Homes and gardens

Seeking a fair deal for the buyer

The ‘Pre-Budget Meet -2021’, chaired by Chief Minister B.S. Yediyurappa at Vidhana Soudha (on February 22) had suggestions that were sent by several industry bodies in real estate and State associations including CREDAI, Builders’ Association of India, Institute of Engineers-Bangalore Chapter, and Institute of Valuers-Bangalore Chapter, and leading builders and developers. PropertyPlus brings to you nuggets on some of the suggestions given for the Budget to be announced by the Chief Minister on March 8, 2021.

Doing away with SBA (Super Built-up Area):

RERA – Real Estate (Regulation and Development) Act 2016 has not recognised the controversial SBA (Super Built-up Area) concept in measuring the apartment area; but still, SBA is in vogue in our State and unfortunately, it is mandatory to show the SBA in the sale deed.

It may be noted that in the late 1980s some builder/developer brought in the concept of SBA in apartment complexes with an intention to recover the costs incurred towards the construction of common areas including lobbies, passages, staircase area, and elevator areas. It suited the builder/developer to vaguely load 30-40% to the built-up area of the apartment and call it SBA, in order to increase the sale price.

Although no construction engineering book or any Town Planning Act defines what SBA is, various State governments embraced the concept as they could collect higher stamp duty, registration fees, GST (earlier VAT) and property taxes, by making SBA a yardstick to measure the area of an apartment.

After finding the menace of SBA, the RERA authorities made it mandatory to sell apartments only on Carpet Area measurements and clearly defined what Carpet Area is.

Many States, after the implementation of RERA, have done away with the SBA concept and made it clear that only the Carpet Area should be mentioned in the sale agreement and sale deed and stamp duty and registration fees to be collected based on the Carpet Area measurements.

It was suggested that Karnataka too should do away with the concept of SBA and make it mandatory for builders and developers to sell the apartments only on Carpet Area measurements. Subsequently BBMP and jurisdictional municipal authorities/gram panchayats can do away with the concept of SBA and collect taxes on Carpet Area measurements.

UDS (Undivided Share of Land) to be certified

In apartment complexes, each owner will be allotted an undivided share of land (UDS) proportionate to the size of his/her apartment vis-a-vis the total built-up area of the complex. In other words, the total of UDS allotted to all apartments should be equal to the total area of the land on which the apartment complex is constructed on. Till now, there has been no proper check on the UDS allotted by any of the government authorities.

In many cases, it is found that the total UDS allotted is less than the total area of the plot on which the apartment complex is built. In a majority of such cases, the developer/land owner has retained 10-20% of total UDS with an intention to construct another unauthorised floor consisting of a few apartments.

This menace is continuing unabated for a long time. In a few cases, surprisingly, the total UDS is more than the total area of the plot. The result of wrong UDS allotted is affecting the common man who buys his dream home by exhausting his lifetime savings. Since the land value increases over the years and building value depreciates, proper allotment of UDS is necessary.

In case of land acquisition by authorities or in case of redevelopment after the life expectancy of the apartment complex, the wrong UDS creates large disputes among all stakeholders.

In view of the above, it is necessary to have a regulatory check on the proper UDS allotted to each apartment owner. The job of properly checking the UDS allotted to each apartment may be entrusted to the Sub-Registrars, who will oversee the sale deed registrations.

All projects to come under RERA

The implementation of RERA has ensuredorderly development of real estate in the past 3 years. The Act is applicable to all projects developing on a minimum of 500 sq. m (5,382 sq. ft.) of land or if there are 8 or more units in the project.

Hence there is an orderly development in medium and large size projects, but in the case of small projects, unauthorised construction, undue delay in construction, and unprofessional approach by a few developers are not only continuing but increasing, leading to higher congestion, especially in CBD areas.

Lower middle class citizens are liable to fall prey to such unauthorised and illegal projects. Hence there is a need to have proper regulation on small residential and commercial projects. The only way to ensure orderly growth is to bring all small projects, which are for sale, under the ambit of RERA, irrespective of the size of land and number of units in the project.

All brokers to register with RERA

Presently, real estate agents (brokers) who are marketing RERA-approved projects are regulated under the Act. Since the role and responsibility is fixed under RERA, there has been good improvement in the approach by a few of the brokers/agents.

At the same time, for the re-sale market and for marketing projects that are not coming under the ambit of RERA, the unprofessional approach by a few local so-called real estate agents continues to haunt lower middle class families aspiring for a home.

In the interest of such citizens, It is necessary to have stringent guidelines to ensure a professional approach by such agents.

(The author is a real estate industry expert and MD of Propseva.com, property consultants/advisors)

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Printable version | Apr 11, 2021 2:42:56 PM | https://www.thehindu.com/life-and-style/homes-and-gardens/seeking-a-fair-deal-for-the-buyer/article33996669.ece

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