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When you purchase a house in a housing society, you have to bear some monthly fees and charges. This includes maintenance, property tax, charges for parking and amenities, etc. A lesser-known fee among these is the non-occupancy fee. <\/p>\n\n\n\n
While not all housing societies expect you to pay a non-occupancy charge, you must be aware of it. In this blog, we discuss everything you need to know about non-occupancy charges, how societies calculate them and in what situations you can avoid paying them. <\/p>\n\n\n\n
Let\u2019s dive in and learn about non-occupancy charges in housing societies. <\/p>\n\n\n\n
Non-occupancy charges are fees housing societies impose on property owners who do not reside in their housing units but lease them out to tenants. The society charges this fee because leasing is considered a commercial activity, and you derive a monetary benefit from it. The non-occupancy charges for a rented flat are as per society by-laws which also mention how they will be calculated. <\/p>\n\n\n\n
For the housing society, non-occupancy charges are an additional source of income, and the funds generated can go towards society improvement. Non-occupancy charges should not be confused with maintenance charges, as you pay them in addition to the maintenance and service fee. While every member of the housing society pays maintenance charges, the non-occupancy charges are paid only by members who lease out their units. <\/p>\n\n\n\n
Also, read – What are Penal Charges?<\/a><\/p>\n\n\n\n Over the years, non-occupancy charges have been a highly debated topic in home-owning. There had been a trend where housing societies charged an arbitrary amount from property owners. This amount would usually be considerably large, making owners feel it was unfair and resulting in legal action against the housing societies. <\/p>\n\n\n\n As a result, the Bombay High Court ruled in 2007 that non-occupancy charges cannot exceed 10% of the maintenance charges collected by the housing society. Based on this legislation, if you pay Rs.3000 as maintenance and service charges, the maximum non-occupancy amount the society can charge you is Rs. 300. <\/p>\n\n\n\n However, it is essential to know that legislation related to non-occupancy charges varies from state to state. Some states ban levying non-occupancy charges, in which case, if a housing society demands this fee, it would be illegal. Taking time to familiarise yourself with the legislation in your state and your housing society\u2019s bylaws will help you protect your interests as a homeowner. <\/p>\n\n\n\n Also, read – Home Loan Processing Fee: Complete Guide & Charges<\/a><\/p>\n\n\n\n In most housing societies, there are three situations in which the non-occupancy charge would not be applicable:<\/p>\n\n\n\n 1. If the housing unit is left empty, that is, no one lives there, and it remains locked. <\/p>\n\n\n\n 2. If family members of the homeowner live in the unit. <\/p>\n\n\n\n 3. If another housing society member lives in the flat without paying rent to the homeowner. <\/p>\n\n\n\n Note that these criteria may change depending on the specific housing society bylaw. <\/p>\n\n\n\n When you do not pay the non-occupancy charges set by the housing society, they will first send you a reminder notice. If you do not make the payment even after receiving the notice, you will be considered a defaulter with outstanding dues<\/a>. This means if there is a situation where you require a no-dues certificate from the society, they would deny it. <\/p>\n\n\n\n A no-dues certificate<\/a> is required by many institutions when you apply for a passport, domicile certificate, or even a bank loan. So, if your society charges a non-occupancy fee following all the legislations of your state, it is advisable not to default on the payments. <\/p>\n\n\n\n Also, read – Fees and Charges applicable while applying for a home loan<\/a><\/p>\n\n\n\n For the property owner, the non-occupancy charge is the additional amount they must pay after paying maintenance and service charges. This way, they can positively contribute towards the upkeep and maintenance of the housing society, thereby maintaining property value. But what if the housing society does not follow all guidelines when levying non-occupancy charges? In this case, the owner can either pay the unfairly demanded non-occupancy charge or enter a legal battle with the housing society.<\/p>\n\n\n\n Sometimes, the owner may ask the tenant to pay the non-occupancy charges. In this case, the tenant gets access to all the amenities as the owner of the housing unit. These amenities may include parking spaces, swimming pools, gyms, and other common areas. However, the non-occupancy fee may burden them with an additional expenditure.