charges such as taxes and maintenance, which he reckons only after the deal is struck and details are explained to him.

Besides the cost of the property calculated at per sq ft for the total area, the buyer has to plan additional 20 to 30 per cent expenditure on stamp duty, registration fee, service tax, advance deposit of maintenance charges for 12 months, legal charges, water and electricity connection fees, car parking, club charges and other charges.

The expenses incurred during the initial period of a property transaction can amount for as much as 1012 per cent of the overall cost of the property, 5 per cent towards stamp duty and between 5-7 per cent for the added charges.

While some of the additional charges such as stamp duty and maintenance are known to most buyers, the less distinct ones ­ which often amount to considerable sums ­ are only communicated verbally. In other words, the buyer may not have a document to go back to establish when such add-on costs were mentioned. Therefore, the overall cost of buying a property can rise drastically above the originally quoted rate.

Another hidden charge is from the builder side, which one can know only by visiting the apartment and having a proper measurement, it is called "front loading" in the total apartment area which can be as high as 30-40 per cent and even go up to 60 per cent in case of some builders. If a flat is having 1,300 sq ft area, it may have smaller carpet area of 850-1,000 sq ft and rest is the area consumed by things such as access path to his flat. But the buyer is charged for 1,300 sq ft.

Some builders also ask for upfront deposit in the maintenance charges for one-year popularly known as society charges. Maintenance charges is calculated on the total flat area, that is why builders have high front loading in the total flat area, as it ensures regular income for them.

The maintenance charge calculated per sq ft is an extra burden flat buyer don't realise at the time of planning a flat purchase.


Builders are charging maintenance charge per square feet per month, which works out to Rs 3,900 per month for a 1,300 sq ft flat at the rate of Rs 3 per sq ft.

Ambiguities in other state government-levied charges such as external development charges can jack up the cost of your home by another 3-10 per cent.

The legal remedies for unsatisfied buyers who don't get proper service from builders and developers available before the home buyers are the consumer courts. In the past some flat buyers have received compensation by knocking the doors of these courts.

But it is better to prevent major problems through proper planning and knowledge of the implications of the fine print.


Thus by the time the house is ready, the buyer will not be caught un-prepared to spare the money.


Being prepared, as much as possible, is imperative in an ever-changing economic status of individual home buyers.

Happy Investing!!

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