Planning to buy property? Must know these 8 hidden Costs

The Festive season has marked its entry and developers are already wooing the home buyers by offering various freebies and attractive offers. Perhaps, this is the best season, when several homebuyers look to invest in property. However, there are certain things property buyers must know beforehand. One of the important factors among all is the hidden cost.

8 hidden Costs of property

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A property purchase is divided into two parts:

  • The cost to be paid to the seller

  • The statutory and legal cost to be paid to the government.

Among the two, the major part of your investment (80-85%) goes to the property seller or developer, on the other hand, the rest is paid to the government as stamp duty and other charges.

Scroll down this blog and get to know about 8 different hidden costs associated with the property investment.

Basic Cost

It is primarily that basic price which is to be borne by the property buyer. It is computed by multiplying carpet area with per sq. ft. price.

Goods and Service Tax (GST)

GST is an indirect tax that is levied on the supply of goods and services. However, in case of the real estate market, GST is charged on under-construction projects over and above the cost implications put forth by the developer.

Currently, GST on under construction property is 12% of basic sale price of the property. For affordable housing, it is 8%.

Stamp Duty and Registration cost

Stamp Duty is levied on all property transactions and is determined by the price of the property at the time of registration. It also varies on the circle rates of the region. On the other hand, registration charges are mandatory under section 17 of the Registration Act of the Indian Constitution. It applies to all immovable properties and is based on the market value or sale value of the property.

While stamp duty charges vary across states, registration charges plus other surcharges range between 5-10%. Apart from them, there are other charges also which a buyer has to pay to the lawyers, notaries to carry on the paperwork during the purchase.


A brokerage fee is a fee charged by a broker to execute transactions or provide specialized services. All the brokers charge brokerage fees for services such as purchases, sales, consultations, negotiations, and delivery. Examples of such fees include financial services, insurance, real estate, and delivery services.

However, many buyers did not know that an amount of brokerage fees is also paid by them to the property agent against consultation, negotiation and final transaction. Usually, this fee is secured from the total deal amount.

Builder charges

Apart from the above, developers also charge several other fees which include parking charges, infrastructure development charges including local water, electricity, maintenance, and other amenities, power back up, preferential location charges in case of premium view or floor-rise costs etc. So, a property buyer has to shell out extra money for all these facilities while buying a home.

Miscellaneous charges

A property buyer cannot neglect several other miscellaneous charges that have to borne by them during property purchase. Although they are not much high in value, you cannot abandon them too. TDS of 1% for properties worth more than Rs. 50 lakhs, legal advisory, documentation charges, loan processing etc. are some examples of miscellaneous charges.

Property Insurance

Although not necessary, it is always said that your property must be insured in order to save it from unfortunate circumstances, natural calamities etc. Property insurance is effective only for a particular tenure which needs to be renewed with time. So, to keep the property secure, you have to pay a certain monthly amount which is based on the layout of the house; type of construction materials; and location of the property.

Property Tax

A property tax is an annual tax which is deposited to the civic body that has jurisdiction in that particular area. Whether public, private, residential or commercial, property tax is levied on all the buildings. It is the responsibility of every citizen to pay property tax timely.