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Vacuuming the Carpet - 3rd May, 2008. Times Property (Times of India)

The New amended bill on carpet area could put buyers on a spot

It is obvious that the Maharashtra government is trying to show that they work and serve the general public (people who vote for them) but in the process of doing so, they have highlighted that they actually work in the favour of the developers. I am not sure if the developers are wrong in adding a justified built up area of up to 20% which is the way I am made to believe it works in Pune residential property sales, but any addition of area for which developer in not paying a premium or area that does not really exist is ridiculous.

For example, from Juhu to Bandra there only small plots with sizes from 400 to 1500 square yards. When you develop a building with FSI calculated at 1:1 and TDR added of 1 ratio, that means you can develop on a 400 sq yard plot 4000 + 4000 sq. ft. approximately. There are deductions in the area on account of road cutting or any other reason in some cases. Certain common areas are free of FSI but come at a certain premium to Municipal Corporation.

All said and done, the bottom -line is that on such a small plot how can one add common areas as ‘super built up’ when even the compound open space, which is used for car-parking, is sold.

The new ‘amended bill actually puts buyers in a spot and gives further ammunition and backing to the developer. The agreement between the developer and the buyer states the carpet area, where the buyer is explained the ‘math’ and is asked to pay on ‘super built up’.

Nowhere does it state that he has paid on super built up in the agreement and has no written communication or proof of the same. Now if you look at the chart here the rates on the carpet area obviously seems higher but giving clarity on what you are paying for as compared to the rates shown in the super built up column.

Let’s take an example. When you buy a home, the trend is to add 35 to 60% if not more to the carpet area; 30 to 65% in case of office premises and 50 to 100% in retail premises. Assuming, some one buys a 1000 sq.ft. ‘carpet area ‘home, the addition of an average 40% makes it to-in words of developers ‘saleable area’ of 1400 sq.ft.

The document mentions 1000 but you pay for 1400 and assuming the transaction has happened with taxed paid ‘white money’ (which is the only way we encourage transactions);that amount and carpet area are the only numbers that recorded in a registered document. So, at any given date if the sales actually happen on ‘carpet’ basis additional payments or areas you have paid for, is not accounted for.

I think a fair formula has to be worked out for both the developer and the buyer. Let’s assume a developer develops a premium property with luxury amenities and facilities, he is charging a premium price to it anyway.

So an ‘add on’, which takes care of ‘other expenses’ incurred by a developer could be a fair method. I think a flat 20% on both residential and commercial properties is fair and up to 30% on the retail properties. Effectively the rates seem higher, but any buying decision has on one formula, which is comparing carpet area from property to property bearing in mind you can only compare apple with an apple.