U ntil recently, builders/developers used to quote the price of the apartment in terms of super built-up area, without clarifying how the super built-up area of particular flat is calculated. Majority of builders used to randomly load 25-40% of net usable area of the apartment to arrive at super built-up area. The reason to charge on super built-up area, as interpreted by builders, was to cover the cost of construction of all common areas such as passages, staircases, lift shafts, lobbies and covered car parking areas. Even civic authorities, instead of discouraging the wrongdoings by builders, supported the illogical move, as they could get higher property tax, considering super built-up area of the apartment for tax assessment. In most States, government authorities made it mandatory to mention the super built-up area in the sale deed of apartment, in order to earn higher stamp duty and registration charges. Thanks to the recently introduced RERA (Real Estate Regulation and Development) Act, which has made it mandatory for builders/developers to disclose the carpet area of each apartment and sale price to be quoted based on carpet area.
Calculation methods
Once it comes to buying an apartment, there has been lot of confusion on the built-up area of the apartment, as it is calculated in three different ways, namely Carpet Area, Built-up Area and Super Built-up Area. Let us understand these nomenclatures.
‘Carpet Area’, as the name suggests, is the space where one can spread a carpet i.e., the net usable floor area in building/apartment.
‘Built-up Area’ is the carpet area plus the areas covered by inside and outside walls, balconies and verandahs attached to the unit for exclusive use.
‘Super Built-up Area’ is the built-up area as above plus proportionate share of common areas such as reception, lobbies, staircases, lift shafts etc.
The new regulator, RERA has slightly tweaked the definition of ‘carpet area’ 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’.
It is very easy and convenient to measure net usable area of a particular apartment, areas of inner walls, external walls and all common areas, as floor plan drawings are drawn on CAD (Computer Aided Design) software. Thus calculations of carpet area, built-up area and super built-up area can be easily understood by the purchaser.
Since the ongoing projects are also regulated under RERA, the builder, who had earlier offered sale price on super built-up area of a particular apartment, is now obligated to offer sale price based on carpet area, as per the following details:
For a 2-BHK apartment, during March 2017, a builder had claimed the super built-up area of the flat as 1,300 sq. ft. and at the rate of Rs. 3,800 per sq. ft., and total basic cost quoted was Rs. 49,40,000.
Now, under the guidelines of RERA, the carpet area of the same unit is found to be 948 sq. ft. and super built-up area is found to be 1,221 sq. ft. The loading (the area added to carpet area on actual measurement of external walls, balconies and proportionate areas of common areas such as lobbies, staircase etc.), works out to 28.8% (28.8% of 948 sq. ft. = 273 sq. ft.) of carpet area.
For the same apartment, at the same price of Rs. 3,800 sq. ft. (super built-up area), the total cost works out to Rs. 46,39,800. Thus the builder was deceiving the purchaser of Rs. 3 lakh, by inflating the super built-up area by 79 sq. ft. (which was not existing), before the RERA era.
In this case, the purchaser who booked the apartment before RERA, not only lost Rs. 300,000 extra, he had to shell out higher VAT and Service Tax (amounting to ₹13,000 apx.), stamp duty and registration costs towards super built-up area of 79 sq. ft. (non-existent), amounting to Rs. 20,000 apx.
Purchaser’s losses did not end there, as on non-existent 79 sq. ft. of area, he has to go on paying property taxes throughout the life of the building.
The illustration shows how RERA is able to bring transparency in real estate dealings and safeguard the interests of consumers.
If you have faced this kind of injustice, you can approach RERA for speedy redress of disputes/complaints. You need to complain to the Adjudicating Officer at the office of Karnataka RERA (www.rera.karnataka.gov.in), who is expected to dispose of your complaint within 60 days of appeal.
(The author is founder Director of Institute of Home Finance, Bangalore and can be contacted at deshpanderp2007@gmail.com)
