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Basic Real Estate Terminologies – Beginner’s Guide Part 1

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Basic Real Estate Terminologies – Beginner’s Guide Part 1

Are you one of those peoples, who cannot understand the terms used by your real estate agent? Do you have to Google these terms every time to find out, what they mean? Do you feel like you should know more about these terminologies?  – When you go out to buy a new home or if you are a beginner in the field of real estate, you must have often come across certain terms or jargons. At times it is really confusing, if you have no clue about what your estate agent or company is saying to you. Terms such as carpet area, built-up area, super built-up area etc. all sound so similar yet you have no idea about the differences. In case, you are not too familiar with them or have no idea what they mean, don’t worry! We are going to break it down for you.

  1. Carpet Area

Carpet Area is the area enclosed within the walls of the home, office, retail space etc.; actual area to lay a ‘carpet’. This area does not include the thickness of the inner walls. It is the total usable area available to the occupant.

  1. Built-up Area

Built-up Area is the carpet area plus the thickness of outer walls, area of balconies, terraces, ducts etc. It is basically the total area that belongs solely to a particular unit.

  1. Super Built-up Area

Super Built-up Area is the built-up area plus proportionate area of common spaces like lobbies, lifts, clubs etc. Sometimes it can also include the common areas such, swimming pool, garden, clubhouse, etc.

Basic Real Estate Terminologies – Beginner’s Guide Part 1

  1. Covered Area

Covered Area is the actual area of any building which is also consider as Gross area. It may include balconies or it may not. This term is more applicable from an architectural viewpoint.

  1. Saleable Area

Saleable Area is the actual size of a home and all the area under common spaces like the lobby, staircase, lift, security room etc. It is another term for Super Built-up Area.

  1. Floor Area

Floor area is the extent or measurement of the floor in a room or building. It is same as Carpet Area.

  1. Plinth Area

Plinth Area is the total covered area of the apartment or commercial property unit. It is just another term to define Built-up Area.

  1. Lot Size

Lot size is the size of the lot the property is on. It is the amount of land which is being conveyed from the Seller to the Buyer. Lot dimensions are typically expressed in feet, and on most occasion rounded to the nearest foot. Lot size can also be expressed in total square feet, or by acre.

Basic Real Estate Terminologies – Beginner’s Guide Part 1

We hope that this should really help you, next time, when you go out to buy a new home. We are going to break down some more real estate terminologies for you, so watch out for this space.

Also Read: Basic Real Estate Terminologies – Beginner’s Guide Part 2

 

Mumbai Real Estate News

Reforming The Realty Market: RERA Redefines Carpet Area

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Reforming The Realty Market

To bring consistency in the sale of flats in the real estate sector, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has issued a circular, redefining the carpet area calculation and instructing the developers to adhere to this standard, refraining away from selling on the built-up area, while creating sale agreements.

The new carpet area will be the net usable floor area of an apartment with the internal partition wall but excluding the terrace, veranda, external wall and the balcony. Built up area being the sum of carpet area, wall thickness, ducts, exclusive balcony and verandas. Super built up area is the sum of built up area and common facilities like veranda, staircase, lift etc.

Despite the mandate by the Maharashtra Ownership of Flats Act, earlier there was no mechanism to enforce the carpet area selling rule. But now after the implementation of the Real Estate (Regulation & development) Act, RERA and the establishment of the regulatory authority, this rule will help buyers to get the value of their money.

Adding class to the realty sector, this reform will set a specific calculations of area measurement for every builder instead of their own definitions of built up area. Maharashtra is among the first of the states to implement RERA and fulfil all the norms set up by the Central government for a smooth transition.

These set of new rules will increase the per square foot rate in certain areas, prices of apartments should remain unchanged. Till now the built-up area, larger than the carpet area, was the basis of the calculation of the sales price, taking down the price per sq. ft. area. Now as the carpet area been deemed as the basis for the price calculation, the prices are anticipated to be raised up to retain the profit margin.

Stopping the unprincipled developers from misleading buyers, this new definition will bring more transparency in the system. With a higher loading factor, the developer can inflate the saleable area. This allows him a room to lower the rate per sq. ft. on the inflated saleable area. This can be highly misleading as consumers easily can get attracted to a seemingly better-than-market offer. However, only the loading factor has changed and not the flat size.

“We gladly receive this move by RERA as it defines carpet area as the standard. Now each builder has to walk the same path. Earlier, various builders used to confuse the buyers by ‘setting up’ their own carpet area, built up area and super built up area” said Shirish Deshpande, executive president Consumer Rights Group, Mumbai Grahak Panchyat.

