9 Hidden Costs You Must Watch Out for When Buying a House

Buying a house is a dream for us Indians, and when that dream is realised, our excitement is uncontrollable. You do everything right; choose the location, set the budget and prepare for the housewarming, but when moving day finally arrives, you'll be greeted by a whole bunch of hidden costs that will completely overshoot your expenses. These costs are not hidden per-se, they are quite forgettable in the excitement you have when buying a home.

Before you go for the big purchase, make sure you set your budget to cover up these 9 hidden costs.

Home inspection cost

When applying for a home loan, apart from doing a background check to calculate your loan eligibility, banks will hire 3rd party home inspectors to check if the proposed property value is worth its price tag. No matter the final report on the property's condition, the payment for these inspection services will be billed to you and may be added to the monthly interest on your loan.

Cost of relocation

The task of getting all your home decor and furniture from old place to new is made easier with relocation or moving services. Then again, they don't come cheap, so better be prepared with the money in hand when you approach a relocation service or plan ahead when setting up your budget for buying a home.

Maintenance deposits

Builders today are asking for maintenance deposits up to 2 to 10 years in advance, as it gives them a greater capital amount to work with. Maintenance charges are subject to the locality, land value and type of home you are hoping to purchase. They can also vary depending on the quality and number of amenities the builder is offering you. This hidden cost adds up a lot of your budget, so make sure you're prepared well in advance.

Stamp Duty/Registration fee

Stamp duty/Registration Fee is a compulsory fee that must be paid to the Government  whenever you are about to register for a property under your name. In Tamil Nadu, the fixed fee is 8% of the market value of the property (7% for stamp duty and 1% for registration fee). This registration is done to achieve a validity to the agreement/ Sale Deed between the buyer and seller confirming a change in ownership. As always, keep your budget fixed well in advance for this fee, as it is likely to cost a lot when you are buying an expensive property.

Parking space cost

Parking space is a handy amenity to have in apartments but then again it is not an amenity that is given to you outright, you have to pay the builders an additional cost to claim your parking space, which may vary depending on how many spaces you require and is directly proportional to the value of the area you are going to live in.

Value Added Tax (VAT)

Taxes is something no one can avoid. When buying a real estate property, VAT is payable to the Government and amounts to 3.09 per cent of the property value in Tamilnadu. For those looking to purchase apartments on a budget more than Rs. 1 Crore or above 2000 sq feet, the VAT is 3.71 per cent and this is something that cannot be avoided. So please do make sure you check with the developer if the price quoted includes the VAT amount.

Interiors cost

Fully furnished apartments save you time in deciding how to set the looks and basic interiors for your living space, but they also come with a price. Basic things like plumbing, painting and laying tiles can vary in cost depending on how exquisite you want your home to look.

Preferential Locality Charge (PLC)

Apartments consist of various blocks, each providing their ways of life to residents. Here, you are forced to balance the budget again with additional costs on the PLC varying from builder to builder. High rise apartments generally cost more when you opt for the luxury homes and penthouses.

Realtor's fee

If you bought a house through a real estate broker, you have to pay the broker some amount of commission.  The charges can vary from depending on the value of the property and the realtor's personal fee. Online brokers charge a lot less and give you more options, but it's better to be safe than sorry and check your budget if it covers for the realtor.

The above-mentioned home charges are unavoidable, but if you have planned everything right and set a strong budget, you can truly live a dream at your new home.

by Varun Manian, Chairman and Managing Director, Radiance Realty