Buying a home may get costlier with new realty bill
Prices of flats are to go up after implementation of the provisions of Real Estate (regulatory and development) Bill.noida Updated: Apr 04, 2016 18:07 IST
Prices of flats are to go up after implementation of the provisions of Real Estate (regulatory and development) Bill. The bill will restrict developers to selling units only on the basis of carpet area and the developers are in turn likely to compensate the cost of construction of super area in flats’ rates.
The Real Estate (regulatory and development) Bill, 2013, was passed by the Parliament on March 10. The bill introduces a regulatory authority at the state level for homebuyers to approach in case of grievances. It will also have the power to penalise or prosecute builders who do not comply with the provisions of the Bill.
Carpet area is the inner wall-to-wall distance or simply, the net usable area inside the house. Built-up area is carpet area added to area of the walls, ducts, and half the area of terrace, which is usually 10% more than the carpet area. Super built-up area is built-up area plus the area occupied by common amenities such as lifts, corridors, awnings and stairs. The super built-up area is usually around 25% more than built-up area.
To make it simpler, a flat with 1,000 sq ft carpet area will have a built-up area of 1,100 sq ft and super built-up area of 1,375 sq ft.
“There will be a minimal change in the rate. A flat that is being sold as a 1,000 square feet (sq ft) unit for `50 lakh will be sold as a 600-700 sq ft unit as the bill will prevent us from including the super area. However, no building can be constructed without a super area and a developer will not construct it for free,” said Manoj Gaur, MD Gaursons India, and president of confederation of real estate developers of India (Credai), NCR.
Developers say the bill will help bridge the trust deficit between builders and buyers, but the new rules will also make units costlier.
“We welcome the bill wholeheartedly. It will give the real estate sector a boost, but at the same time, the cost of super area, which includes the lobby, stairs, lifts and other areas, will be compensated in the carpet area. The cost of compliance will also affect the rates of the units,” said Prashant Tiwari, CMD, Prateek Group, and vice-president, Credai, western UP.
However, builders are still not sure about the regulatory authorities’ decision to count balconies in super area.
“Once the state-level regulatory is constituted, the matter of counting balconies in carpet areas or super areas will be resolved,” said Amit Modi, director, ABA corp, and president, Credai, western UP.
However, existing buyers won’t be affected by this. Experts say the real estate market is already in a bad shape as a number of units remain unsold, widening the gap between demand and supply. Hence, builders cannot take any irrational step to turn down homebuyers.
“Builders can revise the rates of residential units at any point of time, but the homebuyer will approach them only if it fits their budget. They (builders) know what the budget of a middle class family is. Moreover, if they increase rates substantially, the end user, who buys a property for residential purpose, will have other options too, like buying a flat on resale,” said Annu Khan, property expert and president of Noida Estate flat owners’ welfare association (Nefowa).