Defination

4 Basics To Know Before You Sign A Rent Agreement

4 Basics To Know Before You Sign A Rent Agreement

November 26, 2018 in Defination, Real Estate Basics

Now that you have finalized a home on rent, there are certain essential checks which certainly you might be aware of as a tenant. However, it is equally essential to check the rental agreement for some of the most important points before you sign it in order to avoid that any disputes once you start living on rent in the desired house.

It may all start form petty issues like repairs and bills and go on to unexpected rental hike. So, settling it all in the rental agreement needs to be your primary concern when you are about to sign the agreement.

Here are a few aspects and clauses you must not ignore and should be added at the time of the agreement.

  1. Read the Agreement Carefully

It may sound too basic and evident but the truth is that most of the tenants either do not read the whole agreement carefully or unable to understand the legal language used in the agreement. There may be times when you are simply staring at the agreement to decipher the meaning of your legal rental agreement. It is certainly not wise to interpret that the things promised are mentioned in the agreement by the landlord and you can trustfully sign on the dotted line. If you are not able to interpret what exactly the clauses mean, it is recommended that you consult a lawyer instead.

  1. Check the Landlord Details

The details of the landlord do not only mean checking the background of the landlord. Rather it is essential to check the details on the papers when you are about to sign the agreement. Ensure that the person you have been talking to as the landlord signs on the agreement as a landlord with you. There have been instances when the landlord has handed over the property to a relative or a caretaker and they further lease it to the third party without the knowledge of the actual owner of the property. So, verify each detail of the landlord including the title documents.

  1. Overhead Charges

All new projects by reputed builders are facilitated with power backup, water tank and other utility services. However, tenants shouldn’t just be told about overhead charges verbally. These charges should be transparently mentioned in the agreement. Tenants must check these before signing the agreement.

  1. Damage and Repair Costs

Specify the damage or repair costs in the rental agreement before you move in. This is of utmost importance as this may cost you a fortune if some major damages are seen when you vacate the property.

It is indeed too crucial to read the above-said postulates in your rental agreement in order to avoid any discrepancies with your landlord.

Sources: blog.magicbricks.com

Which is a Better Investment: Real Estate Or Stocks?

Which is a Better Investment: Real Estate Or Stocks?

November 21, 2018 in Defination, Investment

There’s always a long-standing debate among investors on whether property makes a better investment proposition to shares. There’s no denying that the stock market historically outperforms other types of investments. And if you have to choose between investing in real estate and stocks, it might seem like a no-brainer.

Some people think the stock market is the better alternative because the real estate market is unstable at its best. There’s no guarantee that property values will appreciate from year to year and when home price gains slow or decline, investors take a serious hit. The stock market isn’t much better, it’s known for its volatility and there are unpredictable ups and downs.

Without a doubt, stock market investing offers an unparalleled ease. You can invest in stocks with as less as Rs 500. It can be done in the comfort of your home. The case with real estate is different. You have to go and survey the property, inquire about the locality and go through a lengthy process, including government regulations, to invest in it.

Each investment options provide a range of benefits. Real estate and equities, both are a great source of investment and help build wealth in the long term. Success in investing in these assets depends on the knowledge of the asset, inclination and attitude of individual investors and understanding the key drivers of the prices of these assets. Regardless of your asset class, returns are determined by different factors that generate different benefits. It’s important that you investigate and consider investing in both real estate and the stock market for different reasons.

Let’s look at these benefits in more detail and what to consider before you invest:

REAL ESTATE

  • A real estate is a tangible asset. It can be a land or a property that you can see, feel and utilize. It can provide a better quality of life. Moreover, before your purchase, you can inspect the property if it is in good condition to make sure that what you are getting is worth your hard-earned money.
  • Complete control over your investment in real estate is possible. The decision to rent it out to generate passive income, to make repairs or improvements and to sell it in the future is in your hands.
  • The value of real estate properties appreciates over time. It is one of the rare assets that rise with inflation. Even during tough times, it is less volatile. When the economy is down, you can still relax in your home.
  • A property is a source of satisfaction. You can take pride in its ownership. Since it is tangible, you have a constant reminder that years of hard work definitely pay off.

