Many (especially first-time homebuyers) believe that buying a newly constructed home is much better than buying an old or previously used home. They believe that buying a previously owned home will eliminate many unwanted cost. But, how much true is this fact? Do you know what determines the price of a property or home?
On the outer side a newly constructed home’s maintenance charges, repair costs are all minimal; considering its construction materials, systems, and other appliances are all latest and brand new. But, then you might wonder why a newly developed home costs more than the old one (in certain cases). What buyers don’t realize here is that new homes have certain hidden charges that make it seem expensive at times. As we have established that it is hidden, here in this blog we are trying to decipher a few factors that will make you understand it better.
1. Registration and Stamp Duty
The registration charges included while buying the property are a function that determines the value of the property and hence, this charge contributes majorly to your whole budget. Generally, the registration charges are a fee that has to be paid to the (state) government for registering the property in the buyer’s name. Following this, comes the stamp duty charges which vary from one state to another.
2. Service Tax & VAT
There are the additional charges that one pays to the government (along with the registration fee) for your property. Also, it has to be kept in mind that these taxes are charged for under-construction properties.
Service Tax is levied by the central government and one has to generally pay 8-10% of the total property value to the government. VAT is charged whenever; property is being exchanged from the seller to the buyer. The value of this tax is generally 1-5.5% of your total property value. However, confirming it before paying is a wise decision.
3. Maintenance Deposit
At the beginning of our blog talked about how we have to pay for the maintenance of an old home and not for a newly built one (or we might have to pay less). It is because many societies charge a maintenance deposit in advance. This charge covers society amenities and its basic infrastructure. Thus bursting the bubble that no matter what the age of your home is maintenance charge has to be paid.
4. Parking charges
Though you ask your realtor or real estate agent about parking space in the society you wish to buy your society, parking space is usually not included while buying a house and has to be bought separately. Thus, the charges of the parking spaces get added to your overall bill.
The cost of the parking space depends on factors such as; how big is the parking space, is the parking space covered or open, and in which locality is the parking being purchased. An important point to be noted here is that the seller has the right to sell the parking space to another person in case you are not interested in buying it.
5. Preferential Location Charges
It goes without saying that location matters the most when it comes to real estate. Thus if one desires to buy a flat at the heart of any metropolitan area the cost of that flat will definitely be higher than others. Thus, it is important to consider this fact and decide on a location where you want to buy a flat. However, these charges are subjective and can vary from one builder to another.
A lot of things go into building a home that you desire hence, it is right to know everything and be informed about a building that you will in the future call home. The aforesaid factors that influence the pricing of a flat or apartment varies from one city to another, one state to another, or even from one real estate developer to another. However, aforesaid are the basic factors that will help you analyze. In case any other charges than the ones mentioned above are being billed, it is better to cross-check with your builder before paying and getting the keys to your dream home.
1 reply on “5 Unexpected Hidden Costs in Buying a New Home – All You Need to Know”
I haven’t checked in here for a while as I thought it was getting boring, but the last several posts are good quality so I guess I will add you back to my everyday bloglist. You deserve it my friend 🙂