From Circle Rate to Carpet Area; 6 essential Real Estate terms every homebuyer in India must know

It is often said that we buy a home once in our life. It’s a dream and it’s an emotional milestone in India. But before we get into the whole process and documentation, it is also important to understand that buying a home is also full of legal and financial jargon. While browning those glossy and dreamy brochures, we often come across words or terms like Carpet Area and RERA, among others. Most time buyers are confused because of bombarding heavy words, especially the first-time homeowners. So here we have prepared a list of some key real estate terms knowing which will make the entire process smoother and easier for you.

Here are 6 essential real estate terms every property buyer in India should know.

Carpet area is among the commonly used or heard words in the world of real estate. Many often get confused whether it’s the actual area of the home or something else. So according to the Real Estate (Regulation and Development) Act (RERA), carpet area is the net usable floor area inside the apartment. It is the space where you can actually lay a carpet. Carpet Area includes living area, bedrooms, kitchens and bathrooms. But it does not include balconies, terraces, walls, and common areas such as staircases or lifts. It is important to know the property’s carpet area because under RERA, builders are needed to sell property based on carpet area, not super built-up area.

Then there is the super built-up area. This term refers to the total area charged by the builder. It includes the carpet area plus a share of common areas such as lobbies, staircases, lifts, clubhouses and corridors, among others. A number of people get confused when they see a “1,600 sq ft flat” much smaller in reality! This is the difference between a super built-up area and a carpet area.

A minimum property valuation fixed by the state government for a particular region is known as the circle rate or the ready reckoner rate. The fact is any property cannot be registered at a value lower than the circle rate. Stamp duty and registration charges are calculated on this basis or the transaction value (whichever is more).

RERA is among the most important reforms in India. It was introduced under the Real Estate (Regulation and Development) Act, 2016. By creating RERA, the government wanted to bring transparency between homebuyers and developers. Under RERA, builders must register their projects and share absolutely accurate project details, and timeline of the project, among other details.

Local municipal authority issues an Occupancy Certificate or OC. It is an important certificate which is issued only after verifying that the building has been constructed as per plans that were approved plans. In simple words, the certificate means the place is fit for occupation. It is important, especially for ready-to-move-in homes. Without an OC, a building may be considered illegal or unauthorised, which can lead to a number of issues in future. So always check the OC.

Stamp duty and registration charges are mandatory legal fees. Homebuyers pay these to the state government for officially recording the property in their name. Stamp duty ranges between 5% and 7% of the property value, (depends from state to state).