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GST Impact on Real Estate

Real Estate: Revamping The Business Model

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real estate revamping business model

Real Estate has always been the top choice to create an investment. This investment was always advised to be early as possible, with a guaranteed return. But recently it has gone down a slow path as potential buyers and investors are opting to wait for a better opportunity. Real estate in India has undergone a big change, beginning with Demonetization which effectively pointed it away from cash transactions. “Demonetization coupled with the imminent implementation of RERA and GST resulted in a major slow-down in terms of real estate sales. It was a domino effect – by the time RERA was in place, it was time for GST to be implemented, so till July this year, things were very slow, across segments of Indian real estate,” explains real estate Czar Dr Niranjan Hiranandani.

Last year the number of units sold were lesser than the new residential projects. Most of the states have fallen in line at the initiation of the implementation of the Real Estate Regulation & Development Act (RERA). This landmark law had enforced the transparency and accountability requirements for developers into the system.

The Goods and Services Tax (GST) also had a major impact on how many developers run their businesses. Demonetisation have affected the older ways of working, but did not affect self-governing developers with the right products targeted at the working masses. The rest have realised it is time now to revamp their existing business models if they want to remain in business at all.

India is finally finding its affordable housing scheme in action. One crore houses are to be built in rural India by 2019, and this vital segment will now see cheaper sources of finance – including external commercial borrowings. Re-financing by National Housing Banks can give a further boost to the sector. 

The parameters for affordable housing were also revised on carpet area rather than saleable area in the four main metros and non-metros respectively. This effectively boosts the affordable housing sector across India. Moreover, the demonetization of high-value currency notes will cause land prices to ease in the next few years – especially in far-flung areas around Indian metros and the Tier-II and Tier-III cities.

The rise in wealth influx in the real estate market pertains also to the rise in jobs. The employment sector is set to increase by more than 80% by 2025 as the potential opportunities in the sector are expected at 17.2 million jobs by 2025 up from 9.2 million in 2016, showed a CREDAI-CBRE joint report. All the industries dependent on each other will see a boost Large scale projects will boost construction and inter-dependant allied industries. It will open up new micro markets and peripheral locations of metro cities. As infrastructure is essential for growth of realty market.

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Real Estate Carpet Area

Under the PM Awas Yojana Centre Increases Carpet Area Of Middle Income Group Houses

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pm awas yojana centre

On Thursday, a proposal to increase the carpet area of houses eligible for interest subsidy under the credit-linked subsidy scheme for the Middle Income Group (MIG) under the Pradhan Mantri Awas Yojana (Urban) was cleared by the Union cabinet chaired by Prime Minister Narendra Modi.

After the cabinet meeting, justice minister Ravi Shankar Prasad told reporters that from now on the carpet area of an MIG-I will be increased from 90 sq mts to up to 120 sq mts and for MIG-II category it will be from 110 sq mts to up to 150 sq mts.

Prasad further added, that the move will give buyers in MIG category a wider choice in developers’ projects and boost the sale of ready flats in the affordable housing segment.

A government statement said, “The limit of 120 square metres and 150 square metres is seen as a reasonable enhancement and would cater to the market generally scouted by the MIG belonging to the two income categories specified in the scheme”.

The credit-linked subsidy scheme (CLSS) for MIG is a pioneering step to empower the middle income group to get the benefits of an interest subsidy scheme.

Jaxay Shah, CREDAI’s President said, “Housing for All by 2022 has taken a huge leap forward by the increase in the unit size of MIG Houses under Credit Linked Subsidy Scheme. The average middle class would now be able to afford bigger and better quality homes than before in smaller towns and cities”.

The CLSS for middle income group covers two income segments, Rs 600,001 to Rs 1,200,000 for MIG-I and Rs 1,200,001 to Rs 1,800,000 for MIG-II per annum. In the MIG-1, an interest subsidy of 4% has been provided for loan amounts up to Rs 9 lakh, while in MIG-2, an interest subsidy of 3% has been provided for loan amount of Rs 12 lakh.

According to the government statement, “The interest subsidy will be calculated at 9% NPV (Net Present Value) over a maximum loan tenure of 20 years or the actual tenure, whichever is lesser. Housing loans above Rs 9 lakh and Rs 12 lakh will be at non-subsidised rates”. The CLSS for MIG would be effective up to March 31, 2019.

NAREDCO chairman Rajeev Talwar and president Niranjan Hiranandani both agreed that this move would help in meeting the aspiration of millions of MIG home buyers.

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