All about External Development Charges!

Real estate developers in Haryana owe close to Rs 21,679 crore in additional development costs (EDC) and infrastructure upgrading fees (IDC). This amount is the 15 percent yearly penalty that those developers have accrued on top of the actual fee as a result of their inability to pay the bill on time. In actuality, at the EDC, about 80% of arrears are considered a penal hobby, and at the IDC, the percentage has exceeded 100%.

In India, the typical cost of buying an apartment in a housing society includes several ancillary expenses that significantly increase the asset’s principal charge. The clients’ inability to opt out of the associated fees is what makes the situation worse. One such supplementary cost is the exterior improvement fee (EDC).

A developer must ensure that a housing project provides a lot of municipal facilities for the consumers to live there. These include basic services including sewage and drainage systems, solid waste management and disposal, roads and street construction, landscaping, etc. The builder must pay an amount known as the EDC to the local civic body to use such services. The EDC is a one-time fee that is paid by the developer to the local government when they are granted permission to carry out the aforementioned upgrading works. This EDC is then given straight to the home consumers.

The Real Estate (Regulation and Development) Act of 2016 recognizes this charge (RERA). Roads and street structures, landscaping, water supply, sewage and drainage structures, power supply, transformers, substations, solid waste control, and disposal, and “every other painting that could need to be performed in the outer edge of, or outdoors an undertaking for its benefit” are all considered to be outside improvement works and may ultimately entice EDC, according to the law.

EDC is also a significant source of revenue for local government. However, builders frequently forget to properly schedule their EDC charges. For instance, chief minister Manohar Lal Khattar indicated in Haryana’s budget for 2020–21, which was unveiled in February 2020, that several developers, mostly in Gurgaon and Faridabad, still owed the national government more than Rs 10,000 crores in EDCs.

The additional burden will unavoidably be shared by the majority of the asset holders inside the undertaking if the builder fails to pay those charges on time and is also required to pay a penalty.

EDC is often assessed in the project’s built-up location. Customers are required to pay additional expenses above the in-line sq the charge of the assets since those prices vary among jobs and developers. However, one important factor in determining the EDC is the size of the rental. In any event, Vikas Bhasin, CMD Saya Group, notes that the EDC may potentially account for up to 10% of the value of the unit. Different circumstances allow the EDC to increase the rental rate by 15% to 20%.

Even if we issue inside the lowest range of the EDC, the client may be asked to pay an additional Rs. 5 lakhs (10% of Rs. 50 lakhs) as the EDC, for example, if the unit’s initial price had been Rs. The consumer will need to pay an additional Rs. 7.55 lakhs or Rs. 10 lakhs, depending on whether the developer is charging 15% or 20% of the unit’s worth as the EDC.

Customers are advised to contact the local government to learn about the general EDC in the area. In this manner, it may be best to avoid paying any additional fees the builder may want that fall under the purview of EDC.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.

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