Decoding Non-Occupancy Charges: Everything You Need to Know

By LODHA

After plenty of back and forth with a horde of brokers and looking at numerous properties, you finally landed on an apartment you deemed worth it. Whether you were simply investing surplus income, diversifying your income, or had to unexpectedly live elsewhere, you put up the flat for rent. While you anticipated the maintenance charges that are associated with owning a flat, you weren't prepared for the extra charges levied on you by the cooperative society. After a little bit of research, you find out that you have to pay non-occupancy charges on the apartment you have purchased. If the extra charges have left you wondering, then here's a complete guide on what non-occupancy charges are, who is liable to pay them, and how they're calculated. 

Meaning of Non-Occupancy Charges

For most of us, there seems to be a considerable amount of confusion when it comes to the non-occupancy charges meaning. Essentially, non-occupancy charges are costs levied by cooperative housing societies on members or flat owners who do not live on their premises. Ergo, the flat or premises are not occupied by the rightful owner. As far as the question of who pays non-occupancy charges is concerned, it is usually levied on members who are not residing in their premises because their flat is occupied by non-family members or is rented out. However, if it has been mutually agreed upon in the tenancy agreement by the tenant and the landlord, the tenant can be made responsible for paying Non-Occupancy Charges.

When Are Non-Occupancy Charges Not Applicable?

According to the rules governing Non-Occupancy Charges, these charges are not imposed under the following circumstances:

- You reside in the premises as your residential unit.

- A close family member (such as parents, spouse, children, siblings, or other close relations) occupies the flat.

- The unit is neither sublet nor left vacant or locked.

Here's an illustration to explain how a society's non-occupancy charges function:

You've been looking for a spacious and luxurious apartment in Mumbai. Looking at the efficient use of space, world-class amenities and prime location, you finally decide on a 3 BHK apartment. Once the sale is complete and you are the rightful owner of the apartment, you find out that you won't be in the city for the next year and decide to rent the apartment while you're away. Since you, the rightful owner of the apartment, will not be occupying it, you will have to pay non-occupancy charges to the cooperative society. On the other hand, if you choose to let your parents move into the apartment while you're away, you won't have to pay any charges. 

Legal Insights on Non-Occupancy Charges

Over the years, non-occupancy charges have been the subject of lengthy debates and discussions. Since there is a dearth of clear guidelines, members and cooperative societies are often caught up in disputes regarding the charges. For this, the rules governing the imposition of non-occupancy charges are outlined in the Non-Occupancy Charges Circular, Maharashtra. As per Section 79A of the Maharashtra Cooperative Societies Act, 1960, the total non-occupancy charge cannot surpass 10% of the maintenance or basic service charge of the society.

Understanding the Non-Occupancy Charges Calculation

When it comes to non-occupancy charges calculation, it is clear that the amount cannot exceed 10% of the service charges. Service charges are levied to pay salaries and allowances to building staff, outgoings of the society office, fees to committee members, stationery and printing costs and electricity charges. You can find the service charges in the monthly maintenance information. If you have and use a parking space inside the society's premises, then this parking area is also considered a component of non-occupancy charges. However, if you do not have a vehicle or designated parking space, you don't have to pay for this component. 

Say, for instance, out of the monthly maintenance due, the service charges for your apartment amount to Rs 3000, then you are due to pay a non-occupancy charge of Rs 300 i.e. 10% of the service charges. Remember that non-occupancy charges are due every month. In case, you as a homeowner, fail to pay non-occupancy charges, you will be served a reminder notice by the society. The society also has the power to declare you as a defaulter. Under specific circumstances, the society may commence legal proceedings to recover the outstanding amount.

One of the key things to keep in mind regarding non-occupancy charges is that they tend to vary from state to state. So, the rate of calculation and exemptions may depend on which state you live in. To ensure that you avoid any legal hassles, have complete and free title to your apartment, make sure to comply with regulations and pay non-occupancy charges on time. You can keep track of the regulations yourself or seek professional help from lawyers and brokers.