RERA carpet area: How carpet area definition changes in RERA

[ecis2016.org] The Real Estate Act has made it mandatory for developers to disclose the carpet area of the units that they sell. We look at the definition of carpet area and how it will affect home buyers and property prices

The area of a property is often calculated in three different ways – carpet area, built-up area and super built-up area. Hence, when it comes to buying a property, this can leads to a lot of disconnect, between what you pay and what you actually get.  Not surprisingly, the maximum number of cases registered in the consumer courts, are against developers on the issue of cheating, vis-à-vis the size of the flat. According to the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA), it is now the duty of the developer, to make buyers aware of the carpet area and quote prices based on this and not the super built-up area.

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Gautam Chatterjee, Maharashtra RERA chairman, explains that “It is now mandatory for the developers of all ongoing projects, to disclose the size of their apartments, on the basis on carpet area (i.e., the area within four walls). This includes usable spaces, like kitchen and toilets. This imparts clarity, which was not the case earlier.”

Carpet area meaning and how is it different from super built-up area?

Carpet area, or the net usable area, is the space where one can spread a carpet. Built-up area includes the carpet area, plus the extra areas certified by the authorities, such as the area of the outer and inner walls, dry balcony area, etc.

Super built-up area, on the other hand, includes the carpet area, the built-up area, as well as a share of the balance area, such as the stairs, lobbies and galleries, which can be used by all the residents. Prior to enactment of the RERA, builders used to quote the super-built up area and agents used to promote new projects citing how spacious these were. The RERA has quashed such malpractices.

For example,  if the built-up area is 1,000 sq ft, 30% (that is, 300 sq ft) is generally not usable and is usually the dry balcony, staircase, etc., while 700 sq ft is the remaining area that will be used and is hence the carpet area.

Carpet area and affordable housing

Residential units in metro cities with 60 sq metres of carpet area and 90 sq metres of carpet area in case of non-metro cities, are considered as affordable housing. Any alteration to this understanding is decided by the authorities.

Carpet area as per RERA

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According to the 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’.

An easier description would be: Anything inside the outer walls of an apartment, but excluding the balconies, verandah or open terrace and shafts, says Digbijoy Bhowmik, head of policy, RICS, South Asia. “Now the balcony’s area will not be included, even if it is an exclusive balcony for the flat. The area of the lift lobby, staircase lobby or any space that you can be in, before you enter the house through the main door, cannot be included. Also the common/exclusive shaft that is used to vent the air from kitchen/lavatory, is excluded. However, a walk-in wardrobe will be included,” he explains.

Dhaval Ajmera, director of Ajmera Realty, points out that “Many promoters provide information on the built-up area, rather than the carpet area, which is less than the built-up area.” Now, a clear definition will align customers’ expectations, with the actual measurements of the flat.

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Mandatory disclosure of carpet area and its impact

Sandeep Singh, CEO of Sheltrex, a Brick Eagle Company says, “Buyers will now understand the exact measurement of the flat they can reasonably expect to receive from the developer. Furthermore, they will know exactly what part of the flat is included in carpet area and what part is included in verandas and terraces. Additionally, developers will have to be more stringent in planning their projects, to ensure exact rendition of plans to actual carpet area.”

• The earlier practice of including balcony, terrace, verandas, flower beds and void spaces within the meaning of carpet area, by unscrupulous developers, will now come to an end.
• In certain cases, corner apartments, or other apartments placed at certain advantageous or disadvantageous positions, usually used to get a little more or less carpet area. While the apartments at advantageous positions that had greater carpet area were always priced at a premium, the ones which lost some carpet area were never sold at a discount, as the ‘missing’ carpet area was usually obfuscated in the super built-up area.
• Good design and efficiency will now become crucial. Previously, an inefficient design, which used too much of common area space, would fare the same as a good design, as both could have the same super built-up area, but different carpet areas.

Home buyer Nidhi Sharma, points out that property rates per sq ft, will certainly go up, as the total price will be divided by a lower denominator (carpet area, as against super built-up area). “Nevertheless, now, at least we will know what we are getting into. We will no longer get a 500 sq ft apartment while thinking we have purchased a 700 sq ft apartment,” she says.

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RERA carpet area definition: How it will help home buyers?

In many projects, loading accounts for approximately 30%-35% of the total area. “Accurate information about a project’s site, layout and plot, will empower the buyer to take an informed decision,” explains Nibhrant Shah, founder and CEO of Isprava. It would also become easy for owners to understand the components of their tax liability on property and the rights and easements associated with a property, when it is part of a larger common structure or building.

According to Rahul Shah, CEO of Sumer Group, “As per the RERA guidelines, a builder must disclose the exact carpet area, so that a customer knows what he is paying for. However, the act does not make it mandatory for the builders, to sell a flat on the basis of carpet area.” Amit Wadhwani, director, Sai Estate Consultants, maintains that a lot of effort needs to be put to create awareness. “Bankers, investors, developers and brokers, need to start practicing RERA and disseminate the information. All the changed definitions are supposed to be practiced and executed on the ground by the real estate fraternity, so that there is clarity and benefit for the end-users,” he concludes.

Change in price if the carpet area is altered

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In the case of an apartment, the promoter has to confirm the final carpet area that has been provided to the buyer, after the construction is completed and the occupancy certificate is granted. The real estate law specifies that in case of alterations, the total payable price will be recalculated. If there is a reduction in the carpet area, the excess amount would be refunded within 45 days, with an annual interest rate as prescribed in the rules. Note that the increase in the area cannot be more than 3%. In case there is an increase in the carpet area, the developer can demand a higher amount in the next payment. The cost will be calculated at the same rate per sq ft, as agreed.

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Carpet area, super built-up area and real estate scams

With RERA, the additional comfort that a home buyer gets, is the assurance that if the developer has stated that a property is 900 sq ft, it would indeed be 900 sq ft of carpet area. However, for years together before RERA, prospective home buyers did not enjoy this benefit. Not just unregistered developers in the past, even the most renowned builders have been accused of real estate scams, wherein they advertised the property with its super built-up area or completely covered the fact that very small units were being advertised in the garb of affordable homes.

Some developers cite the amenities that they provide to home buyers, which adds up to almost 35% of the entire project area. This, they say, was the reason why super built-up area or loading was the unique selling point before RERA. Not anymore.

Penal action against developers for false information

Section 61 of the RERA says that for providing false information and other such contraventions, the promoter may have to pay a penalty of 5% of the estimated cost of the real estate project.

Carpet area in the post COVID-19 world

Thanks to the RERA, developers have been offering clarity about the carpet area of their properties. As per independent researches, in the post-pandemic world, the demand for bigger homes has witnessed a rise. It is important for prospective home buyers to check the carpet area of the property, before signing on the dotted line. Know that the carpet area would be close to 30% lesser than the super built-up area. Do not get confused between the two.

MahaRERA directs promoters to disclose stock details, carpet area

The Maharashtra state real estate regulatory body has directed that all promoters should necessarily disclose information about booked flats, houses, plots and shops, among other constructions. The database thus created, would give more clarity to purchasers and multiple transactions could be avoided. All the information is to be disclosed in a set format and this shall include: total number of floors/wings, number of flats/shops/rowhouse, carpet area, sold/booked/unsold inventory and registration details. With this, instances of unauthorised housing in Maharashtra will also be identified.

(With inputs from Sneha Sharon Mammen)

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