What can be a fair system for common expense for housing societies

714 votes

Dear sir,

What you can do is that you all can mutually agree upon one thing which ever is suitable to you all. You can make an agreement getting it signed by each and every person so that the person does not back on later.

As a resident of an apartment complex, you are required to pay a monthly charge for the upkeep and maintenance of your society. This maintenance charge is usually arrived at taking into account the monthly expenses plus an additional amount that the society can save for major repairs or maintenance that will arise at a later date. Every housing society decides on a method that it believes is a fair and reasonable way of calculating the amount for each member. While this may sound like a simple agenda, at times, it’s not so simple to carry out due to the different ways in which the amount can be calculated. Here, we present some of the popular ways in which societies calculate maintenance charges along with their respective pros and cons:
Pay per Square Feet:

This is the most common and popular way of calculating maintenance fee. In this type of calculation, a fixed rate is charged per super built up area of the apartment that you own. For example, if the fixed rate is Rs. 2 and you own a 1000 sq. ft. apartment, your maintenance charge will be Rs. 2,000 per month. In this type of arrangement, the bigger the area of the house, the higher you pay as maintenance charge. So in apartment complexes with apartments of varying sizes, you’ll have people paying different amounts per month as maintenance charge.

Pros: It is easier to calculate. This method is one of the most commonly used methods in apartment complexes.
Cons: While this method is popular, it is unfair on people owning larger houses as some of the facilities that they use like a lift, the garden, the club, security services etc. are equally shared among all members irrespective of the size of the flat.

Combined Maintenance Charges:

In this method, the maintenance amount is divided into two parts. Part 1 includes all expenses that are equally utilized by members, irrespective of the size of their apartments. This includes the cost of maintaining lifts, salaries for security and other staff, costs for stationery, property taxes of society office, conveyance, meeting charges, audit fees, legal charges, common electricity charges, etc. The other part is calculated on the basis of the area of the flat and includes items like property taxes, water charges, etc. This is also the method advocated by the Maharashtra Cooperative Societies Model Bye-Laws.

Of this amount collected, everything is an immediate outgo for the society except for the amount collected as sinking fund. This amount is used when the society needs funds to carry out major repairs or maintenance. So instead of collecting the amount from the members at one time, the society can dip into the sinking fund that has grown over the years. The bye-laws recommend collecting at least 0.25% per annum of the cost of construction of each apartment (excluding the cost of the land) as sinking fund corpus. The AGM can vote to collect a higher amount than this if required. The amount is calculated on size of the apartment. This amount remains with the society until any major repairs has to be undertaken. In case the owner sells the apartment, this money is not returned to him/her.

Pros: Aims to be fair on all parties involved. The members owning a bigger apartment is not penalized based on the size of the apartment. All other expenses which are related to the size of the apartment are charged as per dimensions of the apartment.
Cons: There can be lot of differences of opinion on the items that should be charged as per size of the apartment.

Equal Maintenance Fee:

This method is favoured in apartment complexes where the size of each apartment is the same. Here, the fixed amount is arrived at after calculating the monthly expenses plus the amount to be kept aside in the sinking fund and dividing the total by the number of apartments in the society. As costs increase, this amount gets revised in the Annual General Meeting. For complexes where apartments are of different sizes, this method will be unfair and is usually not accepted by the members.

Pros: Easy to implement in societies with same-sized apartments.
Cons: Unfair to smaller apartment owners in societies with different-sized apartments. The greater the difference in size of the apartments, the higher will be the discrepancies in the maintenance charges between the members.

In all methods, it is recommended that the maintenance amount calculation be revisited at least once in six months based on the actual expenses incurred in the past 6 months and the contingency amount that the association would like to maintain for any exigencies.

Advocate Siddhant Sharma LawRato

602 votes

As you are leaving in the co-operative housing society and taking benefit of all the amenities or not you need to pay all the expenses of the society without considering whether you are using it or not.

Advocate Bharat Pandirao Pawar LawRato