Maintenance charges usually get determined by the building's life cycle cost and can influence the buyer's decision. Keep reading the article below to learn more about the financial impact of maintenance charges on buyers.
Overview:-
One of the most significant benefits of residing in a gated community or a residential apartment is enjoying different community facilities, such as playgrounds, swimming pools, gardens, gyms, sports centres, clubhouses or recreational centres, etc. Furthermore, regular usage of these amenities also implies that they will need regular upkeep.
It is why apartment owners pay maintenance charges according to the RERA maintenance charges. So we can say that this RERA maintenance charge is a thoughtfully estimated sum that residents regularly pay to the Society Management or Resident Welfare Association (RWA) to maintain these common areas.
What Is a RERA Maintenance Charge, and What Does It Entail?
Maintenance charges refer to the sum that the RWA (Residents’ Welfare Association) or the building management collects from the apartment owner or tenant for optimum upkeep of the common areas.
Furthermore, according to Section 6 of the Real Estate (Regulation and Development) Act, every person who consented to a sale to take a flat, plot, or building specified under Section 13 of the rera complaint status, must pay municipal taxes, RERA maintenance charges, water and electricity charges, and other expenses.
As per RERA regulations, builders and developers are required to provide a detailed breakup of maintenance charges to homebuyers. This includes expenses for services such as security, housekeeping, maintenance of common areas, and other facilities. The maintenance charges cannot exceed 5% of the cost of the apartment.
Therefore, you are legally obligated to pay apartment RERA maintenance charges if you own a flat or take it on rent. Some common maintenance charges are levied by the building management or the Resident Welfare Association (RWA).
- Repair and upkeep charges: These comprise taking care of all building elements, such as pumps, internal roads, sewage, tanks, lifts, generators, security equipment, and street lights, among others. The apartment’s supervising body decides maintenance charges, subject to the minimum of 0.75% per annum, of the building expense of each apartment for meeting costs of normal recurring repairs.
- Water charges: Paying water charges are compulsory for all residents. These charges are based on the size and the total number of inlets provided in each apartment.
- Interest on defaulted maintenance charges: You are accountable for paying interest on defaulted payments if you make late RERA maintenance charges. These defaulted maintenance charges differ from society to society but are subject to 21% annually.
- Non-occupancy charges: A sum to be expended even if you are not presently living in the apartment. Nevertheless, these non-occupancy charges should not exceed 10% of the service charges.
- Service charges: These comprise any expenses incurred to acquire amenities and services, including but not restricted to security guards, electricity for common areas, lift operators, gardeners, and cleaning staff. In addition, these service charges are borne equally by all apartment owners and tenants.
- Parking charges usually apply to apartment owners or tenants who own vehicles. In addition, these parking charges depend on society’s specified rates (usually differ for four-wheelers and two-wheelers).
- Sinking Fund: The emergency account for unforeseeable circumstances is defined by the society’s regulatory body, subject to a minimum of 0.25% annually of the construction expense of each apartment.
- Insurance charges: Specific payments for insuring the equipment and building may have to be paid (based on the super built-up area of the apartment) as part of the RERA maintenance charges. In addition, you do not have to spend money on the insurance premium for apartments used for commercial purposes in the building.
- Lease/rent charges: These lease or rent charges are based on the built-up area of every apartment.
- Other expenses: As decided by the apartment’s governing body as and when required.
How Can RERA Maintenance Charges Financially Affect Apartment Owners?
Any apartment or society maintenance charges directly impact the life cycle expense of a residential apartment. In addition, investors investing in MNCs or commercial property comprehend maintenance expenses well. The society maintenance expenses are more in commercial properties than residential ones, as the commercial properties will have amenities such as larger common areas and central air conditioning.
Yet, when it comes to individuals purchasing homes, not everyone is familiar with or comprehends the impact of RERA maintenance charges on residential apartments. It is one thing real estate developers also don’t care to describe or talk about with the flat owners.
However, you must know that these expenses considerably impact a person financially. Therefore, you must remember that the maintenance charges may not be required initially and may not be discussed in detail for residential projects still under construction.
Nevertheless, all the expenses, including apartment RERA maintenance charges and different deposits, must be paid upfront for a residential property ready to move in. Therefore, it might not be wrong to say that apartment maintenance charges impact a purchaser’s decision.
Understanding the GST Implications on RERA Maintenance Charges
As of 2019, the Finance Ministry of India published a circular on the GST (Goods and Service Tax) payable by Resident Welfare Association (RWA). For GST to be imposed on housing and residential societies.
They must meet two conditions:
- If the monthly RERA maintenance charges of residential apartment owners surpass INR 7,500, they will have to pay GST at 18%.
- If the sum of the expenses imposed by the residential apartment exceeds INR Twenty lakhs in a financial year, GST (Goods and Service) tax is applicable.
If even one of these prerequisites remains unfulfilled, residential societies are not required to pay GST in India. In addition, if the cumulative turnover of an RWA does not exceed INR 20 lakhs in a financial year, the Resident Welfare Association (RWA) is not obligated to complete GST registration.
Likewise, they are not required to pay GST payment even if the RERA maintenance amount surpasses INR 7,500 per month per resident. The typical GST rate for maintenance expenses and even GST payment on CAM (Common Area Maintenance) charges. Below is a tabular representation of GST on maintenance charges.
| Annual turnover of RWA is over INR 20 lakhs | Monthly maintenance expenses are over INR 7,500 | Should RWA complete GST registration? | Should RWA make a GST payment? |
| No | No | No | No |
| No | Yes | No | No |
| Yes | No | No | No |
| Yes | Yes | Yes | Yes |
Conclusion
In a nutshell, purchasing a property is a decision that concerns a considerable amount of money. Therefore, before signing a rent or lease agreement, purchasers must analyze and consider all the costs, including the RERA maintenance charges they will be paying during their term. In addition, this sum that will get paid every month can amount to a substantial amount in the extended run if saved.
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