Everything you Need to Know About Non-Occupancy Charges in Cooperative Societies
Mar 24, 2020 Home Trading Steps
Housing societies levy non- occupancy charges on the flat owners who do not reside on the campus. The said flat or unit could be rented out or remain vacant and it is upon the society to impose non-occupancy charges on the owner or not.
How non-occupancy charges are calculated?
Under Section 79A of Maharashtra Cooperative Societies Act, 1960, a circular was issued by the government of Maharashtra which stated that the amount of non-occupancy charges cannot exceed 10 percent of the service charges of the societies (excluding the municipal taxes).
Criteria of levying non- occupancy charges
If the flat owner is occupying the flat by himself, then there is no need for applying the non- occupancy charges. If the flat is occupied by any of his relatives like son, daughter, or grandchildren, then the non-occupancy charges will not be levied as well.
What are the applicable charges for non- occupancy?
Before the Maharashtra government capped the non-occupancy charges at 10 percent, the societies levied loft charges on the owners. They would charge as much as Rs 9 per square feet as the non- occupancy charges. This in-turn soared the cost of rent and eventually the property in the society. NRIs who invest in Indian real estate suffered the most due to such high prices. Sometimes the owners ended up paying more than Rs 2 lacs per year as the non- occupancy charges.
The non-occupancy charges became a headache for the homeowners and became the tool for harassment by the societies.
Government’s effort towards non- occupancy charges
In Maharashtra, the housing societies are governed by the Maharashtra Cooperative Housing Societies Act, 1960. The Act regulates the legal and regulatory framework to supervise and administer the affairs of the housing societies. If there is any dispute between the housing society and the owner, then the same can be adjudicated under the Act.
Section 79A of MS Act 1960, gives the state government the power to issue circulars prescribing the guidelines for the societies. They circulars issues are legally binding. Section 79A was invoked by the government of Maharashtra to stop the societies from levying large amount as non-occupancy charges. The charges are now capped 10 percent and any violation of the same by the societies will result in legal action and may also include the removal of the societies office bearer.
Non-occupancy circular and Maharashtra Cooperatives Societies Act
Section 79A was challenged by Mont Blanc Cooperative Housing Societies in Bombay High Court claiming that the cap on the non-occupancy charges are unconstitutional and violation of Article 19 of the Constitution of India.
The state of Maharashtra argued that the cap on the non- occupancy charges are to protect the rights of the minority from the exploitation from the majority. The circular also protects the right to property under Article 300A of the constitution. The state also argued that charging high non- occupancy charges not only increase the rent prices but also undermines the real estate of the country.
The judgement by the court
The court gave the judgement with slight modification. They reduced the scope of the levy of the non-occupancy charges. If the flat owner is not residing in the flat but their immediate relative namely son, daughter or grandchildren are living in the flat then the owner is exempted from paying the non- occupancy charges.
Summary
The non- occupancy charges are levied by the housing societies if the owner of the flat is not living in the flat and the property is either vacant or rented out. The exemption of non- occupancy is for the owner’s immediate relatives like son, daughter or grandchildren. The court has capped the non-occupancy charges at 10 percent after the societies started asking the owners rampant charges for the same.
How non-occupancy charges are calculated?
Under Section 79A of Maharashtra Cooperative Societies Act, 1960, a circular was issued by the government of Maharashtra which stated that the amount of non-occupancy charges cannot exceed 10 percent of the service charges of the societies (excluding the municipal taxes).
Criteria of levying non- occupancy charges
If the flat owner is occupying the flat by himself, then there is no need for applying the non- occupancy charges. If the flat is occupied by any of his relatives like son, daughter, or grandchildren, then the non-occupancy charges will not be levied as well.
What are the applicable charges for non- occupancy?
Before the Maharashtra government capped the non-occupancy charges at 10 percent, the societies levied loft charges on the owners. They would charge as much as Rs 9 per square feet as the non- occupancy charges. This in-turn soared the cost of rent and eventually the property in the society. NRIs who invest in Indian real estate suffered the most due to such high prices. Sometimes the owners ended up paying more than Rs 2 lacs per year as the non- occupancy charges.
The non-occupancy charges became a headache for the homeowners and became the tool for harassment by the societies.
Government’s effort towards non- occupancy charges
In Maharashtra, the housing societies are governed by the Maharashtra Cooperative Housing Societies Act, 1960. The Act regulates the legal and regulatory framework to supervise and administer the affairs of the housing societies. If there is any dispute between the housing society and the owner, then the same can be adjudicated under the Act.
Section 79A of MS Act 1960, gives the state government the power to issue circulars prescribing the guidelines for the societies. They circulars issues are legally binding. Section 79A was invoked by the government of Maharashtra to stop the societies from levying large amount as non-occupancy charges. The charges are now capped 10 percent and any violation of the same by the societies will result in legal action and may also include the removal of the societies office bearer.
Non-occupancy circular and Maharashtra Cooperatives Societies Act
Section 79A was challenged by Mont Blanc Cooperative Housing Societies in Bombay High Court claiming that the cap on the non-occupancy charges are unconstitutional and violation of Article 19 of the Constitution of India.
The state of Maharashtra argued that the cap on the non- occupancy charges are to protect the rights of the minority from the exploitation from the majority. The circular also protects the right to property under Article 300A of the constitution. The state also argued that charging high non- occupancy charges not only increase the rent prices but also undermines the real estate of the country.
The judgement by the court
The court gave the judgement with slight modification. They reduced the scope of the levy of the non-occupancy charges. If the flat owner is not residing in the flat but their immediate relative namely son, daughter or grandchildren are living in the flat then the owner is exempted from paying the non- occupancy charges.
Summary
The non- occupancy charges are levied by the housing societies if the owner of the flat is not living in the flat and the property is either vacant or rented out. The exemption of non- occupancy is for the owner’s immediate relatives like son, daughter or grandchildren. The court has capped the non-occupancy charges at 10 percent after the societies started asking the owners rampant charges for the same.
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