 

STOCK MARKET

  • Stocks are low maintenance. Investment in it can be left alone after the initial purchase and it will still pay out dividends. Because it requires less work, you can focus your attention elsewhere with confidence that your investment is still moving.
  • Investing in stocks is doable even for young investors. It is even preferable to start young to maximize its potential growth. Shares can be inexpensive and you can determine its volume.
  • When you buy shares of stock, you buy a piece of a company. The returns you earn is invested in prominent and are persistently successful, companies can certainly be of considerably high value. And historically, stocks have a high rate of return.
  • With stocks, you can invest not only in your own country but even in different countries and in various sectors.

Why Real Estate is still the best investment class?

When one wishes to invest his or her money in a place wherein a long-term viability and return on assets are at a higher rate, real estate investing is the best choice for you. Real estate investing provides for a more controllable amount of risks that other financial assets cannot match. It’s tangible nature also gives the investor a more peace of mind as real estate pricing seem to be more constant as compared to stock market investments.

However, there are also risks involved in this type of market. These risks could be more tricky to analyze in relation to the constant movement of the market, it can be easily affected by the performance of a particular neighbourhood that could endanger your credits where the property is situated, the need for a larger capital to actually invest in the real estate industry, the nature of the property which is less liquid than other financial assets and lastly, the taxes that come along with it. Stocks and real estate are both smart investments, but the right one for you will depend on your own personal preferences. If you’re looking for quick high returns, stocks may be the better option for you.

The biggest advantage of investing in Real Estate gives you is you can buy below market, add value and rent for positive cash flow. If you buy properties right you can make more than your initial investment back before you even rent the home. Your cash flow can provide you lifetime income with no retirement calculators and you have control over your investment to increase its value.

Regardless of which one you choose, it’s crucial to ensure that you research the investment opportunity carefully. Real estate can offer great returns, but you need to choose the right property. The wrong property can lead you owing more than the property is actually worth. The same can be said for stocks. Invest in the wrong company, and you may see your investment go down the drain.

Sources: blog.zricks.com

Difference between Carpet Area, Built-Up Area & Super Built-Up Area?

Difference between Carpet Area, Built-Up Area & Super Built-Up Area?

November 13, 2018 in Defination, Real Estate News

Not knowing what each actually means is what could give Developers a chance to take you for a ride. However, it is not rocket science. Just a little reading and you will be pretty thorough with the terms. Here are some of the basics of Real Estate you should know.

Carpet Area

Carpet area is the area that can actually be covered by a carpet or the area of the apartment excluding the thickness of inner walls. Carpet area does not include the space covered by common areas such as a lobby, lift, stairs, play area, etc. Carpet area is the actual area you get for use in a housing unit. So when you are in search of a house, look at the carpet area and then make your decision, because that is the number that will give you an idea of the actual space at your disposal. Focusing on the carpet area will help you understand the usable area in the kitchen, bedroom, living room, etc. Nowadays, many builders don’t even mention the carpet area at first, and usually, charge on the basis of built-up area or super built-up area. Carpet area is usually around 70% of the built-up area.

Built-Up Area

Built-up area is the area that comes after adding carpet area and wall area. Now, the wall area does not mean the surface area, but the thickness of the inner walls of a unit. The area constituting the walls is around 20% of the built-up area and totally changes the perspective. The built-up area also consists of other areas mandated by the authorities, such as a dry balcony, flower beds, etc., that add up to 10% of the built-up area. So when you think about it, the usable area is only 70% of the built-up area. So, if the built-up area says 1200 square feet, it means around 30% (360 square feet) is not really usable, and the actual area you will get to use is only the remaining 840 square feet.

Super Built-Up Area

Super Built-up area is a builder’s BFF! It is the area calculated by adding the built-up area and common area that includes the corridor, lift lobby, lift, etc. In some cases, builders even include amenities such as a pool, garden and clubhouse in the common area. A Developer/Builder charges you on the basis of the super built-up area which is why it is also known as ‘saleable’ area.

Now let us consider this case – the rate is Rs. 2,000 per square foot and the super built-up area is 1,200 square feet, then the base cost will come up to 24 Lakhs.

