Maharashtra gets transparency in flat pricing
Now, buyers of apartments will know in a transparent manner the charges for shared facilities outside the proper area they directly own and pay separately for them. Lalatendu Mishra reports.india Updated: Apr 28, 2008 00:47 IST
Now you can finally buy your flat based on the carpet area in Maharashtra. Last week, the state legislature made it mandatory for builders to sell flats based on the carpet area, as it passed an amendment to the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act 1963.
Builders refusing to do so will face a jail term of three years, provided the buyer registers his/her complaint.
What the amendment implies is that buyers of apartments will know in a transparent manner the charges for shared facilities outside the proper area they directly own and pay separately for them.
Builders have been permitted to charge an extra amount from the buyers towards common areas like balconies and other amenities such as the passages connecting flats, lifts, lobbies, fire fighting areas, gardens, gymnasiums and swimming pools provided in building compounds.
Though criticized as being pro-builder, this move will certainly bring in transparency in real estate transactions in the state and more specifically in Mumbai where realty prices are among the highest in the country.
Earlier, many builders used to take buyers for a ride by making them pay on the basis of the “built-up and super built-up” areas that was 25 to 33 per cent more than the exact carpet area coming inside a flat. In other words, flat owners used to stay in areas less area than what they had actually paid for. However, buyers are not exactly thrilled by the announcement. Said advocate Vinod Sampat, President of the Co-operative Societies, Residents, Users and Welfare Association, Mumbai, “This is a mere eyewash. There will be no stopping builders from charging extra towards amenities other than the carpeted area of a flat. Though selling through the carpet area is good for buyers, builders are now legally allowed to charge extra for added facilities.”
On the face of it though the government feels that realty prices would drop sharply once builders start selling on the basis of carpet areas. But in effect, it would make no difference for the sellers. They can split the overall price or charge more for the carpet area, as prices are eventually driven more by demand and supply factors. Similarly, the per square foot rates of re-sale flats in housing societies would go up as the sellers who had earlier bought on the basis of the super built-up space will now have to sell on the basis of carpet area measurements. If not, they would incur losses.
For example, a person who had paid Rs 10,000 per square foot. for a flat sold through super built-up measurements only recentlywill jack up the price to Rs 14,000 or more as he/she will now quote the price on the basis of the carpet area. In a 1,000 sq. ft. super built-up flat, the carpet area usually around 700 to 750 sq ft. – sometimes even less.
Whatever may be the consequence, at least a beginning has been made towards transparent pricing.