By Sanjay Chaturvedi, LLB, Ph.D.
All over India, the super built-up concept has taken its place in real estate transactions. It is applicable to residential units, commercial premises and now to the open vacant land. Although there is no place of such a concept in any law for the time being in force, the transactions cannot take place without it.
Question is, who invented and why? When builders started selling concepts instead of flats in the early 80s, they were asked to sell it on the carpet and no due charges were given for the extra amenities they had provided.
The balcony was charged an extra premium by the BMC and builder mounted balcony area on carpet area of the flat. And slowly he started adding areas of passage, common staircase, lift wells, compounds, terrace, gardens etc on the carpet area to maximise his profits.
The permissible built-up ratio was 18% that time and is still applicable. But the trend changed over the years. Builders started mounting 23% in the early 90s then 30% in late 90s and nowadays the majority of the builder sells nothing less than 33% to 45% on residential units, 50% to 200% on commercial premises. Government agencies like MHADA, SPPL, DDA and CIDCO are also following the trend.
Landlords are also now very well informed on such practice and hence sell the open land to developers by adding 33% of the saleable area.
This is not the practice in Mumbai alone. Ahmedabad, Delhi, Rajkot, Bangalore, Pune, Nashik, Kolkatta, Chennai and elsewhere in India are following the trend.
When Deepak Parikh, chairman, HDFC, boldly said in CREDAI meeting at Bangalore that the sale must be on carpet area, no developer came forward to announce his intention to sell at carpet area except Mantri Group. CREDAI has itself imposed a code of conduct which clearly says that the carpet area must be mentioned in the sale agreement. The Confederation of Real Estate Developers Association of India failed to impose such code.
In Model Agreement under Maharashtra Apartment Ownership Act, it is mandatory to mention carpet area in sq.mtrs. And the model agreement is mandatory to be followed for entering into an agreement. But sellers never follows the model Agreement, instead drafts one-sided agreement to protect them and attack the purchaser without any fault.
A thought was coined by MCHI office bearer, in a talk show on some channel recently, that we give extra amenities, extra open space, extra lifts and other amenities, we are charging for that. And the super built-up area is just a method for calculating the rates. Either you pay Rs. 2600/- as super built up or Rs. 3800/- on the carpet, my flat will cost Rs. 18,00,000/- for 2 BHK.
Open spaces are mandatory to be left alone in the Development Rules of BMC. The builder has to keep such an open space. By just decorating and using it as USP for the project, it doesn’t give him any reason to mount on the carpet.
It is already written in DC Rules and proven that lift wells and staircase do not count in the total constructed FSI, hence charging such area on the carpet is not justified.
Compounds also cannot be charged on the carpet, because anything open to the sky is not saleable. Non saleable areas cannot be sold by proxy. It cannot be counted in area of occupation. Also, open car parking is been sold, hence the builder should not charge the open compounds twice, once sold as car parking and secondly mounting such areas on the carpet. Even open car parking cannot be sold.
Lastly, the customer who registers their documents on the super built-up area pays higher property tax, society charges for the lifetime. He pays the taxes for a lifetime on the area which he is not occupying and only mentioned on paper. Higher stamp duty and Registration charges on the super built-up area is also not justified.
It was indeed a great concept two decades ago, but now when transparencies are discussed, the seller must be Caveat Emptor. Let the buyer be beware of everything which he is paying for. Founder Convenor K.V. Satyamurthy, FAAI rightly raised the voice as “Maap Mein Paap Nahin”. An upcoming rating agency sent an SMS to this author, said “Earth will swell 45% if developed by a Mumbai developer”
Updated on August 1, 2009