When there is more than one apartment on a floor, the super built-up area is calculated in a different manner. Let us assume this is the case.

— The area of Apartment 1 is 1000 square feet

— The area of Apartment 2 is 2000 square feet

— The total common area is 1500 square feet, out of which the share of Apartment 1’s common area is 500 sq. ft. while the share of Apartment 2’s common area is 1,000 sq. ft.

Then the super built-up area of Apartment 1 is 1,500 square feet and of Apartment 2 is 3,000 Square feet. The super built-up area, as seen in this example, is divided in the ratio of the apartments’ built-up areas (in this case 1:2).

Considering the fact that Builders and Developers usually price their apartments based on super built-up or ‘saleable’ area, being unaware of the fundamental difference between carpet area and built-up area and other terms leaves one running blind. Often the actual usable area is much lower than the super built-up area. Some Builders take into account the carpet area while charging you, but this is only in the rarest of the rare cases. 90% of the developers calculate the base cost on the basis of the super built-up area; the more the amenities the higher the super built-up area.

Real Estate can be complicated, and you cannot change the rules and practices, but you definitely can make an informed decision when you’re aware of the various types of calculations for square footage, a seemingly major but actually simple job!

We hope this clears up the confusion that always seems to permeate floor areas and how prices are calculated, making it easier for you to make decisions. Got more questions? Ask us below!

Here’s Part 2 of Real Estate Basics, where we talk about OSR, FSI, Loading and Construction Stages.

Sources: housing.com

What Are Ready Reckoner Rates? Real Estate Basics:

What Are Ready Reckoner Rates? Real Estate Basics:

October 17, 2018 in Defination, Real Estate News

To avoid evasion of stamp duty through the undervaluation for agreements and to minimize the disputes on the quantum of stamp duty, all state governments publish area-wise rates of properties, on a yearly basis, known as Ready Reckoner rates.

What Is The Significance Of Ready Reckoner/Circle Rates?

The Ready Reckoner (RR) rate, as it is referred to in Mumbai, is also known as the Circle Rate in Delhi. This rate is the government’s estimate of minimum property values in various locations. The rate differs in every state, city and in different localities in those cities. Authorities determine the price of real estate in a particular locality, based on several factors. Based on these factors, a benchmark is set, below which no property transaction can take place in that particular locality. This benchmark is known as the Ready Reckoner/Circle rate. It is the minimum price on which the government will charge stamp duty and registration fees.

The RR rates are typically lower than the current market rates of properties in a particular area. The rate is reviewed periodically and revised, to bring it closer to market rates. As real estate transactions take place in the private realm and the price is often not disclosed, state governments need a benchmark, to ensure that they do not lose out on an important source of revenue.

How Does The Ready Reckoner Rate Affect Real Estate Transactions?

While RR rates specify the minimum amount at which properties can be sold in an area, there is no maximum limit above which a property cannot be sold. This leads to a significant difference between the RR and market rates. Most property transactions in India take place on the basis of the market rate in a particular locality. The stamp duty and registration fees, to be paid by the home buyer, are calculated on the basis of this market rate. Therefore, a big difference between the RR rate and market rate leads to a loss of revenue for the government. In rare cases where the RR rate is higher, the stamp duty and registration fees will be calculated on the RR rate. On the other hand, higher RR rates discourage home buyers from registering their properties. By periodically revising RR rates and bringing them closer to market rates in every locality, the state government can increase transparency in real estate transactions and also ensure that they do not lose out on revenue.

The Importance Of Ready Reckoner Rates For Home Buyers

The RR rate of properties in a particular area is a good indication of the amount of money a potential home buyer will have to shell out. Market rates of properties are almost always higher and property prices in an area tend to increase when the RR rate is expected to be increased. It is also beneficial for buyers to purchase property in an area, where the gap between the RR and market rates is relatively smaller, especially if the purchase is being financed by a home loan.

