We often heard about maintenance charges. But many of them don’t know how it calculates. Why is it a necessary rule in RERA? Let’s find out.
RERA (Real Estate Regulatory Authority) came into existence through the Real Estate (Regulation and Development) Act of 2016. It aims to protect home purchasers and also boost real estate investments. The Bill of Parliament of India Act was enacted on 10 march 2016 by the Rajya Sabha.
The RERA Act came into existence on 1 May 2016, when out of 92 sections, only 52 were declared. All the other provisions were valid on and from 1 May 2017.
Rera rules for maintenance charges are according to section 11(4)(g) RERA Act of 2016; the promoter must pay all outgoings until they transfer the physical possession of the project to the buyers.
Collections from the allottees of the payment of outgoings (including land cost, municipal or other local taxes, ground rent, water or electricity charges, etc.) can pay to authorities, banks, and financial institutions related to the project.
What Are Maintenance Charges?
When you purchase a house in a community, it comes with some expenses. So, the housing societies desire maintenance charges from the residents for the amenities and facilities. The maintenance cost varies from Rs 1 to Rs 3 per sq ft.
The real estate developers do not share the maintenance costs during the initial period of buying a unit. So, paying the charges for maintenance increases the costs. Therefore, if you are on your home-buying journey, you should know all the changes, including the maintenance charges.
Types of Maintenance Charges
Housekeeping charges, security guards, maintenance of lifts, tools, equipment used, electrical maintenance, and other expenses are mostly shared equally among the residents of the building. The 10% non-occupancy fee of service charges is levied on the rented flats.
Moreover, parking expenses and other parking spaces are available to the flat owners.
As for Rera rules for maintenance charges, it is mandatory for the developer or the builder to deliver and maintain the services of the building at a fair cost until the RWA takes over.
The maintenance charges are compulsory to provide a peaceful and comfortable stay and should be paid by every flat owner. The buyer is liable to pay the maintenance charges after owning the flat.
Importance of Maintenance Charges
Maintenance is one of the factors in the builder-buyer contract that demands payment. Section 6 of the RERA Act 2016 says that any allottee entering a builder-buyer contract should pay expenses on time. One more reason is that paying off these expenses has multiple benefits.
In exchange for these fees, the maintenance team takes care of telephone lines, electricity supply, parking allocation, water supply, and essential security.
If an individual is not living in their flat/apartment, they should pay maintenance charges, and the builder still provides upkeep and amenities to all residents.
If your society uses a hybrid upkeep method, you can pay the maintenance charges annually for necessary components.
RERA Rules for Apartment/Flat Maintenance Fees
Here are a few RERA rules regarding monthly, quarterly, or annual maintenance fees-
- The buyer must sign a maintenance contract with the builder.
- The buyer and the builder should approve paying maintenance fees monthly, quarterly, or annually.
- The quantity and frequency of maintenance fee payments should be fixed in the agreement.
- The builder is responsible for the maintenance fees till the buyer holds the property.
- The builder should select and inform the quantity and frequency of maintenance fee payments.
- Builders may ask for a maintenance fee payment of 12 to 24 months during possession.
- Maintenance fees range from Rs 2 to Rs 25 or more per month, depending on the amenities supplied by societies.
- The owner is liable for all maintenance fees after owning the property. If maintenance fees are cited in the lease, the tenant must pay them (owner-tenant agreement.)
Calculation of Maintenance Charges
The maintenance charge of builders is between Rs 2 to Rs 25 per square foot, depending on the area and city. The maintenance charges are directly proportional to facilities proposed within the housing society.
If the society charges Rs 2 per square foot, the facilities proposed would be the lowest. Management of the housing society charges Rs 25 per square foot for the measurement of property, and the facilities offered would be luxurious.
This amount should pay to enjoy the uninterrupted services provided within the society premises. The operations and maintenance of services and areas depend upon the maintenance charges, and generally, maintenance charges vary from case to case.
How are Maintenance Charges Calculated?
For several reasons, maintenance charges are a doubted topic in housing societies since they seem to be a general ignorance or discontent on how maintenance charges are calculated.
As we discussed above, each charge has a calculation based on logic, the details of which can easily avail from the managing committee. But the law does not concern itself with the issues of fairness.
However, since the cooperative is collaborative, every resident’s grievance or discomfort is considered and rightly resolved by different calculation systems.
Charges Based on Per Square Feet
The calculation system is used when the sizes of apartments/flats differ. Your maintenance charges will depend upon the total number of square feet of flat/apartment.
For example, if the management decides to levy Rs 2 per square foot and your apartment/flat is 600 sq feet, you will pay Rs 1200. if it is 1200 square feet, you have to pay Rs 2400. If apartments with larger sizes pay on square feet, they have to pay a large share for maintaining and repairing common services, for which smaller-sized apartments pay less, even though the utility and access might be the same.
It is one of the ideal methods to calculate your maintenance charges when the sizes of all apartments are approximately the same. The entire maintenance charge adds and equally split among all residents, assuring a reasonable deal for all.
It is easy to calculate and dispute-free, but it does not appear as an impartial method when the apartment sizes are diverse from one another.
This method combines the above two types, doing away with the requirement to choose one or the other and providing fair treatment to all members. In this, square feet-based charges are applied to one clubbed component, maintenance charges, repair, and sinking fund. At the same time, equal fee calculation applies to the other categories of charges like service fees and lift expenses.
Other categories already have specific guidelines given in the model by-laws. A hybrid method is highly effective in the fair and unbiased distribution of maintenance charges.
How do You Usually Have to Pay Maintenance Charges?
You can adopt four payment methods: annual, bi-annual, quarterly, and monthly payment cycles. Housing societies fix one of these payment frequencies at the initial phase and can make changes after.
They need to consider factors such as timely payments of service, members willing to pay maintenance charges in bulk amounts, and the most comfortable payment frequency concerning collection and record-keeping.
It recommends remaining on top of your maintenance charges to dodge late payments, which result in added interest. Paying the maintenance charges on time specifies you as a responsible resident.
Is RERA Rules for Maintenance Charges Compulsory?
Each new flat comes with a set of maintenance fees. It is an essential element of the builder-buyer agreement. The builder allocates an assignment letter after the buyer pays the booking price for the apartment.
Though the precise cost is not disclosed, during a potential purchase, the builder can provide an average estimate of the maintenance rate.
The Real Estate (Regulation and Development) Act 2016 ensures that the residents do not have to pay ad-hoc charges. Until the association of allottees is formed, the promoter is solely responsible for the maintenance charges and provides essential services at reasonable costs.
Rera rules for maintenance charges are generally included in the allotment letter to be issued to the buyer after the booking payment has been paid.
Moreover, it is the responsibility of the promoter or the developer to disclose charges at the time of booking. Post-formation of the association, the promoter collects it from the homebuyers as cited in the contract.
Are maintenance charges compulsory?
Yes, maintenance charges are mandatory in every apartment, and it is an essential part of the agreement between the builder and the buyer. After the buyer pays the amount for the apartment, the builder gives an allotment letter stating the maintenance charge.
How do I calculate the maintenance charges?
The maintenance charge varies from one society to another. The maintenance charges range between Rs.2 to Rs.25 or higher, depending on the city and locality.
Can developers ask for maintenance charges before handing the property to the homebuyer?
No, the builder will be responsible for maintenance charges till they give possession to the homebuyer. Once it is given, society can set such charges according to its rules.