Decoding Indian Real Estate Jargons

Introduction

Real estate jargon refers to the specialized terminology used in the Indian real estate industry to describe different aspects of buying, selling, and developing properties. Some common real estate jargons in India include 

• carpet area, 
• super built-up area, 
• floor space index, 
• leasehold property, 
• freehold property, and 
• occupancy certificate,

Understanding these terms can help buyers and sellers navigate the complex process of buying and selling properties and make informed decisions.

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What is the RERA Act?

The Real Estate (Regulation and Development) Act (RERA) is a government legislation aimed at regulating the real estate sector in India. It aims to promote transparency, accountability, and efficiency in the sector by establishing a regulatory framework for real estate projects and agents. RERA requires developers to register their projects with the regulatory authority and disclose all project-related information to buyers.

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What is RERA Registration Number? 

The RERA registration number is a unique identification number assigned to each real estate project registered under the Real Estate (Regulation and Development) Act (RERA) in India. The registration number is issued by the regulatory authority of the respective state or union territory and is used to verify the project’s compliance with RERA regulations. Buyers can search for a project’s RERA registration number on the official website of the regulatory authority to ensure its authenticity and track its progress.

What is a Carpet Area?

Carpet Area is a term used in the Indian real estate industry to describe the actual usable area of an apartment or building. It is the area that can be covered by a carpet or the net floor area of the apartment excluding the thickness of the walls. Carpet Area does not include the common areas of the building, such as the lobby, lifts, staircases, etc. It is the most important factor in determining the actual usable space in an apartment or building and is used to calculate the maintenance charges, property taxes, and other charges related to the apartment or building.

What is meant by Super Built-Up Area in Real Estate terms?

Super Built-Up Area (SBA) is a term used in the Indian real estate industry to describe the total constructed area of an apartment or building. It includes the carpet area (the actual usable area of the apartment) plus a proportionate share of the common areas such as the lobby, lifts, staircases, etc. SBA is calculated by adding the carpet area to the proportionate share of the common areas, usually at a ratio of 1.25 to 2.5, depending on the builder and location. SBA is used to calculate the price of the property and is often higher than the carpet area, which can lead to confusion among buyers.

What is Floor Space Index  (FSI)?

Floor Space Index (FSI), also known as Floor Area Ratio (FAR), is a term used in the Indian real estate industry to describe the maximum permissible built-up area of a building on a given plot of land. It is the ratio of the total built-up area of all floors of a building to the total area of the plot on which the building is constructed. FSI is regulated by the local municipal authorities or competent authority and varies depending on the location and type of building. It is used to regulate the density of construction and ensure that buildings do not exceed the permissible limits of built-up area on a given plot.

What is meant by Leasehold property?

Leasehold property refers to a type of property ownership in India where a person owns the right to use and occupy a property for a specific period of time, usually ranging from 30 to 99 years. The ownership of the property reverts to the landowner once the lease period expires. Leasehold property ownership is common in government and municipal properties, while freehold property owner grants the owner full rights to the property indefinitely.

What is meant by Freehold property?

Freehold property is a type of property ownership in India where the owner has complete and permanent ownership of the property, including the land and the building on it. The owner has the right to use, sell, or transfer the property without any restrictions or limitations. Freehold property ownership is the most common type of property ownership in India and is considered to be the most secure form of property ownership. Once a property is registered as a freehold, the owner does not have to pay any annual lease charges or renewals to the government or any other authority.

What is Pre-Launch Property?

Pre-launch property is a term used in the Indian real estate industry to describe a project that is marketed and sold before its official launch or before receiving all the necessary approvals from the local authorities. The aim of the pre-launch is to generate interest in the project and to raise funds for its development. Pre-launch properties are usually offered at a lower price than the market rate, and buyers are often required to pay a booking amount or an initial deposit. However, investing in pre-launch properties can be risky, as there is no guarantee of timely completion or approval of the project.

What is Occupancy Certificate in India?

An Occupancy Certificate (OC) is a legal document issued by the local municipal authorities or competent authority in India. It certifies that a building has been constructed in compliance with all the applicable laws, regulations, and approved plans. The certificate is issued after the completion of the construction and inspection of the building by the authorities. It is mandatory for the building owner to obtain the OC before occupying or renting out the property. The certificate indicates that the building is safe for occupation and that all necessary amenities, such as water, electricity, and sanitation, are in place.

Conclusion

Understanding real estate jargon is crucial for buyers and sellers in the Indian real estate market. It can help them make informed decisions and navigate the complexities of the industry more effectively.

Lawyers play a crucial role in the Indian real estate industry by providing legal advice and assistance to buyers, sellers, and developers. Lawyers can also help clients understand real estate jargon and interpret legal documents related to property transactions.

Frequently asked questions about Real estate jargon

Q 1. What is the difference between carpet area and built-up area?

Ans. Carpet area refers to the actual usable area of an apartment or building, while built-up area refers to the total constructed area, including the carpet area and the proportionate share of the common areas.

Q 2. What is a built-up area in real estate?

Ans. The built-up area is the sum of the carpet area plus the area of the walls and other areas that are not usable but contribute to the total area of the property. It includes the thickness of the walls, the balcony, and other common areas.

Q 3. What is a lease agreement in real estate?

Ans. A lease agreement is a legal document that outlines the terms and conditions of a rental agreement between a landlord and a tenant. It includes details such as the duration of the lease, rent amount, security deposit, and other terms and conditions of the rental agreement.

Q 4. What is a sale deed in real estate?

Ans. A sale deed is a legal document that serves as proof of ownership of a property. It is a written agreement between the seller and the buyer and contains details of the property, such as the sale price, the date of purchase, and other terms and conditions of the sale.

Q 5. What is the circle rate in real estate?

Ans. Circle rate, also known as guidance value, is the minimum value at which a property can be registered with the government. It is determined by the state government and is used to calculate the stamp duty and registration charges for a property transaction.