Buying Real Estate – Know the Jargons First
Buying a house to live is a dream which Rakesh wanted to fulfill in his present life. When he was unmarried he started searching for one. But he faced lot of problems during his initial years as there were very few options available which fit his budget. Now, with a high disposable income and easy financing schemes he wants to make his dream come true. He has met many agents and developers in his search for the right property. After lot of enquiries, he is a bit confused now. There are so many terms like carpet area, built up area, etc. which he is unable to understand and hence not able to figure out which property is right for him. He is now thinking of taking help of his childhood friend who is into the real estate business.
Unlike Rakesh, not many of us have the privilege of knowing someone who has sufficient knowledge about real estate. The technical jargon used by the developers is the foundation of real estate business and has become the cornerstone for mis-selling. Hence it is important that before taking a decision to buy your dream house, you get yourself acquainted with the jargon.
- Stamp duty – While purchasing a property (house or land), you need to pay a stamp duty. This is a certain percentage of the actual cost of the property and is levied by the state government. Every state has its percentage defined and can vary from 5-14 per cent. However, this is no way a proof for registration of property.
- Registration of agreement- Any immovable property document has to get registered at the time of purchase only. All the agreements related with such transactions should be registered with the sub-registrar of assurances under the provision of the Indian Registration Act. Do remember registration happens only when you pay the stamp duty to the government
- Carpet area – This is the area where you can easily lay a carpet or the net usable area. Till a few years back, builders were selling their flats on this concept. But it is very rare now and most of the flats are sold as per built-up and super built-up area.
- Super built-up area – This area includes open spaces, lift, stairways and others. This is the area which is being sold by every developer today and is the center point of mis-selling.
- Built-up area (BUA) – This is the circumference of the flat or the space covered by thickness of inner and outer walls of flats. Generally, BUA is 12-15 per cent more than the carpet area
- Property title – The real owner of the property in the registration records. This has been the most disputed factor as the property changes title many times but it does not get recorded. However, when you avail finance from banks you indirectly benefit as banks sanction loans only on properties which have a clear title.
- Floor space index – The floor space index (FSI) or floor area ratio (FAR) is the ratio of the total floor area of buildings on a certain location to the size of the land of that location.
- Approved plans – Before a builder starts a construction in a particular area, the plan has to get approved by the respective municipal corporation. The plan shows the layout of the project and flat.
- No objection certificate (NOC) /occupation certificate – While constructing a building in particular area, every builder has to take NOC from the municipal corporation. This shows that the completed project is as per the approved plan. Required formalities like the water connection and the necessary amenities have been provided. You can always ask this document from the builder for authenticity.
- Allotment letter – When you sign a deal for purchase of a property, an allotment letter is issued to you. This letter contain details of price agreed by you, payment and construction schedule, plan of the house, the exact delivery date and liability of the builder if he misses the completion date or is unable to give you possession on the due date.
- Possession letter: When the projects gets completed the developer hand over a possession letter to you which states that the flat is ready for occupation and you have cleared all your dues.
- Construction linked payments: This has been the latest features in most of the properties selling today. The home buyer or the lender pays to the builder according to the phases of construction completed.
- Sale deed– When finally the sale deed is signed; it transfers the properties to the buyer at a price paid or considered. One must remember that every sale deed is required to be compulsorily registered.
The whole real estate business revolves around the jargon mentioned above. The developer will woo you with lot of attractive offers by using these terms but it is up to you to read the fine print and take your decision to buy your home.