The Hidden Costs Of Buying Property In India: What Homebuyers Should Know

By Pawan Kumar Agarwal

Buying a home in India has long been a symbol of financial success and security. For most Indians, it’s more than just a transaction—it’s the realisation of a lifelong aspiration, often powered by years of disciplined saving, family contributions, and home loan commitments. Whether it's a small 1BHK in a rising tier-2 city or a big flat in a metro city, owning property is a symbol of pride, heritage, and social position.

But, in the midst of chasing this dream, many buyers, especially first-timers, are caught off guard by the multitude of hidden costs that come along with the advertised price. Though the base price often serves as the primary focus of developers as well as brokers, the real outflow may be relatively higher. This is a result of the inclusion of government levies, registration charges, maintenance deposits along with other incidental fees.

This guide sheds light on the hidden costs that homebuyers in India must consider—before signing the dotted line. This, in turn, will help them plan smartly and avoid unexpected financial strain.

Stamp Duty and Registration Charges

These are the most significant statutory costs, in addition to the base property price. Stamp duty is a requirement for property registration and authenticates the transaction, imposed by state administrations. It fluctuates across states, but it typically comprises 4-7 per cent of the property's value. Likewise, the registration fee is typically set at 1 per cent of the property's valuation.

Goods and Services Tax (GST)

This tax is applicable on under-construction properties. However, it is not imposed on ready-to-move-in or resale homes. For affordable houses, valued under Rs 45 lakh - the GST rate is 1 per cent. In contrast, on other properties - the GST rate is 5 per cent. Though being ignored by buyers, it can substantially impact the total price of the property if not factored in early.

Advance Maintenance and Security Deposits

Builders take upfront maintenance charges for six months to a year, especially in gated communities. These cover shared facilities such as elevators, lighting, security etc.

Preferential Location Charges (PLC)

Apartments with premium views, such as those facing gardens or on higher floors, often come at an extra cost. Developers charge PLC per square foot, and this can significantly raise the overall cost without being immediately obvious in the base price.

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Parking Charges

In many projects, parking spaces are not included in the quoted price. Charges for dedicated parking can be substantial. 

Brokerage Fees

Buyers purchasing a resale flat may be required to pay a brokerage fee of 1-2 per cent of the transaction value. 

Home Loan Processing 

Loan applicants must budget for processing fees (typically 0.25-1 per cent of the loan amount).

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Legal and Documentation Costs

Legal fees ranging from Rs 15,000 to Rs 1 lakh encompass legal verification, drafting of sale agreements, indemnity bonds, and affidavits. Document management and notarisation may incur additional fees.

Penalties and Delays

For buyers who elect construction-linked payment plans, they may be liable to pay penalty charges for delayed installments. 

On the whole, purchasing a home in India is a milestone achievement, often shaped by emotion, aspiration, and effort. Nonetheless, behind the glossy brochures and guided site visits lies a complex financial ecosystem. 

From government levies and legal dues to society fees and utility charges, the actual cost of property ownership can significantly overshoot the initial budget. Informed homebuyers—those who look beyond the base price—are better positioned to manage their finances, avoid surprises, and take full ownership of their dream home without hidden setbacks.

With careful planning, due diligence, and awareness of the fine print, buyers can go a long way in turning their homeownership dream into a confident and rewarding reality.

(The author is Managing Director, NK Realtors)

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