In Indian cities, many people own flats in housing societies. While some live in them, others rent them out. If you rent your flat, the housing society may charge an extra fee called a “non-occupancy charge.”
This article explains what non-occupancy charges are, who pays them, how they are calculated, and the legal guidelines surrounding them. It also highlights how to handle disputes and provides tips for flat owners.
Table of Contents
What Are Non-Occupancy Charges?
Non-occupancy charges are additional fees collected by housing societies from flat owners who do not reside in their flats. These charges typically apply when a flat is rented out to a tenant.
Societies argue that rented flats lead to extra use of resources. This includes increased maintenance, wear and tear, and administrative work. As a result, societies impose these charges to offset the additional costs.
Why Are Non-Occupancy Charges Levied?
Housing societies justify these charges for several reasons:
- More frequent use of lifts and common areas
- Higher security monitoring
- Greater wear and tear
- Increased paperwork and tenant verification
- Frequent tenant turnover
These charges aim to balance additional expenses without burdening resident owners. Some societies also claim that tenants are less involved in community affairs, creating more administrative challenges.
Who Is Liable to Pay Non-Occupancy Charges?
The flat owner is responsible for paying non-occupancy charges. Even if tenants pay rent and maintenance to the owner, the society deals directly with the owner.
Tenants cannot be asked to pay these charges directly to the society. The legal relationship is between the society and the owner, who is its registered member.
Owners must ensure timely payment of all dues to avoid penalties or restrictions on services.
How Non-Occupancy Charges Are Calculated
Most societies follow a standard formula. They charge up to 10% of the monthly service charges as non-occupancy fees.
Example: If the monthly service charge is Rs. 3,000, the non-occupancy charge can be up to Rs. 300.
This limit is often guided by state housing rules. For instance, Maharashtra strictly follows the 10% cap.
Charges must be discussed and approved during Annual General Meetings (AGMs). Flat owners should always ask for a detailed breakup of charges.
Legal Guidelines by RERA and Housing Society By-Laws
The Real Estate (Regulation and Development) Act (RERA) promotes transparency in all housing-related charges. It requires that fees be declared openly and fairly.
In Maharashtra, the Co-operative Housing Society Model Bye-laws state:
- Non-occupancy charges must not exceed 10% of service charges
- Charges cannot include property tax, electricity, or water bills
Other states such as Gujarat, Karnataka, and Tamil Nadu have similar rules. Additionally, the Supreme Court has ruled against arbitrary charges imposed by societies. All charges must comply with legal norms.
Difference Between Maintenance and Non-Occupancy Charges
| Feature | Maintenance Charges | Non-Occupancy Charges |
|---|---|---|
| Who Pays | All flat owners | Only owners who rent out flats |
| Purpose | General upkeep of property | Extra admin and monitoring costs |
| Frequency | Monthly | Monthly |
| Basis | Carpet area or flat size | Service charge percentage |
| Legal Limit | No specific limit | Capped at 10% of service charges |
Maintenance charges apply to all. Non-occupancy charges are additional and only apply when flats are rented out.
How Much Can a Society Charge Legally?
According to legal rules:
- Non-occupancy charges cannot exceed 10% of the service charge
- They should not include taxes or utility bills
For example, if the service charge is Rs. 4,000, the non-occupancy charge should not be more than Rs. 400.
If a society charges more, owners can raise objections and file complaints. All charges must be approved in AGMs.
Exemptions: When Are Non-Occupancy Charges Not Applicable?
Non-occupancy charges may not apply in these cases:
- Close relatives (parents, children) stay in the flat
- The flat remains locked and unused
- A relative stays without paying rent
- A company-owned flat is occupied by its employee
Even in such cases, societies may ask for written proof. They cannot impose charges based on assumptions. Written notices and proper communication are essential.
Disputes Around Non-Occupancy Charges: Common Issues
Common disputes include:
- Charging more than the legal limit
- Lack of prior notice
- Denial of basic amenities to tenants
- Unjustified refusal of NOCs
Such actions are against the law. Flat owners can file complaints with the Registrar of Co-operative Societies, consumer courts, or approach RERA.
Societies must act fairly, follow due process, and not discriminate against tenants or owners.
Rights of Tenants and Flat Owners
Tenants are entitled to:
- Full access to amenities
- Equal treatment in the society
- Peaceful use of the rented premises
Flat owners have the right to:
- Ask for a clear breakdown of charges
- Access society by-laws
- Attend and vote in AGMs
- Raise objections against unfair fees
Societies cannot restrict services to tenants or demand unlawful payments. All rules must be in writing and shared transparently.
How to Raise Objections or Clarify Charges
To resolve issues related to non-occupancy charges:
- Submit a written request to the society secretary
- Ask for AGM meeting minutes and the relevant resolution
- If unsatisfied, file a complaint with the housing registrar
- Approach RERA or a legal expert if necessary
- Maintain copies of rent agreements and receipts
Written communication ensures accountability and helps avoid misunderstandings.
Non-Occupancy Charges in Maharashtra and Other Key States
Maharashtra: Enforces the 10% cap strictly with clear by-laws. Many legal cases and rulings originate here.
Gujarat and Karnataka: Follow similar rules. Charges must be passed in AGMs.
Delhi NCR: Charges vary based on builder societies and RWAs. No fixed state-wide rule.
Tamil Nadu and Telangana: Refer to local RERA and housing guidelines. Societies must follow state laws.
Each state may have unique interpretations. Flat owners should consult their local housing regulations.
Impact of Non-Occupancy Charges on Rental Yield
These charges reduce rental income. Here’s an example:
- Rent: Rs. 25,000/month
- Maintenance: Rs. 2,500
- Non-occupancy: Rs. 250
- Taxes and TDS: Rs. 1,000
Net income: Rs. 21,250/month or Rs. 2,55,000/year
Over time, these deductions can impact the profitability of rental investments. Owners must consider all costs before setting rent.
Tips for Owners Renting Their Property
- Review society by-laws before leasing
- Clarify maintenance and other charges upfront
- Mention all responsibilities in the rent agreement
- Notify the society about the tenant in writing
- Attend AGMs to stay informed
- Settle all dues before tenant vacates
- Keep records of payments and communication
Platforms like Openplot help owners list verified properties and ensure transparency. Openplot also supports buyers and tenants in making informed decisions without brokerage fees.
Conclusion
Non-occupancy charges are legal and common in housing societies. However, they must be reasonable, capped, and clearly communicated.
Flat owners should understand their rights and responsibilities to avoid disputes. Societies, too, must follow legal rules and treat all members fairly.
For safe and hassle-free property transactions, use trusted platforms like Openplot. Understanding these charges and your legal rights helps you protect your investment and maintain good relations in your housing society.
Frequently Asked Questions
Q. Can a society charge more than 10% as non-occupancy charges?
A. No. As per housing by-laws in most states (like Maharashtra), societies cannot charge more than 10% of the service charges. Any amount beyond this is illegal.
Q. Do non-occupancy charges apply if the flat is locked and not rented?
A. Usually, no. If your flat is vacant and not generating rental income, societies typically do not charge non-occupancy fees. Written intimation to the society is essential.
Q. What proof is needed to avoid non-occupancy charges?
A. You may need to submit a self-declaration, ID proof of the occupant (if not a tenant), and utility bills to prove that the flat is not under tenancy.
Q. Can a society deny services if non-occupancy charges are unpaid?
A. No. Denying essential services like water, lift, or electricity is illegal. Societies must follow legal procedures for recovery but cannot harass owners or tenants.