Legal Zone

Superficial area

November 2013
A recently introduced legislation for the real estate sector offers hope of greater accountability, transparency and fair practice on the part of developers misleading consumers on the concept of super area, says SAARTHI BHATIA.
According to a report by the Federation of Indian Chambers of Commerce and Industry and Ernst & Young, the Indian real-estate sector is going through a paradigm shift, driven by regulatory developments and new trends in the industry, which will facilitate increasing efficiency and transparency. The Real Estate (Regulation and Development Bill) 2013, aims to promote fair practice and reaffirm the accountability of developers.

What is super area?
The Bill highlights the various facets of the ´super area´ concept, and addresses the evolving controversies regarding it. The term ´super area´, shrewdly coined by realtors, entraps consumers and manipulates them to their advantage. Real-estate agents solicited consideration on the super area without predetermining the actual area allotted to the consumer. In simple terms, the super area combines the carpet area, walls and other common areas. Hence, in reality, the carpet area is the net usable floor area of an immovable property.

Currently, the consumer is inevitably paying more for the entire area as realtors are fixing the price of property on the super area. The consumers pay a higher amount inclusive of extra stamp duty, maintenance cost, registration fee, etc. The vagueness of the super area concept has been misused by realtors and has become the subject of regular contest in consumer courts. The issue has spurred the need for a transparent and accountable system through the Real Estate (Regulation and Development Bill) 2013. The Bill upholds fairness and protection of the consumer´s interest by defining sale of the property on the basis of the carpet area and restricting sale on the basis of super area.

Different Strokes
In Delhi, basements do not form a part of the super area. In Mumbai, the area under water tanks and the other utility rooms fall under the concept of super area. While in Chennai, the basement and atrium are part of the super area, the basement is not part of the super area in Bengaluru. Hence, it is evident that the concept of ´super area´ is more of a marketing gimmick than tangible reality. A consumer is expected to pay for the super area, especially when he has to invest in a group housing project. It encompasses common areas like gyms, pools, lifts, corridors, lobby, staircases and utility areas slated to be commonly used by residents. The lack of concrete information pertaining to the super area has resulted in abuse of consumers and unaccountable profits to developers.

Recently, a leading builder based in Gurgaon (with deceitful financing by a family member of a minister) booked consumers for a housing society group at Rs 2,500 per sq ft. The super area was subtly quoted as 1,380 sq ft. The consumers paid up the same only to be surprised that the registered area in the sub lease deed was only 1,200 sq ft. To add to their woes, promised delivery, scheduled for 2012, still hasn´t happened and a further 18 per cent has been levied under different headers per month. Instances such as these have become rampant. The only difference remains that´big´ names abuse it aggressively through monopolisation of their market position and ´smaller´ players tread on it softly.

Rekindling justice
This new Bill hopes to rekindle justice by making an attempt to outline the various terms in the buyer´s agreement and preferences. The Bill hopes to throw light on the profits made in the shadows of super area measurement.

Quantifying the super area through a formal calculation poses the next challenge in the wake of implementation of the Bill. The lack of uniformity across the nation in the concept of super area coupled with the mammoth task of standardising super area are the immediate hurdles in the speedy implementation of the Bill.

Since 2011, the Government has been trying to introduce a new consumer-friendly policy: The Real Estate Regulatory Authority (RERA). RERA emphasises that builders should sell homes based on carpet area alone. There are additional provisions being made to resort to legal recourse in case of any complications.

The Government should expedite the process of implementing these policies juxtaposed with a commitment to improving infrastructure. Whatever the methodology applied to calculate super area, the new Bill has raised hope among consumers to prevent being duped. The time is right for harnessing potential growth through implementation of just rules to evaluate new growth channels for developers.

About the author: Saarthi
Bhatia is Founder Partner of MKBS & Co, Company Secretaries. He is an associate member of the Institute of Company Secretaries of India.