Transparency In Deals In Indian Real Estate Market

To inspire confidence among homebuyers, developers and builders are gearing up to embrace transparent practices while selling their projects. Lalit Kumar Jain, the president of Confederation of Real Estate Developers’ Association of India (Credai), said all the developer and builders, who are members of Credai, have decided to disclose built-up area of apartments, along with the super area.
Manoj Gaur, the managing director of Gaursons and a prominent member of the NCR chapter of Credai, says that his firm has decided to sell apartments in their newly-launched project, Gaur Cascades, at Raj Nagar Extension in Ghaziabad, on the basis of built-up area and not on the basis of super area, which was a practice so far. He said the company would follow the same principle in its future projects as well.
The built-up area of an apartment includes its carpet area, which is the area inside the apartment, and the proportionate common areas like corridors, lobbies, staircases, lifts and other similar facilities.
However, in the super area, even those areas which the residents don’t use get included. Normally, built-up area is at least 20% less than the super area. But, if the project is very luxurious and has wide corridors and big lobbies, the ratio can increase further.
Anuj Goel, the executive director of KDP Infrastructure, who supports the idea, says that the ratio of the built-up area and super area varies from project to project, depending on the facilities and luxuries offered. Goel said that a builder should also disclose the carpet area, so that a buyer knows what exactly he is going to get in his flat.
Goel says: “The crux of the problem for a customer is that while purchasing a home, this price mechanism should be kept in mind, so that he can compare the price variations with different builders.”
Suppose a developer is selling a flat of super area of 1,500 sq ft at the rate of 2,000 per sq ft, for Rs 30 lakh. But in this, the built-up area for a resident in the flat is 1,050 per sq ft, 30% less than the super area. Therefore, the effective cost for a buyer is Rs 2,857 per sq ft. Therefore, if another builder is selling an apartment at Rs 2,500 per sq ft of built-up area, it will be a better bargain than the earlier one.
QUICK BITES
THE BUILT-UP AREA OF AN APARTMENT INCLUDES ITS CARPET AREA, WHICH IS THE AREA INSIDE THE APARTMENT, AND THE PROPORTIONATE COMMON AREAS LIKE CORRIDORS, LOBBIES, STAIRCASES, LIFTS AND OTHER SIMILAR FACILITIES
But the carpet area will be further reduced by at least 20% of the built-up area depending on the size of the corridors, lobbies and other facilities. However, the cost of the carpet area will be further increased. In this example, if the carpet area is reduced by 20%, the price will become Rs 3,571 per sq ft of the carpet area.
Jain says the code of conduct mandates that a member will mention in the builder-buyer agreement not only the super area of the unit but also the built-up area. Additionally, on demand from any customer, a builder would provide a copy of the autoCAD drawings, substantiating the built-up area of the unit. He says that a developer can continue to sell on the basis of super area, as long as he is transparent about the built-up area.
The code of conduct has been signed by all the members of Credai, as a mechanism for self-discipline and self-administration. If any customer is aggrieved, he can file a complaint with Credai. If a member developer is found faltering on this count, Jain says his membership will be cancelled.
Credai is planning to run a campaign to announce that if a customer buys from Credai member developers, his interest would be better protected. Manoj Gaur says, “Being Credai members, we will start bookings after approval of the building plans and start construction on the site to ensure timely delivery of projects.”
Gaurav Gupta, the director of SG Estate, while supporting the decision of the developers and builders, says that his company will also adopt the norms suggested by Credai.
He says that builders should also start quoting ‘all inclusive price’ to prospective buyers, except payment of government levies, if any. At the same time, he suggest that in case a project is delayed, buyers should have the option to drop out from a project and that the entire amount paid by them till that point be refunded to them with interest, at a specified rate.
O P Agarwal, the chairman of Lotus Infra Project, wants even more stringent norms to bring in transparency into the system.
He says that to bring in more transparency in property transactions, it is desirable to quote the rate on the basis of carpet area, otherwise builders should have standard loading norms for the additional area, besides the carpet area in the project. All these things should be disclosed in the document given to customers, so as to make buyers aware and enable them to compare various options available with greater accuracy.
Rajesh Goyal, the managing director of RG Group, supports the idea and said that his group would also embrace these practices. He says the industry has to embrace best practices for better relationship with all the stakeholders.

Source – TOI

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