The Real Estate (Regulation and Development) Act, 2016 (RERA) makes it compulsory under Section (4)(d), for the developer to be responsible for providing and maintaining the essential services, on reasonable charges, till it is taken over by the association of the allottees.
On possession, the builder makes the buyer enter into a maintenance agreement clearly specifying the actual amount and the frequency. RERA has asked the builders to mandatorily specify the maintenance charges in the agreement so that it does not come as a shock to the buyers. Later, the society association can work it out and charge the buyer’s maintenance costs accordingly. After possession, the payment of maintenance charges is the buyer’s responsibility. Until a tenant has been found for the property, the owner has to pay the maintenance charges. Later, the tenant can pay the maintenance charges, given it is mentioned in the owner and tenant agreement.
Points to keep in mind:
- Till the formation of RWA, the promoter is responsible to take care of the maintenance of the society and thereby collect them from the homebuyers. After that, RWA can charge such charges as per its own rules.
- They are generally included in the allotment letter, initially issued to the buyer after the booking amount has been paid.
- The RERA Act, 2016, has ensured that the residents don’t have to pay any ad-hoc charges as per the own will of the builder.
- It should be properly disclosed by the builder at the time of booking, non-disclosure of such charges can hurt the residents on a later stage.
- Many State Governments have provided clear guidelines about the maximum amount of maintenance charges that can be charged by the builder through a proper contractual arrangement.
- Not all the societies have the same structure of charging them it varies accordingly. Sometimes it is calculated on the basis of the area of the flat.
- The frequency of collection of maintenance charges depends on the builder. He may ask for 12 months, 24 months, in advance at the time of possession.
- As per the recent circular of the Finance Ministry, the flat owners have to pay GST @ 18% if their monthly contribution to RWA exceeds Rs. 7500.
Today the increase in the demand of the residential and commercial property has given birth to a number of builders and developers who offer or promise special features to attract prospective allottees. The same has also developed a long ending fight between the homebuyers and the builders with respect to the unfair practices used by the builders and the delay in handling over the possession the allottees in which case the ultimate sufferer is the allottee who suffers mentally as well as financially. It's always better to have a fair idea of the maintenance charges at the time of booking an apartment as they are recurring monthly charges.
- Are maintenance charges compulsory?
Yes. Maintenance charges are compulsory in every new apartment. 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. The homebuyer can insist the builder to tell average estimate of the maintenance charges if not informed by the builder.
- How do I calculate the maintenance charges?
The structure of the maintenance charge differs from one society to another. The maintenance charges range anywhere between Rs.2 to Rs.25 or even higher depending on the city and locality 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. 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 lift maintenance are divided equally between each flat. While electricity and water charges depend on per flat consumption.
- Is maintenance charges same in residential and commercial projects?
No. Generally maintenance charge is higher in commercial properties than residential ones. These maintenance costs can be related to any cost of managing and maintaining the commercial property.
- Can developers ask for maintenance charges before handing over the property to the homebuyer?
No. The builder will be responsible for maintenance charges till he hands over the possession to the homebuyer. Once the possession is delivered, society can charge such charges as per its own rules.
- Is GST applicable on maintenance charges?
Yes. Flat owners also have to pay GST at 18%, if their monthly contribution to the residents’ welfare association exceeds Rs 7,500, as per the Finance Ministry’s orders.
Written by- Ankur Saha, Head- Legal, VOICE