Sources: housing.com

Key Legal Checklist For Buying A Commercial Property

Key Legal Checklist For Buying A Commercial Property

October 15, 2018 in Defination, Real Estate News

Buying a commercial property, then keep the following points in minds:

1. Verification Of Title And Ownership Of The Seller

It is a settled legal principle that a person cannot convey a better title, than what he himself has. As a first step, the buyer should undertake due diligence, to ascertain the existence of the title with the seller, the nature of the title and its marketability and the ability of the seller to convey clear and marketable title, free from encumbrance. Documents, for a period of 30 years, if not more (and where documents are not available, for a minimum period of 12 years) must be examined and the seller may be called upon to provide the following documents/information:

  1. Title documents of the property – government order for grant, succession certificate, sale deed, gift deed, will, partition deed, etc., evidencing the transfer of title over the years, culminating in the vesting of property with the seller.
  2. Nature of title – leasehold, freehold, or development right.
  3. In the case of the seller claiming development rights to the property, the development agreement and power of attorney, executed by the owners in favour of the seller.
  4. All title documents being duly stamped and registered at the office of the jurisdictional sub-registrar of assurances.
  5. Khata registered in the name of the seller.
  6. Information on pending or past litigation.
  7. Availability of original title documents with the seller.

2. Verify Identity Of The Seller

Similar to verifying the title to the property, the buyer should also ascertain the identity of the seller and any specific conditions, governing the ability of the seller to convey the property. The following instances may be noted for illustration:

  1. Residence status and nationality of the seller, in case of an individual and whether consents from government authorities are required for the sale.
  2. Identification of all owners, in the case of properties held jointly.
  3. Where the seller is a company, trust, partnership firm, society, etc., the constitutional documents of the entity are necessary, to confirm its ability to own and transfer the property, besides ascertaining that the person executing and registering the sale deed is duly authorised.
  4. Orders from the competent court, permitting a sale of the property and appointing a guardian, where the property is held by a minor or person of unsound mind.

3. Conversion And Land Use Permissions

With increasing urbanisation and merging of revenue lands with urban conglomerates, conversion of property for non-agricultural use assumes crucial significance, since several state laws restrict the purchase of agricultural property by non-agriculturists. Secondly, the buyer must examine the Master Plan and satisfy that the property is developed in accordance with the zoning plan – such as residential, commercial, industrial, public/semi-public, parks and open spaces, etc. Where actual use is different from the notified zoning, obtaining orders from the Town Planning Authority permitting change of land use, is mandatory.

4. Construction Approvals

For purchase of apartment or land with constructed building, the buyer should also scrutinise the building plan/layout plan sanctioned by the local municipal authorities, along with approvals issued by government, statutory and regulatory authorities, for providing infrastructure facilities, water, sewage, electricity, environmental clearance, fire safety approval, etc.

5. Occupancy Certificate

It is mandatory for the seller to obtain the occupancy certificate from the competent authority, prior to conveying the property. Use of the property, without obtaining occupancy, exposes the buyer to penalty under the applicable building bye-laws, besides the risk of a demolition of the property.

6. Check Status Of Tax Payment

Non-payment of property taxes constitute a charge on the property, affecting its marketability. Hence, the buyer must verify with the municipal authorities that the seller has not defaulted on payment of property taxes.

7. Encumbrance

Searches at the jurisdictional sub-registrar of assurances, where property documents are registered and information available on the official web portal of the Ministry of Corporate Affairs, in case of the seller being a corporate entity, will reveal information of any registered encumbrance on the property. By way of caution, the purchaser may also issue a public notice in newspapers, prior to completing the transaction, calling for claims from interested third parties, if any.

8. Physical Survey And Access To The Property

The buyer may undertake a physical survey and confirm the extent and measurement of the property. In the case of land, it is advisable to identify and demarcate the boundaries and access to the property and further, ascertain any other physical attributes that may impede enjoyment of the property.

9. Compliance Under The Real Estate (Regulation And Development) Act, 2016 (RERA)

RERA mandates that developers should register their projects with the authority constituted under the Act. A buyer, intending to buy a property in a project coming under the ambit of RERA, is advised to verify whether the property has been registered with the authority under RERA. Information available on the official web portal of RERA for each state, also provides details of any cases/complaints filed against the developer of the project and default by the developer, if any and thus, provides useful insight into the credibility of the developer and the project and helps the buyer make an informed choice.

Conclusion

While buying a property, it is better to err on the side of caution. With proper legal advice, scrutiny of documents and verification of relevant information pertaining to the property, the buyer can ensure that the investment brings peace of mind and a sense of security.

