Planning to buy a new home? You should know these terms and jargons

Buying property is a massive financial decision. Here are key terms you must know if you plan to buy a home

Buying property is a massive financial decision. So, to be able to make an informed choice, it is a good idea for homebuyers to get familiar with property jargon.

Here we explain key terms you must know if you plan to buy a home.

Carpet area is the actual habitable area measured from the inner faces of walls, including the balconies. It is now mandatory for developers to disclose the carpet area of all units in brochures and websites.

Built-up area refers to the total area of a flat – the carpet area, the space covered by the thickness of the walls and the ducts. Typically, it is 10-15% more than the carpet area.

Super built-up area is the total ‘saleable’ area, adding a markup over the built-up area for common spaces like lifts, staircases, entrance lobby, corridors, etc. It includes all common infra (excluding parking space) not directly charged to the buyer but divided proportionately among all flats. The unit price per square foot is calculated on the basis of the super built-up area.

Now there is also something called the loading factor. The difference between a super built-up area and carpet area is known as ‘loading’. The loading factor is the extent of the non-liveable common area (space around staircases, elevators, lobby, and terrace) added to the carpet area and charged to the buyer.


 

It is important to know how to calculate loading to ensure one doesn’t end up paying more for less space.

An acceptable loading factor is between 20% and 30%. In the absence of any regulation, many developers charge loading as high as 50% or more for their projects.

Floor space index is the ratio of the total area covering all the floors in a building to the total plot area. It indicates the maximum amount of construction allowed on a given plot of land. For instance, if the FSI for a plot measuring 4,000 sq ft is 1, the total floor area of a multi-storied building cannot exceed 4,000 sq ft. A project with a higher FSI allows a builder to offer a larger liveable area even if the plot is small.

Ready reckoner rate or circle rate is the minimum price at which a property has to be registered in case of a transfer. A property has to be registered on the declared transaction value or the minimum rate set by the government, whichever is higher. The stamp duty is calculated as a percentage of this value.

Prospective homebuyers also need to have their papers in order. Here's what you will need:

A no-objection certificate issued by the local authority specifying that construction plans are in order and conform to the guidelines.

Encumbrance certificate, which is issued by Registrar of Assurances or Sub-Registrar’s office after due verification of relevant documents.

Occupancy certificate is issued by the local municipal body to the builder or owner of a house specifying that it is fit for occupation.

Sale agreement (or agreement to sell) contains a promise to transfer the property in future, on the satisfaction of certain terms and conditions. An agreement for sale does not in itself create any ownership interest in a property. Therefore, the purchase of a property is not complete without a sale deed.

Sale deed/conveyance deed is a contract in which the seller transfers all rights of the property to the buyer, providing the buyer the absolute and undisputed ownership of the property.