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Understanding the basic terms used in property deals

15 July, 2017      Financial & Technical

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From the emails I received over the last few weeks, I've come to realise that there is still a fair bit of confusion when it comes to understanding the complicated terms used in the property deals and contracts.

 

 

From the emails I received over the last few weeks, I've come to realise that there is still a fair bit of confusion when it comes to understanding the complicated terms used in the property deals and contracts. So, in an attempt to help you navigate your contracts better, I'm going to try and break down these terms. Let's start with the very basic carpet area, super built up area and built up area.

Builders tend to advertise and calculate the cost of a new building on the rack rate or the base rate and then load the extra costs on to it before arriving at the final cost. This is not unlike the cost of a car from the showroom to on road. The cost goes up when you add features to the car and the final cost before taxes becomes the on-road price. Similarly, with homes the rate per square foot is then loaded with amenities, FSI based on floor you have picked, costs of club memberships and so on. This is called loading. Let's begin with understanding the terms first.

 

The carpet area

This is the area of your home within the walls of the apartment that belong exclusively to you as a buyer. To make this simple to understand, if you were to literally carpet your entire apartment, from wall to wall, the area that will be covered by the carpet is the carpet area. While computing the carpet area, the ledges and balconies are usually considered as half the actual area.

 

The built-up area

This area includes the carpet area and thickness of external walls, internal walls and columns. It is typically 10-20 percent more than the carpet area and is also sometimes known as the plinth area.

 

The super built-up area

This area includes common amenities, such as the area of lift shafts, lobby, and corridor, proportionately divided among all flat owners. While these areas are common, they are also collectively owned by all the home owners. The common usable areas, such as a swimming pool, garden and clubhouse, may also be included. Per square foot rate quoted by the developer is typically applied on the super built-up area to determine the value of the flat. This is the reason why super built-up area is also sometimes referred to as the saleable area. The difference between the rate per sq foot from super-built up to carpet tends to be 30-40 percent. In cases where the apartment complexes have a lot of amenities, it might go up to 50 percent.

Now the important thing to remember is that the courts have mandated that all property deals mention the carpet area clearly so that you as a consumer know exactly what you are paying for. Make sure you have an architect look through the plans of the home you are buying if it is still under construction so that you get a clear idea of what you are buying. Do not sign a contract that does not have the carpet area listed.

 

 
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