(The writer is associate partner, Khaitan & Co LLP)

Sources: housing.com

Agreement for Sale versus Sale Deed: Real Estate Basic

Agreement for Sale versus Sale Deed: Real Estate Basic

October 5, 2018 in Defination, Real Estate News

While buying a property, people enter into an agreement with the seller. The form and format of the agreement may be different. It may either be an agreement for sale or it may be a sale deed. People generally do not understand the difference between these two documents and treat both as synonymous. However, it is not so.

WHAT IS AN AGREEMENT FOR SALE?

An agreement for sale is an agreement to sell a property in the future. This agreement specifies the terms and conditions, under which the property in question will be transferred. The Transfer of Property Act, 1882, which regulates the matters dealing with the sale and transfer of house property, defines the contract for sale or an agreement for sale as under:

“A contract for the sale of immovable property is a contract that a sale of such property shall take place on the terms settled between the parties” – Section 54. Section 54 further provides that “It does not, of itself, create any interest in or charge on such property.”

From the above definition, it becomes amply clear that an agreement for sale contains a promise to transfer a property in question in future, on the satisfaction of certain terms and conditions. So, this agreement itself does not create any rights or interest in the property, for the proposed buyer.

What the agreement for sale creates, is a right for the purchaser to purchase the property in question on the satisfaction of certain conditions. Likewise, the seller also gets the right to receive the consideration from the buyer on complying with his part of the terms and conditions.

In case of failure of the seller to sell or hand over possession of the property to the buyer, the buyer gets a right of specific performance, under the provisions of the Specific Relief Act, 1963. A similar right is available to the seller under the agreement, for seeking specific performance from the buyer.

SUPREME COURT RULING ON SALE DEED AND AGREEMENT FOR SALE

This agreement for sale may or may not result in an actual sale of the property in question. Some of the stamp duty laws, like the Maharashtra Stamp Act, deem an agreement for the sale of an immovable property, on the same footing as a proper deed of conveyance and therefore, are subject to the same stamp duty as is applicable on the proper deed of conveyance or sale deed of an immovable property. Due to such deeming provisions, requiring payment of stamp duty on an agreement for sale, people mistakenly perceive an agreement for sale, as a proper sale deed.

The Supreme Court of India in 2012, in the case of Suraj Lamp & Industries (P) Ltd (2) v State of Haryana, while dealing with the validity of sales of immovable properties made through power of attorney, has held as under:

“Immovable property can be transferred/conveyed only by a deed of conveyance (sale deed), duly stamped and registered as required by law. We, therefore, reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance.”

“Any contract of sale (agreement to sell), which is not a registered deed of conveyance (deed of sale), would fall short of the requirements of Sections 54 and 55 of the Transfer of Property Act and will not confer any title, nor transfer any interest in an immovable property (except to the limited right granted under Section 53A of the Transfer of Property Act).”

According to the Transfer of Property Act, an agreement for sale, whether with possession or without possession, is not a conveyance. Section 54 of the Transfer of Property Act enacts that the sale of an immovable property can be made, only by a registered instrument and an agreement for sale does not create any interest or charge on its subject matter.

CONSEQUENCE OF FAILURE TO EXECUTE A SALE DEED

As per the Indian Registration Act, 1908, any agreement for the transfer of any interest in an immovable property of a value more than one rupee, is required to be registered. So, if you have purchased any property under an agreement for sale, without it being followed by a proper sale deed, you do not get any right or interest in the property purported to be transferred under the agreement of sale.

This absolute rule is subject to the exception provided under Section 53A of the Transfer of Property Act. Section 53A provides that where the buyer has obtained possession of the property that is the subject matter of the transfer, while fully complying with his part of the obligation under the agreement, the seller shall not be entitled to disturb the possession so granted to the buyer. It may be noted that Section 53A provides a shield to the proposed transferee against the transferor and debars the transferor from disturbing the possession of the transferee, but it does not cure the title of the buyer to the property. The ownership of the property still remains with the seller.

