Here's a list of some real estate terms which are widely used and as a buyer you should be aware of.
Pre – Launch Sales: -
Also known as soft launch means sales of the project without 100% approvals for the development of the project, off late there are many builders who are promoting prelaunch sales of their project by giving the advantage of price to the buyer who are willing to buy the project without 100% approvals. As soon the project is launched either the prices are revised upwards or the apartments at good locations are already sold.
Launch Sales: -
Means sales of the project which has 100% approvals, normally in Northern
India the sales of the project start in the pre – launch phase only.
Inaugural Discount: -
During the prelaunch phase many builders offer inaugurals discount to the buyer to lure them to buy the property in the prelaunch phase. They also use this as a technique to create curiosity to increase the sale and also revising the prices upwards.
FAR & FSI: -
FAR means Floor Area Ratio and is used for commercial properties, FSI means Floor Service Index and is used for residential properties. Both of them mean the total area that can be constructed in a particular piece of land for eg. Suppose If the FSI of a property is 1.75% and the total land area is 10 acres then the total area that can be constructed in square feet will be: -
10 acres * 43560 sq ft = 4,35,600 sq.ft.(Converting to sq.ft.)
1.75%(FSI)*435600 = 7,62,300 sq.ft.(Multiplying FSI of the plot with total sq.ft. area of the plot) So the total area that can be constructed is 7,62,300 sq.ft. The higher the FSI the lower is the price of the property as more houses can be built on the same piece of land and vice versa.13 Off late government has increased the FSI for the existing land and also for the olds land, encouraging accommodation of more people and promoting budgetary housing.
Land Coverage: -
Means the maximum land that can be covered for construction, the smaller the size of the plot, greater is the land coverage area, the bigger the size of the plot the smaller is the land coverage area. Correlating it with the example of FSI, suppose if the maximum land coverage allowed for a plot is 40 % then the land that can be covered will be : - 40% of (10 acres X 43560 sq ft) = 174240 sq.ft.
Now for covering the total area available for construction the builder has to scatter the construction over 4.5 Floors (7,62,300/174240), with every floor of 174240 sqft. The government has fixed the maximum land coverage however one has to use the land coverage below the maximum limit allowed. For eg. Though the maximum limit allowed is 40% but you want to cover only 20% then the calculations will be as below: -
20% of (10 acres X 43560 sq ft) = 87120 sq.ft. Now for covering the total area available for construction the builder has to scatter the construction over 9 Floors (7,62,300/87120), with every floor of 87120 sqft. However government has fixed certain limit to the building height, so one has do proper permutations and combinations to ensure a right combination of Land Coverage and FSI.
Refers to the population that is allowed in one acres of land
A sky lighted central area, often containing plants, in some modern buildings especially for public, in properties of commercial nature.
A podium is a platform that is used to raise something to a short distance above its surroundings, for instance the conductor of an orchestra stands on a podium.
Mezzanine Floor: -
means an intermediate floor between two floors above ground level accessible only from the lower floor.
Building Height: -
means the numbers of floors that can be built in the building, normally it is mentioned as G + 7 which means ground floor and seven more floors. Sometimes it is also mentioned as S + 10 which mean that building doesn’t have a ground floor, ground floor has a parking which is known as Stilt (S) and the building has 10 more floors.
Escalation Charges: -
When a builder fix the price of the property it takes into consideration the economic inflation which might affect his costing as the construction of the project is scattered over a period of 2-3 years. There can be huge escalations in the costing of the builders because of economic changes which may lead to an increase in cost of labor & raw material. Builders normally keep the prices escalation free, sometime these charges are escalations free to a particular level of inflation and if the inflation rises more than the defined limit then the builder increases the rates of the property accordingly.
Earnest Money: -
Means the amount of booking paid along with the booking application, it is normally around 10% of the Basic Sale Price.
Capital Gain Tax: -
is paid to the government for the profits made from the sale of a property, it is of two types: -
- Short Term Capital Gain Tax: - when a property bought in sold within three financials years of the purchase then the profit made on it is taxed at 30%.
- Long Term Capital Gain Tax: - when a property bought in sold after three financials years of the purchase then the profit made on it is taxed at 20%. The rate at which the tax is charged keeps on changing according to the government policy. An entity can avoid this tax if the sales proceed of the transaction are reinvested in a property within one financial year of the sale of the property. A sale proceed of a residential property cannot be invested in a commercial property. To keep the money safe, banks open special accounts for this purpose in which the sale proceeds of the property can be kept. For avoiding the Capital Gain tax some of the buyers take the profit of the transaction in form of cash thus creating an involvement of black money. The policies of government for capital gain keeps on changing from time to time so it’s important to be updated on the same.
Allotment Letter: -
it is a document issued by the builder to the buyer of the property mentioning the number of the unit or apartment being allotted to the buyer and details of how the payments have to be made.
Builder Buyer Agreement: -
It is the most important document in case of primary bookings, it’s the agreement that contains all the terms and conditions of the purchase of the property, the total prices of the property and the payment schedule. It is signed by both the buyer and the builder. There are two copies of the same in original; one is retained by builder and the other by the buyer.
Property Tax: -
Taxes are paid to the government according to the rules and regulations.