Friday, July 12, 2013

SUPER AREA-- A MYTH

In the last topic we scrutinized the term "Pre-Launch" and then The Builder Buyer Agreement. In the series to reveal the meaning of various jargon's used in the Indian Real Estate, we would today take a look at the meaning of "SUPER AREA". What is Super Area. Does it have any meaning in the eyes of the law makers, Do Competent Authorities define Super Area, who calculates this Area and for what reason, lastly why there is a need for a term like Super Area??

SUPER AREA- A MYTH

Before we try to understand any thing about this word, let me assure you that nowhere in the world-any property is sold on Super Area. This is an indigenous phenomena, fabricated by Indian Builders to gain exponentially by selling an area that does not exist. To create confusion they have created a definition that does not find any mention anywhere else in the world but only in our Indian context it has relevance. The definition propagated says that SUPER AREA = COMMON AREA +  BUILD UP/COVERED AREA.

To the RTI filed to Noida Authority, Ghaziabad Development Authority and Directorate Town & Country Planning, Haryana to provide the definition of Super Area. The reply received were similar, "That the department has no such information on Super Area".

That means that the regulatory body which is essentially granting the builders the plans to construct the group housing projects are not even aware of the term Super Area. The Bureau of Indian Standards, the agency which defines the weight, measurement etc of the products in India also does not define the Super Area for buildings. Yes, they have definition for Build-up area, Carpet area etc. So how do we find out the definition for super area.

The fact is that there is no way to find it out. A case investigated in Haryana, where the builder has 28.433 Acres of land, the permissible construction allowed by the DTCP according to the plans passed was 17.70 lakh sq. ft. where as the area charged by the builder to its allottees was 23 lakh Sq. Ft. Amost 5.29 lakh Sq. ft. over and above the prescribed limit. which is almost 30% of the approved area...maybe that is why they call it SUPER AREA as it is neither on the ground nor in the air..it is Nowhere.

Lets see this using another method of calculation, the total land area is 28.433 acres that means it is 115064 Sq. Mtrs. on this land the Builder is constructing almost 1695 flats of two types (Two Bedroom and three bedroom) the total area of which is approx 23 lakh Sq. Ft. which is equal to 2,13,754 Sq. Mtrs. The FAR used by the Builder is only 1.43, so the sanctions of plans for all construction in the said land can only be for 1,64,542 Sq. Mtrs. which means the area over the area of construction sold to the consumers is approx 49,212 Sq. Mtrs or almost 12 acres on a 28.433 Acre land. Wonderful, now please access the amounts he has made selling this additional area, it is a whopping Rs. 71,48,53,512/- only. The total land costed approx Rs. 11 Crore and the total project's construction cost was approx Rs. 141.63 Crore, therefore for a project which costed a total of Rs. 153 Crore the Builder has made half of it just by selling an unknown area. WOW!! Now we know why Businessmen across different industries are wanting to have their own real estate company and why Builders need Super Area....naturally that is why, even the Finance analyst say that Private Real Estate Companies are non-transparent, even they get goose pimples trying to understand their balance sheet, as every thing is skewed.

That is why Super Area exists in India, so that Builders can loot without providing any calculations for this Super Area, knowing pretty well that the Consumer would not be able to find this area in any of the Competent Authorities Books. Sadly it is not the builder alone who enjoys and makes profit on selling this non-existent area its also the Revenue department that gains, as they register the flat on Super Area. The reason prescribed by the Revenue secretary is that they register the flat on the plan submitted by the Builder and as the flat is sold on Super Area it is therefore duly registered on the same.

Stupid Argument. Plots are registered on Actual Size of the plot, why not on super area of the plot. Plots are not registered on the permissible Construable area or the Super Area of the Construction beyond the FAR, as is the case in Group Housing. True that all construction on the plot is in ownership of the landowner, so its easy to register the Area of the plot in one/ two name. But the plot holder also enjoys common areas of the said Plotted Colony, similarly as the buyer of a flat in group Housing. The builder constructs parks, club etc in plotted colony too. But why this area is not included, the Builders say it is not done, as the said consideration of all common Areas is inbuilt in the cost of the Plot on actual size.

Similarly when one buys a flat in a group Housing colony then the Cost of the land, construction other common areas & facilities is inbuilt in the cost of the flat, so why should the builder be allowed to charge the same again for a non existent Area and the Registrar coolly register it. The builder knows all the costs of the plant, Machinery, lifts, sewerage treatment plants, rain water harvesting, water tanks, guard rooms, toilets, EWS, Service Apartment etc that he would build within the group housing, the Cost of which he duly assign's to each flat proportionately to arrive at the cost of the flat in the project. That is how the Per Square Feet is determined. Therefore when all area and its construction is already computed within the cost of the flat, then it is criminal to add some excess non existent areas at BSP rates and justify the same as Super Area.

It is also often seen that at advance stage of Construction the Super Area of the flat is increased by the builder, without any increase of the Acreage of the plot. which also indicates that there is no term as Super Area, as by their own definition the Super Area= Build Up Area + Common Area, so if this is true than with any increase in Build Up Area, the Common Area would in direct proportion decrease, if the land acreage of the said colony does not increase. That means that when builder increases the Super Area of the flat without proportionate increase in the Acreage of the land, he is not considering the effect of decrease in common area. Therefore it is easy to establish that the Super Area is not what the Builder wishes us to believe as the Common Area or Build Up Area do not have any impact on its computation, it is just a lie that has been fed to the citizens of the nation and since has been accepted by our people as preamble.

The Government has to look into this very very diligently and make sure that this loot is stopped immediately. Various RWA's and RTI activists are consistently in touch with the Ministry of Urban Planning & Development to get relevant changes in the prospective legislation's which would ban sales or registry of flats on Super Area. Hope very soon, the desired changes are made and Super Area becomes a non-entity.

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