So, in the cases where you have purchased any property under an agreement for sale and got possession, the title of the property still remains with the developer, unless a sale deed subsequently has been executed and registered under the Indian Registration Act. Thus, it becomes clear that a title in an immovable property can only be transferred by a sale deed. In the absence of a duly stamped and registered sale deed, no right, title or interest in an immovable property, accrue to the buyer of the property.

Sources: housing.com

11 Legal Documents That You Should Check Before Buying Any Property

11 Legal Documents That You Should Check Before Buying Any Property

September 19, 2018 in Defination, Investment News, Real Estate News

Property buying can often be messy. Jargons float around and you can be confused with all the legalese. We made it simple for you. Use this handy guide to help you navigate the real estate pitfalls you may encounter while buying a home. While purchasing property, it is essential to check that the following documents are in order:

  • Agreement to sell – It is the first document prepared in anticipation of a sale of the property. It contains a detailed description of the property and states the terms of conditions between the buyer and the seller, including the purchase price as agreed upon.
  • Absolute sale deed and title deed - The sale deed or title deed is the most important document that records the actual transfer of ownership of the property. It needs to be registered at the sub registrar’s office under whose jurisdiction the property would fall.
  • Title search and report – Property title search is a process of retrieving the chain of documents relating to the history of the property that has been registered with the concerned authority. It includes a description of the property and names of title holders, joint tenancy, etc. It is especially important for procuring a home loan.
  • Khata certificate – This document is known by different names in different states and it provides proof that the property has an entry in the local municipal records.
  • Receipt of property tax – The receipts of property tax hold that the previous owner or occupier had paid all the taxes and none have been left as due. They also establish the legal status of the property and therefore serve as an important document of evidence.
  • Encumbrance certificate – An encumbrance certificate states that the property is free from all encumbrances or loans. It is a key document for procuring a loan against property from banks. It has all the details about transactions relating to the property.
  • Occupancy certificate – An occupancy certificate or completion certificate is given by the municipal corporation after the construction of a building to establish that it was constructed according to a sanctioned plan and that it is ready to be occupied.
  • Statement from a bank if loan outstanding – If any loan is outstanding on the property that is being purchased, it is safe to procure the statements relating to the loan so that there is full disclosure in that regard.
  • Non-objection certificates – It is important to ask the developer to produce copies of various NOCs that must be procured from various departments such as the Sewage Board, Pollution Board, Environment Department, Traffic and Coordination Department, etc. This forms the ‘intimation of disapproval’ for the construction of the building.
  • Sanctioned building plan by statutory authority – This is to ensure that the buyers are cautious about any deviations from the sanctioned plan made by the developer.
  • Power of Attorney/s, if any – A Power of Attorney is required in original if any person is acting on the authorization of the owner of the property. It could be general or specific.

Sources:  thehindu.com

What is Carpet Area, Built-Up Area & Super Built-Up Area?

What is Carpet Area, Built-Up Area & Super Built-Up Area?

August 28, 2018 in Defination, Investment, Real Estate News

While buying a property, terms such as carpet area, built-up area and super built-up area mostly evade our realm of understanding, or at least cause some confusion. In every residential complex, there are these three ways of calculating the area, or the square footage. They may not all sound very different, but there is, in fact, a BIG difference between carpet area and built-up area!

Not knowing what each actually means is what could give Developers a chance to take you for a ride. However, it is not rocket science. Just a little reading and you will be pretty thorough with the terms. Here are some of the basics of Real Estate you should know.

Carpet Area

Carpet area is the area that can actually be covered by a carpet or the area of the apartment excluding the thickness of inner walls. Carpet area does not include the space covered by common areas such as a lobby, lift, stairs, play area, etc. Carpet area is the actual area you get for use in a housing unit. So when you are in search of a house, look at the carpet area and then make your decision, because that is the number that will give you an idea of the actual space at your disposal. Focusing on the carpet area will help you understand the usable area in the kitchen, bedroom, living room, etc. Nowadays, many builders don’t even mention carpet area at first, and usually, charge on the basis of built-up area or super built-up area. Carpet area is usually around 70% of the built-up area.

