Buying a new home does not mean that you spend only on the base price of the property – you also have to spend on additional costs associated with the property. Therefore, it is vital that you be aware of extra costs associated with property purchases in order not to have any unpleasant surprises. Last week, Realestate.com.kh explained in Part 1 some basic additional costs including: home loan application fee and legal fees, ownership transfer tax fee, home insurance fee and real estate agent’s fees. This week Realestate.com.kh will explain the remaining additional costs associated with your property. Below are other extra costs you need to know upon purchasing a new home.
Interest on the home loan:
When purchasing a home, most buyers in Cambodia usually do not have enough money to pay outright. Therefore, they choose home loan options either with company projects or banks. Whether you choose to pay with the company project or banks, you still have to pay for home loan interest.
When you opt for a bank loan, you are required to submit collateral, hard title and an income confirmation letter in order to qualify for a home loan. Bank loan terms can range up to 15 or 20 years, depending on the decision you and the bank agree to; interest rates can range from 8 percent to 10 percent per annum. Generally, banks will not offer you 100 percent of total home value, but only 70 percent.
Application for registration and title verification fee:
Done at the District Land Office of the Ministry of Land Management, Urban Planning & Construction, you must pay a cadastral transfer fee of KHR 600,000 in order to insert the name of the new owner on the legal documents. Checking for potential liens or encumbrances under a title will cost you about $12.50, according to Prakas 995, which is dated December 28, 2012.
All the immovable properties need to pay annual tax. However, it will only apply for a property with a value of $25,000 and above. According to the Prakas of the Ministry of Economy and Finance, the tax is being collected annually at a rate of 0.1 percent of the value of the property.
The property tax is computed by taking 80 percent of the property’s total value, subtracting $25,000, and then multiplying that by 0.1 percent. And the property’s value is obtained through a government valuation, depending on several factors such as data collection on relative properties in the market, quality and location.
This includes maintenance fees, repair costs and bills such as internet, electricity and water. Maintenance fees are paid by home owners for the upkeep of the building. This fee varies between borey home and condo.
For a borey home, the maintenance fee includes cleaner, security guard and public light in the project area. It will cost between $20 and $50 per month. For condos, the fee ranges from $0.50 to $2 per square metre. In addition, living in a condo requires you to pay for parking space which ranges from $50 to $60 per month. Also, you should prepare some money for furniture and any future renovations.
These are the remaining additional costs associated with a property purchase. Check out our additional costs part 1 @ Realestate.com.kh/news. Realestate.com.kh will explain more details of this topic and you can find it in our full guide online @ Realestate.com.kh/news.
James Whitehead is Director of Content @Realestate.com.kh