Despite the rule, developers are charging transfer fees   

June 9, 2010

The Maharashtra government had ruled in August 2006 that developers have no right to charge transfer charges on a flat till a cooperative society is formed. However, this notification is being openly flouted

The housing department of the Maharashtra government had passed an opinion in August 2006 stating that a developer has no right to recover transfer charges at the time of sale of a flat by the investor till a cooperative society is formed. But it is an open secret that most builders are blatantly violating the rule and are charging Rs1,000 (or more) per sq ft as transfer fees.

"The Maharashtra housing department has passed the notice long back but builders are not following it. The issue has remained in the industry since a long time but the official authorities are not taking action against such wrong deeds of the developers," said Vinod C Sampat, advocate and proprietor, Vinod C Sampat and Co.

He further added, "There is a lack of transparency, developers are collecting the transfer fee. This is a way of extortion."

Transfer fee is a one-time payment made to the residential cooperative society when there is a case of transfer of ownership. However, the society can be registered only when 60% of the flats are sold. A ceiling of Rs25,000 has been fixed by the registrar of cooperative societies as transfer fee while local developers have been charging as much as Rs1,000 per sq ft. This is an illegal act being carried out by builders.

Property prices are sky-high in Mumbai-on the top of that, developers are charging such a huge fee for transferring the ownership of the flat. Currently property prices in Worli (central Mumbai) range between Rs26,000 per sq ft to Rs37,000 per sq ft while in Lower Parel (central Mumbai) and Bandra (suburban Mumbai) they range between Rs18,000 per sq ft to Rs23,000 per sq ft.  

"If builders charge a nominal fee of Rs25,000, it is fine because it involves an administrative cost, but to charge a certain sum per sq ft is not fair," said Pranay Vakil, chairman, Knight Frank (India) Pvt Ltd.
— Moneylife Digital Team