Built-Up Area

Built-up area is the area that comes after adding carpet area and wall area. Now, the wall area does not mean the surface area, but the thickness of the inner walls of a unit. The area constituting the walls is around 20% of the built-up area and totally changes the perspective. The built-up area also consists of other areas mandated by the authorities, such as a dry balcony, flower beds, etc., that add up to 10% of the built-up area. So when you think about it, the usable area is only 70% of the built-up area. So, if the built-up area says 1200 square feet, it means around 30% (360 square feet) is not really usable, and the actual area you will get to use is only the remaining 840 square feet.

Super Built-up Area

Super Built-up area is a builder’s BFF! It is the area calculated by adding the built-up area and common area that includes the corridor, lift lobby, lift, etc. In some cases, builders even include amenities such as a pool, garden and clubhouse in the common area. A Developer/Builder charges you on the basis of the super built-up area which is why it is also known as ‘saleable’ area.

Now let us consider this case – the rate is Rs. 2,000 per square foot and the super built-up area is 1,200 square feet, then the base cost will come up to 24 Lakhs.

When there is more than one apartment on a floor, the super built-up area is calculated in a different manner. Let us assume this is the case.

— The area of Apartment 1 is 1000 square feet

— The area of Apartment 2 is 2000 square feet

— The total common area is 1500 square feet, out of which the share of Apartment 1’s common area is 500 sq. ft. while the share of Apartment 2’s common area is 1,000 sq. ft.

Then the super built-up area of Apartment 1 is 1,500 square feet and of Apartment 2 is 3,000 Square feet. The super built-up area, as seen in this example, is divided in the ratio of the apartments’ built-up areas (in this case 1:2).

Considering the fact that Builders and Developers usually price their apartments based on super built-up or ‘saleable’ area, being unaware of the fundamental difference between carpet area and built-up area and other terms leaves one running blind. Often the actual usable area is much lower than the super built-up area. Some Builders take into account the carpet area while charging you, but this is only in the rarest of the rare cases. 90% of the developers calculate the base cost on the basis of the super built-up area; the more the amenities the higher the super built-up area.

Real Estate can be complicated, and you cannot change the rules and practices, but you definitely can make an informed decision when you’re aware of the various types of calculations for square footage, a seemingly major but actually simple job!

Sources: housing.com

What is OSR, FSI, Loading & Construction Stages in Real Estate?

What is OSR, FSI, Loading & Construction Stages in Real Estate?

August 20, 2018 in Defination, Investment, Real Estate News

Loading Factor, FSI and OSR are terms used with respect to the area you will be charged for. The base cost may say something but the end result could cost you a lot more – the base cost may be in your budget but when costs like the common areas, maintenance charges, etc. are factored in, the total cost shoots up.

Loading Factor

Loading Factor can be defined as the area which includes the proportionate share of the common area for a flat which is determined by applying a multiplier to the carpet area. In general, builders include space around staircases and elevators as common areas while calculating the loading factor. Thus, the loading factor, when combined with the carpet area, gives the super built-up area of a flat.
For example, if a builder puts 1.25 as the loading factor, then it means 25% of space has been added to the carpet area of the flat. If the carpet area of a flat is 500 square feet then the super built-up area of the flat can be calculated as:
500 square feet + 500 x 25% = 625 square feet.

OSR (Open Space Ratio)

Open Space Ratio (OSR) is a terminology commonly used in the development of residential spaces. OSR is calculated by dividing the total amount of open space (which is commonly owned on the residential land parcel which is proposed for development) by the total area of the entire land parcel (which is proposed for development). Areas on private lots which are buildable and any commonly-owned open space that is less than 320 contiguous square feet are not counted as open spaces. Although, areas like parking lots and recreation areas are included in open spaces.
For example, if there are 4 acres of common open space and 8 acres of the land parcel proposed for development, then the open space ratio is 50%.

FSI (Floor Space Index)

FSI, meaning Floor Space Index, also known as Floor Area Ratio (FAR), is the ratio of total built-up area to the total area of the plot. The municipal council of a particular area is responsible for establishing the FSI limit in a certain range in order to regulate the amount of construction and the size of the buildings in that area. Since FSI is a measure that combines the height and footprint of a building, regulating it ensures flexibility in the design of the building.
For example, if for a particular plot area of 10,000 square metres, an FSI of 1 is allotted, then the construction of 10,000 square metres would be allowed for the project.

