Non-occupancy Charges in Co-operative Housing Societies

Non-occupancy Charges in Co-operative Housing Societies

It is a common practice for homeowners to invest in a residence and sub-let it to tenants. It is a good way to come into an additional source of income but brings with it the condition of paying your dues to the housing society. On the bright side, the non-occupancy charge is a relatively smaller amount, calculated and added on your maintenance bill. All you need to know is if you are liable to pay the charge, and if so, how much.

What is non-occupancy charges?

Your housing society collects non-occupancy charges from you when your residence is occupied by someone other than you or a close family member. In other words, it is an amount you pay to your society when you rent or lease your residence to a tenant.

Under what conditions are non-occupation charges levied by the society?

A non-occupancy charge is NOT applicable if:-

  • Your apartment is occupied by your family members, including mother, father, husband, wife, son, daughter, sister, brother, grandchild/ren, son-in-law, daughter-in-law, brother-in-law, sister-in-law, or any other near relations
  • You, as a member of society, reside in it
  • The apartment is vacant/locked/occupied by no one

When you live in your own apartment/home, you are liable to pay maintenance charges to the society. If you decide to move and leave the apartment locked with no one occupying it, you are still required to pay the maintenance charge without any concessions but a non-occupancy charge is not levied on you.

In case if the residence is neither self-occupied or occupied by a family member, and if the member stands to make a commercial profit out of the property, non-occupancy charges have to be paid in compliance with the government mandate. It is the society’s way to claim some share in the financial benefit from your property while it is being rented to a non-family member. In such scenarios, the society needs to be given a copy of the lease/license agreement along with other required forms. The non-occupancy charges are added to your maintenance bill. You have the right to select any type of tenant (provided they are not destructive or criminally inclined) and your tenants have the right to avail all the services and amenities of the society as you yourself would.

How is the non-occupancy charge calculated?

In the past, the non-occupancy charges were fixed at a one-time payment of service charges. According to government directives followed currently, non-occupancy charges should not exceed 10% of the service charges billed to the member. The service charges are part of the total maintenance bill and include housekeeping fees, applicable fees paid to committee members, common electricity charges, security charges, garden maintenance, and society’s outgoing charges. Property tax, water charges, repair and maintenance expenses are not included as part of the service charge.

Let’s understand this with an example. If the total maintenance bill of your society is Rs 3000, out of which if Rs 2000 is to be considered as service charges, you’d have to pay 10% of Rs 2000 (Rs 200) as non-occupancy charges.

This directive is applicable to all residential societies and has received approval from the Supreme Court as well. The decision came about after it was highlighted that due to lack of clarity in the way non-occupancy charges were to be calculated, several housing societies’ managing committees were levying unnecessary charges on unsuspecting members at higher rates and profiting personally from such exploitation.

Why should you know about non-occupancy charges?

If you’re part of the managing committee, you’d be responsible for informing the member about non-occupancy charges, explaining how the amount was arrived at, and collecting it as part of monthly maintenance. It is vital that you first understand the mandated action on your behalf. Most members, in general, are unaware of how the non-occupancy charges are calculated or if they apply at all. If they sub-let their apartment and are levied with non-occupancy charges without prior knowledge, they might become hostile or grudgeful.

At the same time, members are sometimes asked to pay unfair amounts of money in the form of non-occupancy charges by dishonest office bearers. Several consumer complaints have been registered against managing committees charing non-occupancy wrongly (even when a member hands over their residence to a relative), an action that is illegal and fraudulent.

In such cases, members should immediately register a complaint with the Registrar of the said locality and get the necessary help from the authority if no corrective measure is taken by the society. As an active and alert member, you must do your due diligence first so that you can help not only yourself but others as well. Understanding what you owe and what you most certainly don’t owe to your housing society is the first step towards practical wisdom and citizen awareness.

How much can societies charge as non occupancy charges?

In the event that the owner of the unit fails to pay the non-occupancy fees or refuses to do so, the housing society will send a reminder notice. If the sum is not paid, it may declare the owner to be in default. Additionally, the housing society would not offer the no-dues certificate.

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