Real estate developers charge anywhere between Rs 10 and Rs 30 per square foot per month as common area maintenance charges (CAM) in advance from homebuyers at the time of handing over possession. This is over and above the cost of the property, an analysis by Zapkey.com showed.
Tenures for which advance maintenance is collected by builders ranged from 12 to 24 months. Generally, this is the period within which the builder plans to transfer the upkeep of the building to the resident welfare association (RWA)/society from the time of handing over possession, it showed.
The Real Estate (Regulation and Development) Act, 2016 (RERA) does not explicitly mention any specific formula or standards for this. It mandates that under Section (4) (d), the developer will be responsible for providing and maintaining the essential services, with reasonable charges, till the taking over of the maintenance of the project by the association of the allottees.
“Most homebuyers are very happy when they hear from the builder that the project has received OC (occupation certificate), which means the builder can start handing over possession. However, they are also asked to pay CAM at the time of possession which has a serious dent on the buyers’ pocket,” said Sandeep Reddy, co-founder, Zapkey.com.
Zapkey analysed advance maintenance charged by builders for 15 real estate projects spread across Mumbai, which showed that there is a wide variation—from Rs 10 to Rs 30 per square foot per month (on carpet area)—and non-standard tenures for which this advance is collected.
The wide variation from Rs 10 to Rs 30 per square foot per month was observed for maintenance charges (goods and services tax or GST not included) even though the projects had similar amenities like gymnasium, clubhouse, swimming pool, etc.
South Mumbai locations or premium projects had much higher CAM charges, the analysis showed.
Projects like Rustomjee Crown in Prabhadevi had CAM of Rs 30 per sq ft per month and for a 1,404 sq ft apartment, this worked out to around Rs 50,000 per month (including GST). Peninsula Bishops Gate, another luxury complex in Breach Candy, has a CAM of around Rs 25 per sq ft per month which translates to a whopping Rs 1.37 lakh per month for a 4,700 sq ft apartment.
It should be noted that as per GST laws, maintenance charges paid by residents to the RWA are exempt from up to Rs 7,500. In case the amount charged exceeds this amount per month per member, GST is chargeable on the entire amount levied.
Some projects like Lodha Bellagio in Powai and Dosti Eastern Bay in Wadala split the CAM into Building and Layout/Federation (for common areas in case of multiple towers) maintenance. For example, Lodha imposed a Building CAM for 18 months but Layout or Federation CAM for 60 months. Generally, this helped spread a load of CAM across owners as possession of various towers happens over time, the analysis said.
Though most of the agreements mention the advance maintenance charges explicitly, some projects like Kanakia Zen World and Kanakia Silicon Valley did not mention the exact CAM numbers. The agreement generally mentioned that the amount will be charged on a pro-rata basis in proportion to all other allottees in the whole project, it showed.
Generally, the total advance maintenance collected by developers ranged from 0.5 to 1.4 percent of the property value (registered value). Projects with higher advance maintenance as a percentage of property value included Piramal Revanta in Mulund, Runwal Bliss in Kanjurmarg and Rustomjee Crown. Some of the premium projects were on the lower end of the range, especially because of the high/premium property value such as Peninsula Bishops Gate and Godrej Urban Park, which were at 0.5 percent, and Oberoi Elysian at 0.7 percent.
What are advance maintenance charges?
Maintenance charges are the operating charges levied on residents of a housing society. The residents or owners of a particular property are charged for the maintenance of commonly owned property areas. It is collected periodically—monthly, semi-annually or annually. In under-construction projects, a developer may collect advance maintenance charges for a fixed period as mentioned in the agreement and charge for such accordingly at the time of possession. This is to ensure common areas of the project are maintained until the RWA/society is formed and operational.
In Maharashtra, maintenance charges are dependent on the area of the property. The total amount required to maintain the common areas and facilities is divided in proportion to the flat area. The developer cannot demand CAM before receiving an occupation certificate.
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