Er. Jagvir Goyal*
North Indians, known for their extravagant living, have always found it hard to escape the ‘palatial bungalow’ and ‘kothi’ culture. Till date, flats and apartments have mostly been greeted with a big ‘no no’ and apartment living has been looked upon as ‘B class’. But now, a sharp rise in prices of property and the benefits associated with apartment living are changing the mindset of people and a tilt towards flats and apartments is clearly visible. As the real estate builders and apartment sellers en-cash this new line of thought, there is a need to dwell upon some dubious terms related to apartments and correct them.
Tri-city takes the lead: In North India, tri-city has taken the lead in change of mindset. Apartment culture is fast catching up with the residents of Panchkula, Mohali and Chandigarh. For the common man, it has become impossible to buy a plot of land in Chandigarh. Next obvious choice is a good flat built by a builder or a cooperative society. Most of the towns in Punjab, Haryana and HP have followed suit. Sporadic upcoming of flats and apartments in vacant pockets of land is being witnessed. Sensing the trend, all the big and small builders have landed in Chandigarh and launched their housing projects. Apartment culture is therefore here to stay.
Super area: Apartment builders come out with attractive brochures to provide necessary information about their apartment schemes to the buyers. These brochures provide location plan, layout plan, apartment plans, specifications to be followed, price list, terms of the agreement and other details of the housing scheme. The area under each apartment is termed as ‘Super Area’ and the cost of the flat or apartment is worked out on the basis of this area. Here, ‘Super Area’ is an entirely misleading term.
Why misleading? Super area is worked out by adding many areas of common use to the actual area under an apartment. A flat with a super area of 2000 sq. ft. may in actual have a carpet area of1500 sq. ft. only. There are many areas of common use in a society or a colony. These include a common terrace, a common parking and common lifts etc. The builders divide the sum of these areas among the number of flats in the complex and add the area so worked out to the plinth area of a flat. The figure so arrived is projected as Super Area. Obviously, it looks impressive while actual and livable area is quite less. Super Area thus misleads the buyer to develop an impression that he is buying quite a spacious apartment.
What is Plinth area?: Plinth Area of a flat is the built up area of that flat. As the name suggests, it is measured at plinth level or floor level. The best method to calculate it accurately is by finding the centerline length and breadth of each room or corridor and then multiplying them to calculate the plinth area of each room. The sum total of all these areas is the plinth area of the flat. Carpet Area of a flat is the area that can be carpeted. It is in fact the area that we use while living in the flat. Roughly, it is equal to the plinth area minus the area coming under walls and cupboards at plinth level or floor level.
Cost difference among builders: While buying an apartment, the most baffling question that the buyer faces is the large differences in prices of apartments built by different builders. No doubt, the prices may vary from size to size, city to city. Apartments of identical size and design may have different costs at different locations, as the basic land prices may be high at one place due to its prime location. That’s why, the apartments in Panchkula and Mohali will be costlier than apartments in Zirakpur. When the specifications and sizes of flats are the same, the land prices make a difference. Provision of amenities, services and recreational facilities also cause a difference in prices.
Reject super area: One should reject the cost estimates based on super area. Work out the plinth area of the apartment from the building plan and believe in it. Work it out or get it worked out. A simple method will be to add the areas of all rooms, bathrooms, kitchen, lobby, covered verandahs and balconies, garage, covered staircase, shafts etc and then add a percentage for walls. Smaller are the rooms, more is the percentage area of walls. Otherwise, simply ask for the details of super area from the builder and note down the plinth area out of it. Divide the cost of apartment demanded by the builder by the plinth area in sq. feet. You’ll get per sq. ft. cost. Compare the rate worked out with prevalent market rate. You’ll get an idea of the excess price being charged and you can negotiate accordingly.
Take an example. Suppose that a flat having 1500 sq.ft. as super area is priced at Rs. 45.00 lacs. The per sq.ft. cost of flat works out as Rs. 3000. Work out the plinth area of this flat. It will be somewhere around 1100 sq.ft. The actual cost being charged by the builder is therefore Rs. 4090.00 per sq. ft. which is too high.
Making land price calculations: For better bargain, the buyer can make land cost calculations also. In order to develop a residential complex, a builder has to first buy undeveloped land, get it converted to residential land by paying CLU charges, get a license to develop the colony and then develop the land. The apartment buyer can’t evaluate all these things. He should assess the present market rate of residential plots in the area. He should also find the land area chargeable to his apartment by dividing the land under his apartment by the number of storeys. Now, he can work out the land cost component for the apartment he intends to buy.
Consider an example. Let there be 40 apartments in a land pocket of 1 acre. One acre consists of 4840 sq. yards. So the land area chargeable to one apartment shall be 121 sq. yards only. Note that this is not the land covered by the apartment but chargeable to it. Let the prevailing market price of developed plots in the area is Rs. 50000 per sq. yard. The cost of land for one apartment shall therefore be Rs. 6.05 lacs. This cost shall include all development charges also. More is the number of storeys or number of apartments in a pocket of land, less is the cost of land chargeable to one apartment.
CREDAI stance: Confederation of Real Estate Developers’ Association of India enjoys a good image and reputation. It works both for the welfare of Real Estate Builders and the apartment buyers. It has recently advised its members to avoid using the term ‘Super Area’ in their brochures. It is now for the builders and CREDAI members to follow the advice.
A word for the builders: In order to win the trust of the buyers, the builders should present a break up of cost of apartment, showing the cost of land, cost of construction and the cost of common areas separately in their brochures. The plinth area of the apartment should be clearly told to the buyer. Such a step will add transparency to the deal with the buyer. Mutual trust will prevail. Such a builder shall also be able to build a good credibility and reputation in the market.
Let the best practices come up in the real estate industry and the term ‘Super Area’ is replaced by ‘Plinth Area’.
* Author, Technical & General books; Columnist, leading journals and newspapers; Recipient of many awards and honours.
