Renting out your home is a common way to earn a steady second income. But if you’re a flat owner in a cooperative housing society, there’s one charge you shouldn’t overlook non-occupancy charges.
This is a fee that applies when your flat is not occupied by you or your immediate family, and instead is rented out to tenants. While it’s not a very large charge, it’s important to understand when it’s applicable, how it’s calculated, and what to do if you’re being overcharged.
What are non-occupancy charges?
Non-occupancy charges are levied by housing societies when a flat owner rents out their property to a person who is not a close family member. This fee is collected in addition to your usual monthly maintenance charges.
The purpose of this charge is to ensure that members who are earning rental income from their property also contribute a little extra to the upkeep of common services used by the tenant, such as security, lifts, water, and other shared facilities.
When are non-occupancy charges applicable?
These charges are applicable only if your flat is rented out to someone who is not your immediate family.
You will not be charged non-occupancy fees if:
- You, the owner, are living in the flat.
- The flat is occupied by close family members, such as your parents, spouse, children, siblings, in-laws, or grandchildren.
- The flat is locked, vacant, or unoccupied.
The charge becomes applicable when the flat is used to earn a commercial benefit (i.e., rent) by giving it to non-family members.
In such cases, the society usually requires you to:
- Complete police verification of the tenant (mandatory in many cities).
- Inform them in writing about the tenancy.
- Submit a copy of the lease or leave-and-license agreement.
- Fill out any society-required tenant forms.
How is the non-occupancy charge calculated?
Earlier, societies used to charge a flat amount as a one-time non-occupancy fee. This led to disputes and overcharging in many cases. To address this, the Maharashtra government issued a circular under Section 79A of the Maharashtra Cooperative Societies Act, which clearly states that:
Non-occupancy charges cannot exceed 10% of the service charges paid by the member.
This rule has since been upheld by the Supreme Court and is now followed by most cooperative housing societies, especially in Maharashtra and major metro cities.
Let’s break this down with an example:
- Suppose your total maintenance bill is ₹3,000 per month.
- Out of this, ₹2,000 is considered “service charges” (expenses such as security staff, society staff salaries, electricity for common areas, housekeeping, etc.).
- You will be charged 10% of ₹2,000 = ₹200 as non-occupancy fees.
Important: Service charges do not include sinking fund, repair fund, property tax, or water charges.
What if you are overcharged?
This is unfortunately not uncommon. In many housing societies, members have raised complaints that the management committee has either:
- Charged non-occupancy fees even when the flat is used by a relative
- Charged more than 10% of service charges
- Not provided clarity on the breakup of the charges
In such cases, here’s what you can do:
- Write to the managing committee and request an explanation with supporting calculations.
- If you don’t receive a proper response, escalate the issue to the Registrar of Cooperative Societies in your area.
- You can also approach a Consumer Forum for redressal if the charges are unfair or violate the law.
It’s illegal for societies to charge more than what is permitted under the rules. And it is equally illegal to collect non-occupancy charges when the flat is used by a family member.
Is GST applicable on non-occupancy charges?
Yes. As per recent GST clarifications, if the total maintenance charges (including non-occupancy) exceed ₹7,500 per month per member, then 18% GST is applicable.
However, this GST is not paid by the owner to the government directly. The society is responsible for calculating and collecting the GST and remitting it to the government. Make sure your maintenance bill reflects this clearly, especially if you cross the ₹7,500 threshold.
Do tenants have to pay the charge?
By default, non-occupancy charges are the responsibility of the flat owner, not the tenant.
However, if you want your tenant to cover this cost, you can mention it clearly in the rental agreement. That way, you can legally recover it from them along with rent and other maintenance charges. But societies will only deal with the owner for collecting this charge.
Is this rule the same across India?
The 10% rule originates from the Maharashtra government circular and is strictly enforced in cities like Mumbai, Pune, and Nagpur.
In other states like Karnataka, Telangana, Delhi, and Tamil Nadu, most societies either follow similar rules by internal agreement or choose not to charge non-occupancy fees at all. But unless there is a clear by-law stating otherwise, housing societies cannot arbitrarily fix this charge.
In Bangalore, for example, many RWAs do not charge non-occupancy fees unless it has been included in the society’s registered bye-laws.
Why should committee members understand this?
If you’re part of your RWA’s managing committee, you’re expected to:
- Inform members about non-occupancy charges when they rent out their flat
- Collect it as part of the maintenance bill
- Explain how the amount is calculated
- Ensure the society stays within the legal limits
Many disputes between owners and societies arise due to lack of communication or incorrect billing. Being transparent and following the law helps keep things smooth for everyone.
What if the owner refuses to pay?
If a flat owner does not pay the non-occupancy fee when it is due, the society can:
- Issue a payment reminder notice
- Declare the member as a defaulter for society billing purposes
- Withhold the No Dues Certificate required for property sales or rentals
However, societies must still act within the legal limit and cannot use coercive tactics or harassment.
Non-occupancy charges are legal and necessary but they must be applied fairly, transparently, and within the limits defined by law.
If you’re a homeowner renting out your flat:
- Check your society’s by-laws
- Inform the committee and submit documents
- Verify your monthly bill for correctness
- Know your rights if you’re being charged unfairly
If you’re on the committee:
- Know the rules
- Educate members
- Stay accountable
Understanding non-occupancy charges helps everyone avoid unnecessary conflict and ensures smoother community living.