Construction Stages

You may choose to stay away from assuming that the various construction stages don’t concern you, but if your business involves an under-construction flat, these stages will definitely help you.

Knowing the real estate terms of all the stages in the building construction process and their significance will save you much trouble:

1) Mobilisation
The mobilisation is the process of making the plot ready for construction. The process generally involves building a fence around the plot, making necessary services available, transport of construction tools and equipment to the plot and building a shed for the labourers.

2) GroundWork
The process of levelling the ground of the plot, benchmarking and cleaning the plot comes under the phase of groundwork.

3) Sub Structure Work
Substructure work involves the construction of structures like the foundation, neck columns, grade beams, the ground floor, etc.

4) Super Structure Work
Superstructure work involves the construction of the structures that are situated above the ground like columns, slabs, beams, staircases, etc.

5) Masonry Work
Masonry work is a phase in which everything comes into shape and gets a face. It involves plasterwork and levelling of the walls and ceilings. This stage is what prepares the project for the services work.

6) Services Work
Services work includes electrical work, sanitary work, plumbing work, etc. It involves fixing lights and fans, bathroom fittings, toilet equipment and anything else that would be provided by the builder.

7) Finishing Work
At this stage, it is time to give the final touch to the property. It involves painting and any kind of carpentry work like doors, door frames and, in some cases, false wooden ceilings.

8) Completion
Completion stage of the building construction process involves cleaning of the built property, final inspection and handover of the property to the buyer.
These terms are regarding realtor jargons when it comes to starting a construction.

Sources: housing.com

What is Carpet Area in RERA & how it affects Buyers and Property Prices?

What is Carpet Area in RERA & how it affects Buyers and Property Prices?

July 30, 2018 in Defination, Investment, Real Estate News

Carpet area and how it will affect buyers and property prices:

The area of a property is often calculated in three different ways – carpet area, built-up area and super built-up area. Hence, when it comes to buying a property, this can leads to a lot of disconnects, between what you pay and what you actually get.  Not surprisingly, the maximum number of cases registered in the consumer courts, are against developers on the issue of cheating, vis-à-vis the size of the flat. According to the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA), it is now the duty of the developer, to make buyers aware of the carpet area and quote prices based on this and not the super built-up area.

“It is now mandatory for the developers of all ongoing projects, to disclose the size of their apartments, on the basis of carpet area (i.e., the area within four walls). This includes usable spaces, like a kitchen and toilets. This imparts clarity, which was not the case earlier.” – explain by Gautam Chatterjee, Maharashtra RERA Chairman

Carpet area under RERA: What does it cover?

Carpet area, the net usable area, is the space where one can spread a carpet. The built-up area includes the carpet area, plus the extra areas certified by the authorities, such as the area of the outer and inner walls, dry balcony area, etc. Super built-up area includes the carpet area, the built-up area, as well as a share of the balance area, such as the stairs, lobbies and galleries, which can be used by the entire building.

According to the RERA, carpet area is defined as ‘the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment’.

Mandatory Disclosure of Carpet Area and Its Impact :

“Buyers will now understand the exact measurement of the flat they can reasonably expect to receive from the developer. Furthermore, they will know exactly what part of the flat is included in carpet area and what part is included in verandas and terraces. Additionally, developers will have to be more stringent in planning their projects, to ensure exact rendition of plans to actual carpet area.” – by Sandeep Singh, CEO of Sheltrex, a Brick Eagle Company

The earlier practice of including a balcony, terrace, verandas, flower beds and void spaces within the meaning of carpet area, by unscrupulous developers, will now come to an end.

In certain cases, corner apartments, or other apartments placed at certain advantageous or disadvantageous positions, usually used to get a little more or less carpet area. While the apartments at advantageous positions that had greater carpet area were always priced at a premium, the ones which lost some carpeted area were never sold at a discount, as the ‘missing’ carpet area was usually obfuscated in the super built-up area.

Good design and efficiency will now become crucial. Previously, an inefficient design, which used too much of common area space, would fare the same as a good design, as both could have the same super built-up area, but different carpet areas.

Sources: https://housing.com

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