Non-Occupancy Charges in Housing Societies: Meaning, Rules and Calculation in India

Non-occupancy charges are additional fees levied by housing societies when a flat is rented out or remains vacant, and is not occupied by the owner or their immediate family. Non-occupancy charges help societies manage expenses fairly, with rates typically set at 10% of the monthly service charges. In some cases, non-occupancy charges in society may vary depending on society's rules. Legal provision under the Maharashtra Cooperative Societies Act 1960 ensures proper calculation, standardisation, and prevents the misuse of these charges.

State-Wise Non-Occupancy Rules: Maximum Rates Allowed

Non-occupancy charges vary across states, with maximum percentages and specific rules outlined in the respective cooperative society regulations.

What Are Non-Occupancy Charges?

Non-occupancy charges are fees that housing societies impose on flats that remain vacant or are rented out, instead of being occupied by the owner. Non-occupancy charges in housing societies help cover maintenance, utilities, and shared expenses, ensuring all residents contribute fairly, even if some flats are unoccupied. Let’s understand it in  more detail:

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When Are Non-Occupancy Charges Not Applicable?

As per Non-Occupancy Charges rules, a charge for non-Occupancy is not levied if: -

• You are using the premises as a residential unit for yourself. 
• A close member of your family (parents, spouse, children, siblings including other close relations) is occupying the flat.
• The unit is not sublet, remains vacant or locked. 

The finer print defines these circumstances in detail. In some cases, if the residents are availing commercial benefits from a property in a society, the society has the right to apply a non-Occupancy Charge along with the maintenance bill. Non-Occupancy Charges on sinking funds are not included along with other repair funds and taxes.

How To Calculate the Non-Occupancy Charges?

Non-occupancy charges apply when a flat remains vacant, locked, or rented out to non-family members. Housing societies calculate these charges on service charges only, not on total maintenance. Most states allow a fixed percentage. Maharashtra caps it at 10 percent of service charges. These charges help societies cover the costs of maintaining common areas and services.

Step-by-Step Calculation of Non-Occupancy Charges

• Step 1: Identify total monthly maintenance
  • Check the maintenance bill issued by your housing society.
• Step 2: Separate service charges
  • Remove property tax, sinking fund, repair fund, and other statutory charges. The remaining amount is the service charge.
• Step 3: Check the applicable percentage
  • Refer to society bylaws or state rules. Most societies apply up to 10 percent.
• Step 4: Calculate the non-occupancy charge
  • Multiply the service charge by the approved percentage.

Formula to Calculate Non-Occupancy Charges

• Non Occupancy Charges = Service Charges × Applicable Percentage
• Example: Monthly service charges: ₹5,000
  • Applicable non-occupancy rate: 10 %
  • Hence, Non occupancy charges = ₹5,000 × 10 percent = ₹500

Key Considerations for Flat Owners

• Legal cap: In states like Maharashtra, societies cannot charge more than 10 percent of service charges.
• Who pays: The flat owner pays the charge. Owners may recover it from tenants through the rent agreement.
• When it applies: Charges apply when the flat stays vacant, locked, or rented out. Charges do not apply when the flat is occupied by the immediate family.
• State variation: Rules differ from state to state. Some states restrict or discourage non-occupancy charges entirely. Always verify local laws and society bylaws.

What Is The Criteria for Non-occupancy Charges: Cooperative Housing Societies?

A Non-Occupancy Charge in Society is applicable under the circumstances of a vacant or rented flat. A cooperative Housing Society has the right to levy:

• Non-occupancy charges for a vacant flat
• Non-occupancy charges for a rented flat
• Non-occupancy charges for commercial premises

How Much Can Societies Charge as Non-Occupancy Charges?

Housing societies usually limit non-occupancy charges to a fixed percentage of monthly service charges. In most states, this limit stays around 10 percent of service charges, not the full maintenance amount. The intent is to recover basic society expenses without unfairly penalising flat owners who do not live in the property. These charges apply only to services linked to day-to-day society operations. Societies cannot calculate them on property tax, water charges, or sinking fund contributions as clarified by the Supreme Court.For example, if the service charge is ₹3,000, the non-occupancy charge cannot exceed ₹300, ensuring fairness and compliance.

What Non-Occupancy Charges Usually Cover?

• Salaries of security staff, cleaners, and supervisors
• Society office expenses, such as stationery and record keeping
• Common area electricity for lifts, staircases, and lighting
• Administrative and committee-related expenses

What Happens If the Flat-owner Refuses to Pay Non-Occupancy Charges?

In case the owner of a unit fails or refuses to pay the Non-Occupancy Charges, the housing society can send a reminder notice to the owner. The Managing Committee has the right to declare the owner a ‘defaulter’ and withhold the no-dues certificate. In certain circumstances, society can initiate a legal proceeding to collect the withheld/due amount. 

Difference Between Maintenance Charges and Non-Occupancy Charges

Maintenance charges and non-occupancy charges are often confused, but they serve different purposes. NOC charges in society are specifically for vacant or rented flats, while maintenance covers all residents.

Government Resolution on Non-Occupancy Charges?

The government has issued clear guidelines for society non-occupancy charges to ensure fairness and prevent excessive fees by housing societies for unoccupied or rented flats. In some states like Karnataka, the government has issued direct guidelines against the collection of NOC charges. The points below will explain things in a better way:

• The Maharashtra Government resolution states that non-occupancy charges cannot exceed 10% of the monthly service charges or maintenance amount.
• Societies must apply uniform rates to all members, whether the flat is vacant, rented or used by relatives.
• The rule is based on Section 79A of the Maharashtra Cooperative Societies Act, ensuring transparent and fair fee collection. [2]

Non-Occupancy Charges: Court Judgement

The introduction of Section 79A under the Maharashtra Cooperative Societies Act, 1960, played a major role in regulating non-occupancy charges and ensuring fair practices among housing societies.

• The state government issued a circular under Section 79A, capping non-occupancy charges and making it mandatory for societies to follow the rules.
• The Mont Blanc Cooperative Housing Society challenged this rule under Article 226 claiming it violated their freedom under Article 19 of the Constitution. [3] [4]
• The Supreme Court upheld the circular in the public interest, revising the final bylaws and setting clear rules for the calculation and collection of non-occupancy charges.

Impact of Non-Occupancy Charges on Rental Yield 

• Reduces net rental income: Non-occupancy charges increase monthly outgo, which lowers actual profit from rent.
• Lowers rental yield percentage: Higher maintenance costs reduce net returns and impact yield calculations.
• Adds burden during vacancy: Owners must pay these charges even when the flat stays vacant.
• Affects tenant pricing: Passing charges to tenants raises monthly rent and may affect demand.
• Needs clear rent agreement: Without a written clause, the owner bears the cost.
• Varies by location: State rules and local caps decide the final impact on rental income.

How Can NoBroker Help With Non-Occupancy Charges?

NoBroker helps flat owners save money when their property is empty by offering rental and legal services. The platform makes it easy to find verified tenants, reducing vacancy time and associated costs. NoBroker also helps with rental agreements, property paperwork, and legal advice for society issues. With services such as property management, packing and moving, and interior design, NoBroker offers a reliable, comprehensive housing solution.

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