The guide to non-occupancy charges
If you are a homeowner giving your property out on rent, you are liable to pay non-occupancy charges to your housing society. Here, we speak to experts to learn more about these charges, how they are calculated and the rules regarding them.
As a homeowner, there are plenty of expenses of one’s property. Besides this, there are also payments that one is required to make to one’s housing society for the general maintenance of the building. The non-occupancy charge is one such fee that is levied on flat owners who give out their homes on rent. Shiwang Suraj, the founder and director of a real estate firm, defines this charge in simple terms for those who know little about it. He says, “Non-occupancy charges are additional fees that are imposed by housing societies when an owner rents out their residential property to tenants and does not live in the same building or society. These charges are levied to cover the additional wear and tear that the property may experience due to the presence of tenants, and to compensate for the maintenance and security costs. It’s also important to note that these charges are generally applied to the property owner, not the tenants, and so the latter should ensure that they are not made to pay these charges as part of their rental agreement.”
The rationale behind this charge is that the society ought to get a small part of the earnings for its maintenance and upkeep. Nowadays, the quantum of charges is governed by law.
The rationale behind this charge is that the society ought to get a small part of the earnings for its maintenance and upkeep. Nowadays, the quantum of charges is governed by law.
Laws and Regulations
As a homeowner, if this charge is applicable to you, it’s important that you are aware of how it is calculated and the rules or laws in place to regulate them. Suraj adds, “For example, there are rules and laws in Mumbai that govern the imposition and calculation of non-occupancy charges. The Maharashtra Cooperative Societies Act, 1960 and the Maharashtra Ownership Flats (Regulations of Promotion of Construction, Sale, Management and Transfer) Act, 1963 allow for such charges, and they are typically a percentage of the monthly rent or property value based on factors like location, size and type. These charges usually range from 10-25 percent of the monthly rent.”
While there are rules in place to monitor this fee, this was not the case earlier, which caused immense financial strain on homeowners. Sharing his views on the positive changes that have emerged in this regard, Jaatin Suratwala, the managing director and chairman of a real estate company, says, “The rationale behind this charge is that the society ought to get a small part of the earnings for its maintenance and upkeep. Nowadays, the quantum of charges is governed by law. Prior to the government verdict on this charge, most societies charged arbitrarily and exorbitantly. Now it cannot exceed 10 percent of service charges that a building levies on its members.”
It’s important to know that these charges are typically based on the actual expenses incurred by the society and must be reasonable and transparent. Residents should ensure that they understand the terms and conditions related to these charges before they agree to purchase or rent a property in the said society.
While there are rules in place to monitor this fee, this was not the case earlier, which caused immense financial strain on homeowners. Sharing his views on the positive changes that have emerged in this regard, Jaatin Suratwala, the managing director and chairman of a real estate company, says, “The rationale behind this charge is that the society ought to get a small part of the earnings for its maintenance and upkeep. Nowadays, the quantum of charges is governed by law. Prior to the government verdict on this charge, most societies charged arbitrarily and exorbitantly. Now it cannot exceed 10 percent of service charges that a building levies on its members.”
It’s important to know that these charges are typically based on the actual expenses incurred by the society and must be reasonable and transparent. Residents should ensure that they understand the terms and conditions related to these charges before they agree to purchase or rent a property in the said society.
Other fees
Besides non-occupancy charges, there are various other charges that a society can levy on flat owners. Highlighting some of them, Ravi Kewalramani, the director of a real estate agency says, “ It could be parking charges for using a covered spot, despite the owner purchasing it from the developer. In the case of mechanical car parks, heavy charges may be levied as these vehicles need regular maintenance and expert services. One may also have to contribute to a repair fund which is levied in the case of major repairs undertaken in the building and its compound. In case a member refuses to pay the charges demanded by a society, they could charge an interest on it.”
Suraj concludes, “ It’s important to know that these charges are typically based on the actual expenses incurred by the society and must be reasonable and transparent. Residents should ensure that they understand the terms and conditions related to these charges before they agree to purchase or rent a property in the said society.”
Suraj concludes, “ It’s important to know that these charges are typically based on the actual expenses incurred by the society and must be reasonable and transparent. Residents should ensure that they understand the terms and conditions related to these charges before they agree to purchase or rent a property in the said society.”
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