By Team MyGate
All You Need To Know About Society Maintenance Charges
By Team MyGate
Once you are the rightful owner of a residence in a housing society, you are part of a larger, more inclusive, white picket fence community. Home ownership is not only a matter of pride and joy, but a lifelong commitment that comes with a regular cost in form of maintenance charges. This, however, should not be perceived as a cause for concern but be regarded as an essential investment you make for a comfortable and practical living experience. While a sizeable number of online and offline resources would have you believe that maintenance charges are a complex and necessary evil, we’d like to assure you that not only are they easy to comprehend but also mostly justified and in compliance with the law. Let’s find out how.
Types of maintenance charges to be paid by the members
In India, model bye-laws vary from one state to another, albeit the basic anatomy is the same. The most detailed guidelines on maintenance charges are set forth by the state of Maharashtra, permutations and combinations of which may be followed by other states.
The charges can be categorically divided as shown below: (Keep in mind that these are guidelines provided by the bye-laws, however based on different calculation systems, each society determines how much each member pays as maintenance charges… more on that later).
Service charges: These include any charges incurred to acquire services and amenities, including but not limited to electricity for common areas, watchmen, lift operators, cleaning crew, and gardeners. Service charges are borne equally by all members.
Repair and maintenance charges: These include taking care of all elements of the building such as internal roads, pumps, drainage, lift, tanks, generators, street lights, security equipment, among others. Rates are determined by the society’s governing body; subject to the minimum of 0.75% per annum, of the construction cost of each flat for meeting expenses of normal recurring repairs.
Parking charges: Applies to those who own vehicles. Charges depend on the rates fixed by the society (usually vary for two-wheelers and four-wheelers).
Water charges: Mandatory for all residents, the charges are based on the basis of total number and size of inlets provided in each flat.
Non-occupancy charges: An amount to be paid even if you are not currently residing in the house/flat, however, these charges should not be more than 10% of the service charges.
Sinking Fund: Emergency fund for unforeseeable situations is determined by the governing body of the society, subject to a minimum of 0.25% per annum of the construction cost of each flat.
Property Tax: Decided by local authority, but not applicable outside Maharashtra since it is directly paid to the government
Interest on defaulted payments: If you make late payments, you are liable to pay an interest on defaulted dues. Charges vary from society to society, but are subject to a maximum of 21% per annum on the charges.
Insurance charges: Certain expenses for insuring the building and equipment may have to be paid (based on the built-up area of the flat) as part of the maintenance bill. You don’t have to pay the insurance premium for shops/flats used for commercial purposes by others in the building.
Lease/rent charges: This is based on built up area of each flat / unit.
Other charges: As decided by the governing body of the society as and when needed.
Is it mandatory to pay maintenance charges?
If you are in an independent apartment ownership, every amenity or service you require, you pay out of pocket but are not subject to an annual or monthly maintenance charge. In case of housing societies, it is mandatory to pay maintenance charges as you are agreeing to be a part of a larger, co-operative construct. As soon as you are a registered member, a maintenance contract is signed by you and the builder, making both parties legally liable to fulfil their respective duties.
Once the builder hands over the affairs to the society, the managing committee takes over the handling of services. Paying maintenance charges is a valid and preferable arrangement as you don’t have to pay for large amounts of money alone in order to avail common services; the cost is shared by all members. Besides, a reasonable amount of flexibility is offered to members in terms of payment options and frequency.
How are maintenance charges calculated?
For a number of reasons, maintenance charges is a hotly contested topic in housing societies since there seems to be a general ignorance or discontent about how they are determined. As we perused above, each charge has a calculation based in logic, the details of which can be easily availed from the managing committee. But the law doesn’t concern itself with the issues of fair levying of charges as per the size of the residence and the utility of services. However, since the co-operative is a collaborative effort, every resident’s grievance or discomfort is duly noted and rightly resolved by the use of different calculation systems. Let’s explore them in detail.
Charges based on per square feet: This system of calculation is used when the size of apartments are different. Your maintenance charges will depend on the total number of square feet in your apartment. For example, if the committee decides to levy Rs 2 per square feet and your apartment is 600 sq feet, you will pay Rs 1200. But if your apartment is 1200 square feet, you will pay Rs 2400. The downside of this method is that if apartments with larger sizes end up paying on the basis of square feet, they may have to pay a larger share towards maintaining and repairing common services for which smaller-sized apartments will pay less, even though the utility and access may be the same.
Equal Fee: This is the ideal method to calculate maintenance charges when the sizes of all apartments is either exactly the same or approximately the same. In this method, the total maintenance charge to be collected per month is added and then equally divided among all residents, thus ensuring a fair and square deal for all. This is simple to calculate and dispute-free but does not appear as an impartial method if the apartment sizes are largely diverse from one another.
Hybrid fee: This method is a combination of the above two types, doing away the need to choose one or the other, thus providing absolutely fair treatment to all members. In such a method, square feet based charges are applied to one clubbed component, say repair and maintenance charges and sinking fund. At the same time, equal fee calculation is applied to the other categories of charges such as service fees, lift expenses. Categories other than that already have specific and precise corresponding guidelines given in the model bye-laws. Applying a hybrid method is highly effective in case of fair and unbiased distribution of maintenance charges.
How often do you have to pay maintenance charges?
There are four payment cycles you can adopt – they are (1) annual (2) bi-annual (3) quarterly (4) monthly payment cycles. Housing societies decide upon one of these payment frequencies at the very initial stage and can make changes later. They have to consider factors such as timely payments of service/utilities, how many members are willing to pay maintenance in bulk amounts and ultimately, which is the easiest payment frequency with respect to collection and record-keeping.
It is always recommended to stay on top of your maintenance charges to avoid late payments, which result in added interest. Paying your maintenance charges on time also establishes you as a responsible resident. However, be sure to examine any expenses that look out of place and bring them to the management’s notice promptly.