Decoding Real-Estate Jargons For Homebuyers
The most important factor for buying a home is value for money
The Indian real estate sector has undergone a shift in recent times and has now taken an upturn, showing signs of positive growth. As a result of the resurgence, there has been a significant shift in the buyer mindset as we witness the realty market withstand various upheavals. These changes have been aided by the introduction of new reforms and government policies that are transforming the sector to further enable transparency, streamlined processes. Right from RERA, to GST and demonetisation, these reforms are positively impacting the sector and transforming it from a previously unorganised one to a more mature and structured market.
The year 2017 was a landmark year for buyers and developers alike with the implementation of two monumental reforms, namely RERA and GST. RERA (Real Estate Regulatory Authority) ensures mandatory completion of projects, utilization of funds collected by customers for the concerned project, and disbursing project related information on a public platform, paving way for a more transparent relationship between the buyers and developers. Not only the developers but also the investors and homebuyers will benefit from these policy changes.
Over the years, the parameters for choosing a home have drastically evolved. The most important factor is value for money. Buying a home involves a lot of emotions and is a lifelong investment. Buyers need to do the required due diligence and accordingly plan their decisions, in order to enjoy the perks of being a homeowner.
A rightly priced product alongside superior amenities, good infrastructure and optimum design elements is the need of the hour. Changing market trends and the introduction of reforms have improved market stability and structure of the sector. The same has ensured that buyer interests are safeguarded, providing clarity and a better understanding of the varied options available in the market basis their requirement.
Considering the rise in buyer demand and market complexities, it is important to understand and know the intricacies of real estate terms often used by professionals in the sector. Below are some of the most commonly used jargons every buyer should understand:
- FSI (Floor Space Index): Floor Space Index (FSI), also known as Floor Area Ratio (FAR) is the ratio of the built-up area to the total area of the plot. The respective municipal council is the authority responsible to determine the FSI limit for regulation of construction in a particular area.
- Stamp Duty: Stamp duty is the tax collected by the respective state government on property transactions within its jurisdiction. The buyer of the property is the one who pays the stamp duty. This kind of tax is applicable to non-agricultural, agricultural, independent homes and also commercial flats or units. The tax, however, ranges from 3 per cent to 10 per cent across states in India.
- Carpet Area: According to RERA, carpet area is defined as 'the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment'. True to its name, this space is essentially where you can spread the carpet. Carpet area is, in simple terms, anything inside the outer walls of an apartment.
- Sale Deed: Also known as the conveyance deed, the sale deed is a non-judicial agreement drafted at the time of the sale of a property. This deed signifies the closure of the sale process. A sale agreement takes place when both the buyer and the seller are satisfied with the terms and conditions mentioned in the agreement. The sale deed is also the transfer of the ownership of the property to the buyer.
With a basic understanding of the real estate terms, buyers can be more informed and make smart decisions. As the industry continues to grow at a rapid pace, it is imperative for developers to engage in educating home buyers and support them in what will be one of their most prized investments in life.
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