By Sandeep Reddy, Cofounder of Zapkey
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, very soon this state of happiness turns a little sour when they get to know the amount they need to pay at the time of possession- which will have a serious dent on the buyer’s pocket. In our view this is because the buyers are generally not fully aware of the applicability and the quantum of common area maintenance (CAM) charges which could be a function of not knowing this at the time of booking or they may have forgotten about it given that the project may have taken several years to complete.
We at Zapkey analyzed advance maintenance charged by builders for 15 projects in Mumbai which showed that there is a wide variation from Rs 10-30/sqft/month (on carpet area) and non-standard tenures for which this advance is collected. RERA also does not explicitly mention any specific formula or standards for this.
What does RERA say about maintenance charges? The Real Estate (Regulation and Development) Act, 2016 (RERA) mandates, under Sec (4) (d), that the developer will be responsible for providing and maintaining the essential services, on reasonable charges, till the taking over of the maintenance of the project by the association of the allottees.
Let us understand more about Advance Maintenance Charges
Maintenance charges are the operating charges levied on residents of a housing society. The residents or owners of a particular property in an area are charged for the maintenance of a commonly owned property area. It is collected periodically i.e., monthly, semi-annually, or annually depending upon the project. 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 society is formed and operational to take over such duties. This amount doesn’t go to the builder and is not counted as income for the builder but has to be deposited in a separate account. Any balance CAM is to be transferred to the society or apex body at the time of handing over the responsibilities to manage and maintain the facilities.
In Maharashtra, maintenance charges are dependent on the area of the property. The total amount required to maintain the common areas and facilities are divided in proportion to the flat area. The developer cannot demand advance CAM before receiving OC. This means the builder cannot force buyer to take possession of a unit by paying charges without receiving proper OC, especially in delayed projects.
Zapkey findings from analysis of Advance Maintenance Charges for 15 projects spread across multiple localities. Wide variation from Rs 10-30/sqft/month of maintenance charges (GST not included) even though the projects had similar amenities like gymnasium, clubhouse, swimming pool etc. We observed that South Mumbai locations or premium projects had much higher CAM charges.
Note: Views Expressed in this artilce belong to Sandeep Reddy, and do not represent that of SquareFeatIndia.com
Also Read: World Environment Day: The Real Estate Sector Needs to Be Sustainable
