Initially, housing societies were used to impose huge non-occupancy charges on the house or flat owners. But now as per government guidelines, non-occupancy charges should be 10% of the applicable service charges. Read this article to know about non-occupancy charges calculation, exceptions, circulars, and court judgments.
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What are Non-Occupancy Charges?
If the ownership of the property is provided by the developer to the owner but the owner doesn’t reside there then non-occupancy charges are imposed.
These charges can only be imposed if the property is provided on lease by the flat owner.
If the family members of the flat owner residing in the house or remained locked then non-occupancy charges are not applicable.
Previously there were various complications due to the absence of these guidelines. Many disputes have happened between society and its respective members.
Flat owners were imposed huge charges by society. And society justifies that it is because flat owners provide property for lease. And earning great rental amounts.
And circular about Non-occupancy charges solved all of these issues.
Criteria to impose Non-Occupancy Charges
As non-occupancy charges are levied only if the non-family members of the flat owner are residing in the house.
So the criteria for non-implication of non-occupancy charges are:
- The flat owner is living in the house
- The flat or property is unoccupied or locked.
- The flat owner’s family members are residing in the flat.
Non-Occupancy Charges Calculation Process
Section 79A of the Maharashtra Co-operative Societies Act 1940 states that non-occupancy charges should not surpass 10% of the applicable service charges of the society.
This is mentioned in the circular provided by the government of Maharashtra.
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What are service charges?
Service charges are considered as salaries, outgoings for the society office, allowances for personnel, sitting charges for committee members, common electric charges, etc.
This is based on bye-law 68 of the new model bye-laws.
Ex. Mr. Raj stays in Mumbai. He received a total maintenance bill from the society of amount Rs. 3500 for June month. Out of it, the service charge is Rs. 2500.
So, society will impose Rs 250 as the non-occupancy charges for June month. As it is 10% of Rs. 2500.
What if the flat owner doesn’t pay non-occupancy charges?
In case the flat owner doesn’t pay the non-occupancy charges, the housing society will provide them a reminder notice.
If still the charges are not paid then the owner will be labeled as a defaulter. And society will not provide a no-dues certificate for them.
You can check out stamp duty and registration charges in Maharashtra to know the latest updates about charges imposed while buying a house.
Non-Occupancy Charges Circular from Government
In Maharashtra, housing societies are governed and supervised by the Maharashtra Co-operative Housing Societies Act, 1960 (MCS Act 1960).
This act mentions the legal and regulatory processes to supervise the affairs of housing societies.
MCS Act 1960’s, Section 79A clarifies that state government to provide circulars mentioning guidelines for the societies functionalities.
Section 79A specifies and clarifies the imposition of necessary non-occupancy charges by housing societies to the members.
If the guidance stated under section 79A is not maintained by the society then strict action will be taken.
It may also lead to the removal of the society office workers.
Mont Blanc Co-operative housing society challenged section 79A in the Bombay High Court. It stated that the rules mentioned non-occupancy charges as illegitimate. And it also doesn’t follow up the Constitution of India’s Article 19.
Further, it stated that the circular is an unnecessary interference with the processes of housing societies.
Whereas, the Maharashtra government stated that the circular saved members from unnecessary charges from the housing societies.
The circular also stands for the right to property under Article 300A of the Constitution. This is because the flat is the personal property of a member. And society doesn’t have the right to look at the use of the property.
The state argued that impose of unnecessary non-occupancy charges will impact the rental housing market in a wrong way.
So, circular will be proven beneficial in various ways for the housing sector.
Non-Occupancy Charges Supreme Court Judgement
A division bench that includes justice BH Marlapalle and JH Bhatia praised the 79A circular. As it states that the housing society can charge just 10% of the applicable service fee as non-occupancy charges.
And this circular made a uniform non-occupancy charge across Maharashtra.
But the judgment of the court comes with little modification. The judgment clarified that exceptions from paying applicable non-occupancy charges will be applied to only the flat owner and his/her family members.
FAQs
| What are the exceptions for non-occupancy charges?
The flat owner is living in the house, and the flat is non-occupied or vacant, both these scenarios are exceptions for non-occupancy charges. |
| Who needs to pay the non-occupancy charges?
The house owner is responsible for paying non-occupancy charges to the housing society. As this only needs to be paid if the property is on lease. |
| What is the rate of non-occupancy charge?
The government has kept the rate of non-occupancy charges at 10% of service charges. Whereas, service charges cover salaries, outgoings for the society office, sitting charges for committee members, common electric charges, etc. |
