When friends tell me they have found a flat for a certain number, I have learnt to ask a follow-up question: and what is the number after the number? The agreement value is the headline, but it is not what leaves your bank account. Between the government, the bank, the broker, the lawyer, the society and the carpenter, the real cost of a Mumbai flat is reliably and substantially higher.
None of these costs is hidden, exactly. They are just rarely added up in one place before people commit. So let us add them up.
Stamp duty and registration
The largest single extra is stamp duty. In Mumbai, it is 6 per cent of the property's value, a figure that includes the 1 per cent metro cess. It is levied on the agreement value or the government's ready reckoner valuation for that property, whichever is higher, so a bargain price below the ready reckoner rate does not reduce your duty.
Maharashtra has, for some years, offered a 1 per cent concession on stamp duty for women buyers, subject to conditions. The concession and its conditions have been revised before and may be again, so check the current position with IGR Maharashtra before you plan around it, and take advice before putting a flat in one name purely to save duty.
Registration is charged on top, at 1 per cent of the value, capped at ₹30,000. For almost any flat in Mumbai, you will simply pay the ₹30,000.
GST, and why ready flats are different
If you buy an under-construction flat from a developer, GST applies. For most residential flats it is 5 per cent, without the developer being able to claim input tax credit. For flats that qualify as affordable housing under the GST definition, which is based on carpet area and value limits, it is 1 per cent. In Mumbai's price bands, relatively few new flats qualify as affordable, so most buyers should assume 5 per cent.
There is no GST on a ready-to-move flat that has received its occupancy certificate before the sale, and none on a resale flat bought from an individual. This is a real difference and is often the quiet reason a ready flat that looks more expensive turns out to be comparable. Do check how the developer treats parking, floor-rise and other charges, because those may attract GST separately.
Brokerage, society and legal costs
Brokerage in Mumbai purchases is customarily around 1 to 2 per cent of the deal value, and GST applies to the broker's fee. It is negotiable, and it is worth agreeing the percentage in writing before you see the flat you end up buying.
Society charges apply when you buy a resale flat in a cooperative housing society. The society will transfer the share certificate into your name and may charge a transfer premium. State rules cap what a cooperative society can charge, and some societies ask for amounts well beyond that dressed up as donations or development funds. Ask for the society's demand in writing, and check it against the current rules before you pay. You will also typically settle pending maintenance up to the date of transfer, which should be the seller's cost.
Legal due diligence is the cost I would least like anyone to skip. A property lawyer will search title, check the chain of agreements, look for encumbrances and pending litigation, verify the society's no-objection letter and, for new projects, compare the developer's documents with the MahaRERA registration. In Mumbai this typically costs in the tens of thousands of rupees. It is trivial next to the downside.
TDS is not strictly a cost, but it trips people up. When you buy a property worth ₹50 lakh or more, you as the buyer must deduct 1 per cent as tax at source, calculated on the sale consideration or the stamp duty value, whichever is higher, and deposit it with the government on the seller's behalf. It is part of the price, not an extra, but it is your job to get it right.
The loan, the fit-out and the move
The home loan
If you are borrowing, the bank will charge a processing fee, commonly a fraction of a per cent of the loan, sometimes with a cap and sometimes waived during promotional periods. There may be charges for the property valuation, the bank's legal opinion and, if you choose it, loan-linked insurance. Stamp duty on the loan documents themselves is modest but exists.
The larger cost of a loan is, of course, the interest, which is not a one-time expense and does not belong in this tally. But it is worth remembering that the bank will usually lend against the agreement value, not the total cost, and never against stamp duty or interiors. Those come out of your own savings.
Interiors, and moving in
A new flat from a developer arrives with a bare minimum of fittings. A resale flat arrives with someone else's taste. Either way, before you move in, you will probably spend on a modular kitchen, wardrobes, electrical work, lights, fans, air-conditioners, bathroom fittings and paint. In Mumbai, a modest job on a two-bedroom flat can run into several lakh, and a full carpentry-led fit-out into the mid-teens of lakh or more. This is the most elastic line in the budget and the one people most consistently underestimate.
Add a few smaller items: moving, a gas connection, electricity meter transfer, internet installation, and the society's move-in formalities.
A worked example
The following numbers are purely illustrative, rounded for readability, and assume a ₹1.5 crore two-bedroom flat in the suburbs bought with a home loan. Your own figures will differ, and the rates should be checked at the time you buy.
For a ready-to-move resale flat:
- Agreement value: ₹1,50,00,000
- Stamp duty at 6 per cent: about ₹9,00,000
- Registration: ₹30,000
- Brokerage at 1 per cent, plus GST: about ₹1,77,000
- Legal due diligence: about ₹40,000
- Loan processing and related bank charges: about ₹50,000
- Society transfer and incidental charges: about ₹25,000
That comes to roughly ₹12.2 lakh on top of the price, or about 8 per cent, before a single cupboard is built. Add an interiors budget of, say, ₹15 lakh, and the total extra reaches roughly ₹27 lakh, or about 18 per cent above the headline.
For an under-construction flat at the same agreement value, bought directly from the developer, remove the brokerage and society transfer but add GST at 5 per cent, which is ₹7.5 lakh. The extra costs before interiors come to roughly ₹17.7 lakh. With interiors, you are looking at an outlay in the region of ₹1.83 crore for a flat advertised at ₹1.5 crore, and you will also be paying rent or EMIs during construction.
The number after the number
None of this is meant to put anyone off. Buying a home in Mumbai is expensive in every sense, and people do it every day with their eyes open. The trouble only starts when the eyes are open to the price and closed to everything else.
My advice is simple: before you negotiate, write out every line above with your own numbers, and treat the total as the real price. If the flat still makes sense at that figure, you have found a home. If it only made sense at the headline, you have found a very expensive lesson, and it is much cheaper to learn it on paper.
