Wednesday, October 10, 2012

Contentious charges of the real estate developers

Have you ever been stumped by the fact that the actual prices of the apartments are far more than what has been advertised in the different media? This might have come as a shocker to you but this is business as usual for the real-estate companies who would keep on describing charges after charges which are levied in addition to the advertised basic minimum price of the apartments, shooting up the actual purchase price of the property.

These additional charges levied by the real-estate companies become the bone of contention between the customers and the developers. The former often call these unreasonable and excessive whereas the latter such as Shiv Sai Ozone Park provide justifications for the same.

Let us examine some of these contentious charges and what both the parties have to say about it.
1. External Development Charges (EDCs): There are two types of charges, the Infrastructure Development Charges and the External Development Charges. It is the IDC which is to be levied to recover the costs of infrastructural development in the whole area. These charges are to be levied in a proportionate amount and spread across different projects. Then these are spread over each of the unit within a project. In this way these charges are apportioned and every buyers is required to pay these as and when demanded. Often, there is a contention that the IDC and EDC charges are heavy and are not justified. There is often a demand from the customers to the society to tell how have these charges been arrived at.

2. Parking Charges: It is not uncommon to find that the parking charges for one vehicle per residential unit is also to be paid for and the rates for the same vary from tens of thousand to lakhs of rupees. The customers content that this charge is unreasonable because it is understood that that owners do have the cars and at least one parking space shall be provided free of cost. And, for the owners who have more cars, there shall be a provision for extra charges for more space only when there is a paucity of space. If there is sufficient space, there shall not be any charges. The builders such as Shiv Sai Ozone Park Faridabad contend that the parking space will become scarce as more and more cars per unit and therefore, it is necessary to have special provisions for developing the parking spaces. This cost, they contend, is separate from the cost of developing the apartment. Further, they reason that the option of including the parking cost in the price of flat is not a good option since the people who do not own a car would have to pay for the parking. This will also inflate the prices of the property.

Similarly, arguments and counter-arguments are also given for the other charges such as power back-up and the maintenance and security deposit which is charged by the builders from the customers.