Homing in on terms
To help you take an informed decision while buying a house, here are some terms that are commonly used in the real estate market and what they mean.
Though financial planners insist there is no right or wrong time to buy a house, the current situation is enticing for home buyers, given the easy availability of finance and ready access to discounts. Despite these facilitators, buying a house can be arduous. One way to smoothen the process is to acquaint oneself with terms used in the property market. Go through the ones listed below to help you make a purchase decision.
Freehold
It's a property where the owner has complete control of the land and all the buildings on it. When you buy a freehold property, you get absolute right to it, subject to the law and applicable regulations. This means you can transfer or sell the property, mortgage it for a loan or give it on lease. For obvious reasons, a freehold property is considered more valuable than a leasehold one.
Leasehold
Such a property is leased from the freeholder for a specific period of time on certain terms and conditions. The lease can be transferred to another person after taking permission from the lessor. Most lease agreements are for 99 years. At the end of this tenure, the property reverts to the freehold owner. The lease also specifies the person or party responsible for maintaining the property.
Power of Attorney
If a property cannot be sold or purchased due to certain restrictions, power of attorney is executed to transfer the rights to the buyer. It is a legal contract, which gives a person the right to manage, rent, lease, mortgage or sell property, and take binding decisions on behalf of the owner.
However, the ownership of the property remains with the seller. "There are substantial risks involved in purchasing through a power of attorney as the document is revocable and can be annulled at any point of time. It is not advisable to buy property through a power of attorney," says Anshuman Magazine, chairman and managing director, CB Richard Ellis South Asia, a real estate services company.
Floor Space Index
It's the ratio of the total area of all the floors in a building to the total plot area. Every locality has a certain floor space index (FSI), which indicates the maximum construction that is allowed on a plot in a particular area. So if the FSI is 2, the total floor area of a m u l t i -storeyed building cannot exceed twice the size of the plot.
Built-up and Carpet Area
In any house or apartment, the area within the confines of the walls, but not including the thickness of inner walls, is the carpet area. It's the actual area used in a house. The built-up area is the carpet area along with the walls and balconies.
Super Built-up Area
Super built-up area, also known as usable area, is the entire area of the flat, including walls and your share of common areas such as lobby, stairs and corridors in the building. Developers add the shared space and distribute it among flat owners in proportion to the area of the flat.
"Ideally, the common floor area should not be more than 12-15% of the built-up area," says Tariq Nawab, managing partner of Delhibased Top Mortgage Brokers.
Mutation
Mutation of a property is the entry of the transfer of title in the revenue records of the local municipal body. Since it is only for the purpose of paying property taxes, it doesn't provide a legal title to the person mentioned in the mutation records. As the state collects property tax, the procedure and fees differ among states.
It's a property where the owner has complete control of the land and all the buildings on it. When you buy a freehold property, you get absolute right to it, subject to the law and applicable regulations. This means you can transfer or sell the property, mortgage it for a loan or give it on lease. For obvious reasons, a freehold property is considered more valuable than a leasehold one.
Such a property is leased from the freeholder for a specific period of time on certain terms and conditions. The lease can be transferred to another person after taking permission from the lessor. Most lease agreements are for 99 years. At the end of this tenure, the property reverts to the freehold owner. The lease also specifies the person or party responsible for maintaining the property.
If a property cannot be sold or purchased due to certain restrictions, power of attorney is executed to transfer the rights to the buyer. It is a legal contract, which gives a person the right to manage, rent, lease, mortgage or sell property, and take binding decisions on behalf of the owner.
However, the ownership of the property remains with the seller. "There are substantial risks involved in purchasing through a power of attorney as the document is revocable and can be annulled at any point of time. It is not advisable to buy property through a power of attorney," says Anshuman Magazine, chairman and managing director, CB Richard Ellis South Asia, a real estate services company.
It's the ratio of the total area of all the floors in a building to the total plot area. Every locality has a certain floor space index (FSI), which indicates the maximum construction that is allowed on a plot in a particular area. So if the FSI is 2, the total floor area of a m u l t i -storeyed building cannot exceed twice the size of the plot.
In any house or apartment, the area within the confines of the walls, but not including the thickness of inner walls, is the carpet area. It's the actual area used in a house. The built-up area is the carpet area along with the walls and balconies.
Super built-up area, also known as usable area, is the entire area of the flat, including walls and your share of common areas such as lobby, stairs and corridors in the building. Developers add the shared space and distribute it among flat owners in proportion to the area of the flat.
"Ideally, the common floor area should not be more than 12-15% of the built-up area," says Tariq Nawab, managing partner of Delhibased Top Mortgage Brokers.
Mutation of a property is the entry of the transfer of title in the revenue records of the local municipal body. Since it is only for the purpose of paying property taxes, it doesn't provide a legal title to the person mentioned in the mutation records. As the state collects property tax, the procedure and fees differ among states.
