Criteria for Apartment Maintenance Charges: Flat-wise or Square Feet-wise?
In the realm of residential and commercial property management, the method of charging maintenance fees is a critical aspect that often leads to discussions and debates among owners, residents, and property managers. One common area of contention is whether maintenance charges should be assessed based on the number of flats or the square footage of the unit. This article explores the pros and cons of both approaches to help determine the most effective method for calculating maintenance costs.
Understanding CAM: Common Area Maintenance
Common Area Maintenance (CAM) refers to the costs associated with maintaining shared spaces within a property. Typically, residential properties assess these costs by calculating a flat rate or a charge based on the square footage of the unit, plus taxes and insurance. However, the specifics can vary depending on the scale and type of the property.
In residential properties, the total annual CAM costs are distributed across all units based on the proportion they occupy within the building. The formula is straightforward: add up the total expected CAM costs for the year and divide by the respective proportion of the property that each unit represents.
Residential Property Considerations: Flat-wise vs. Square Feet-wise
This approach works well when the number of residential units is relatively small. If the apartment society consists of fewer than 20 flats, it may be feasible to establish a fixed flat rate that covers all expenses and reserves. This method simplifies charge calculations but may not always reflect the varying costs associated with maintaining different-sized units.
When the number of units exceeds 20, it becomes more practical to base maintenance charges on square footage. This approach ensures that larger units contribute more to shared maintenance costs, which is logical considering the larger space within the unit. However, this method also has its limitations. For example, it can be unfair to assume that a 3 BHK (3-bedroom house) owner and a studio flat owner are serving the same maintenance needs proportionally, which may not always be the case.
Another challenge with assessing maintenance charges by square footage is that it does not adequately account for the number of residents in each flat. Generic assumptions about the number of people living in a particular size of flat can lead to inaccurate assessments and dissatisfaction among residents.
Commercial Buildings and Separate CAM Charges
In commercial buildings, CAM charges are typically broken out as a separate item and adjusted periodically to reflect fluctuations in costs. This approach allows for more precise budgeting and management of shared expenses, as commercial properties often have more complex shared areas requiring specialized maintenance and services.
The Best Practical Method: Square Feet Basis
Technically, the most accurate way to calculate maintenance charges would be on a per person basis. However, tracking the number of residents in each flat is impractical and challenging to maintain. The second-best approach is to use the square footage of the flat, as it is a more straightforward and proportional method.
This method ensures that larger units contribute more to maintenance costs while avoiding the inaccuracies of using fixed flat rates. However, it is important to adjust the per-square-foot charge based on the specific amenities and maintenance needs of the property.
In conclusion, the best practical way to charge maintenance fees in residential apartments is based on the square footage of the unit. This approach strikes a balance between fairness and feasibility, ensuring that larger units contribute more to the maintenance of shared spaces while avoiding some of the complications of fixed flat rates and per-person assessments.