Hidden costs to consider when buying a new flat

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Stamp duty and registration charges

One of the highest additional expenses when buying a flat is registration fees and stamp duty. These are levies imposed by the government to lawfully transfer property title. Stamp duty is different across states but may range from 5-7 percent of the price of the property, while registration fees usually run to 1 percent. Together, they can account for a considerable portion of your overall expense, and most folks keep forgetting them when budgeting.

Goods and Services Tax (GST)

GST is another cost that you need to consider when purchasing a property that is still in development. Currently, the GST levied for under-construction properties with no input tax credit is 5 percent (1 percent for affordable housing). However, there is no GST levied on completed flats with a completion certificate. This can be a deciding factor in your decision to buy a ready property or one which is yet to be completed.

Maintenance and society charges

Even before you take possession of the keys to your new home, developers typically ask for a one-time maintenance deposit, which takes care of common property and facility maintenance like lifts, security, and gardens. There are also regular society maintenance charges that vary based on amenities and size of the flat. Buyers must go through the maintenance policy and escalation provisions in the future so that there are no surprises later.

Parking and clubhouse fees

Car parking spaces are not generally included in the upfront cost of the flat. Builders will charge extra for uncovered, covered, or stilt car parking, anywhere from Rs.2 lakh to Rs.10 lakh depending on the location and category of property. Similarly, access to a clubhouse, gymnasium, and recreational areas can have extra membership or usage fees. These add-on features could increase your overall expense quickly.

Interior and fit-out expenses

An apartment that's just been bought—particularly one still under construction—is typically handed over in a partially finished manner. Cost of fittings of furniture, electrical components, wardrobes, modular kitchen units, instalments, and other interior work, can often be far more than you budgeted for. Budgeting 10-15 percent of property cost towards interiors is a fair estimate.

Legal and brokerage charges

It is highly recommended to consult the services of a lawyer to authenticate property documents and draft sales agreements. Legal authentication establishes the fact that there is no claim or lien on the property. Further, if you buy through an intermediary, brokerage commissions of 1-2 percent of the value of the property is also levied.

Why accounting for hidden costs is crucial

Overlooking these "stealth" charges can disrupt your budgeting. By understanding and budgeting for each component—tax, registration, upkeep, and other fees—you are more likely to accurately estimate your total cost and less likely to face surprise expenses on the spot of sale.