<\/p>\n\n\n\n The significant implication of a non-occupation charge on the housing society is that they receive additional funds, which can be used for various development activities. In the long run, it helps the housing society ensure that the property\u2019s value does not decline over time due to a lack of maintenance and upkeep. <\/p>\n\n\n\n According to the new model bye-laws, the owner of the housing unit is responsible for paying the non-occupancy charges. However, in most cases, homeowners ask tenants to pay the non-occupancy and maintenance charges. Both the parties, owner and tenant, usually enter an informal agreement for this arrangement. <\/p>\n\n\n\n Such an arrangement is convenient because the tenant can pay the non-occupancy and maintenance charges as a single amount instead of two separate payments by the tenant and the owner. Since the non-occupancy charge is only a tiny amount when charged legally, this does not cause major inconvenience to the tenant. <\/p>\n\n\n\n Also, read – Home Loan Part-Prepayment: Working & its Benefits<\/a><\/p>\n\n\n\n While non-occupancy charges in housing society cannot be completely avoided, there are ways to decrease them or check if the right amount is being paid. <\/p>\n\n\n\n In many states, such as Maharashtra, non-occupancy charges cannot be more than 10% of the maintenance charges. To confirm that you are not being overcharged, you should review your state\u2019s co-operative housing laws and your society\u2019s bye-laws.<\/p>\n\n\n\n Most society bye-laws do not require non-occupancy charges if the flat is occupied by close family members. To claim this, official documents along with relationship proof need to be submitted.<\/p>\n\n\n\n You can also avoid paying non-occupancy charges if you show proof of temporary use or declare the occupant as a caretaker. However, these methods need to be genuine and also approved by the society. <\/p>\n\n\n\n If property owners decide to rent out their units in a housing society or residential community, then they have to pay non-occupancy charges. The purpose of the charge is to account for the owner\u2019s non-residency while still holding ownership within the society. <\/p>\n\n\n\n However, this responsibility can be transferred to the tenant if there is a clear agreement between the owner and the tenant. If the tenancy agreement specifically mentions that the tenant will pay the non-occupancy charges, then the tenant is required to bear this cost instead. <\/p>\n\n\n\n Also, read – What Are The Different Fees And Charges On Loan Against Property<\/a><\/p>\n\n\n\n Non-occupancy charges in housing society<\/strong> can not exceed the limits set by the state\u2019s cooperative housing laws. In most states the maximum non-occupancy charge permitted is 10% of the monthly service charges. This rule exists to prevent societies from misusing their authority by imposing unfair or excessive fees on flat owners who do not live in their homes. <\/p>\n\n\n\n For instance, if a society\u2019s monthly service charge is \u20b94,000, the non-occupancy charge cannot be more than \u20b9400. Flat owners have the right to question or legally challenge any charges that exceed this cap.<\/p>\n\n\n\n Service charges are the fees that a housing society collects to manage and maintain shared spaces and services used by residents. These charges cover everyday expenses such as the cleaning of common areas, security services, and electricity for lifts and corridors and the upkeep of the society. Every flat owner has to pay service charges, whether they live in the flat or not, unless the society\u2019s bye-laws state otherwise. Non-occupancy charges in society<\/strong> are usually calculated as a percentage of service charges, making it important for owners to understand them clearly.<\/p>\n\n\n\n Also, read – Notice of Intimation (NOI) Charges for Home Loan<\/a><\/p>\n\n\n\n Non-occupancy charges in society<\/strong> were revised after many societies were criticised for overcharging residents. In June 1997, the Maharashtra government formed a committee to study the issue and based on their recommendation, new guidelines were issued under Section 79A of the Maharashtra Cooperative Societies Act, 1960.<\/p>\n\n\n\n Under the current bye laws, societies must follow Section 79A guidelines, which state that non-occupancy charges cannot be more than 10% of service or maintenance charges. Societies that do not follow these limits can face action under the Consumer Protection Act and the Indian Penal Code.<\/p>\n\n\n\n Non-occupancy charges are relatively small charges levied on property owners by the housing society. If you\u2019re planning to buy a new house to rent out, research thoroughly to ensure that the housing society levies only the legally acceptable amount on you. But that\u2019s not all. When buying a new house, you must also consider the finances to pay for it. A simple solution to your fund requirements is a home loan. Tata Capital<\/a> offers multi-purpose home loan<\/a> with easy eligibility requirements, quick processing, and long repayment tenures. With Tata Capital home loans, you get the most competitive home loan interest rates<\/a> in the market. Visit our website today to learn more!<\/p>\n\n\n\nNon-occupancy charges calculation<\/strong><\/h2>\n\n\n\n
When are non-occupancy charges not applicable? <\/strong><\/h2>\n\n\n\n
What happens if you do not pay non-occupancy charges?<\/strong><\/h2>\n\n\n\n
Implications of non-occupancy charges<\/strong><\/h2>\n\n\n\n
#1 On the property owner<\/strong><\/h3>\n\n\n\n
#2 On the tenant<\/strong><\/h3>\n\n\n\n
#3 On the housing society <\/strong><\/h3>\n\n\n\n
Can tenants pay non-occupancy charges?<\/strong><\/h2>\n\n\n\n
Tips to Avoid Non-Occupancy charges<\/strong><\/h2>\n\n\n\n
Who pays the non-occupancy charges?<\/strong><\/h2>\n\n\n\n
Maximum Non-Occupancy Charges Societies Can Charge<\/strong><\/h2>\n\n\n\n
What are Service Charges<\/strong><\/h2>\n\n\n\n
Legal Actions You Can Take Against Unfair Charges<\/strong><\/h2>\n\n\n\n
Conclusion<\/strong><\/h2>\n\n\n\n