Ten Important Terms you should know before investing in Kolkata Real Estate Market

Before investing in any property, knowing or understanding different terms that specifically make you understand the real estate industry is significant. In this blog, ten major terms that are important to understand for any buyer have been explained in detail herein below: 

1. Carpet Area: It refers to the actual area of the apartment or building that can be covered by the carpet. it is the area within the walls of the building, including the areas of the rooms, kitchen, bathrooms, and living room, but not including the thickness of the walls. It mainly includes the area that is available for actual use and is generally smaller than the super built-up or built-up area. Moreover, the carpet area is mainly measured in square feet and is used to calculate the value of the property for renting, buying and selling apartments in Kolkata, Howrah or Hooghly. It is considered to be the most accurate measure of a property.

2. Built-up Area: It refers to the total area of the apartment or building that includes the carpet area, as well as the area that is covered by corridors, walls, balconies, and balconies. it is the area that is enclosed by the outer walls of the building and includes the area of the rooms, kitchens, bathrooms and other spaces. The build-up area is also measured in square feet in Kolkata and in some cases used to calculate the valuation of the property for buying, renting and selling. Furthermore, it is also used to measure the property value for stamp duty, property tax and registration fees. It is a broader measure as compared to the carpet area as it is used to inflate the valuation of the property. 

3. Super Built-up Area: It refers to the total area of the apartment or building that includes the carpet area, as well as the area that is covered by corridors, walls, balconies, balconies, terraces and common areas that are used by the customers while living in the flats in Kolkata., Howrah or Hooghly. It is the most inflated measure of property valuation as it includes the common areas that are used to develop the amenities in a project.

4. Floor Area Ratio (FAR): It is the measure used in Kolkata to determine the maximum built-up area that can be constructed on a particular plot of land. A term similar to FAR is the Floor Space Index (FSI), which is calculated as an index, whereas FAR is calculated as a ratio. Moreover, FAR is a tool which is used to control development and urbanisation to ensure that the density of the population and buildings in a particular area is sustainable. The FAR varies from one city to another, and even within different areas within a city. For instance, the FAR in Kolkata in a particular location is 1.75:1, which means that in a plot of 1000 square feet, the maximum built-up area is 1750 square feet.

5. Leasehold Property: The leasehold property mainly refers to a property that is owned by someone for a certain period of years and then returned back to the original owner after the extinction of the lease period. This type of property is mainly used for commercial purposes. However, there are leasehold properties in the residential segment in Kolkata, Howrah and Hooghly that are leased for a minimum of 99 years.

6. Freehold Property: Freehold property can be defined as any estate which is "free from hold" of any entity besides the owner. Hence, the owner of such an estate enjoys free ownership for perpetuity and can use the land for any purposes however following the local regulations.

7. Home Loan or Mortgage Loan: When a borrower takes money from the bank to build or buy a house, it is known as a home loan. Borrowers can also take loans to buy land or renovate the existing house. Home loan is released when the entire loan is repaid in the form of EMIs. Usually, the tenure of home loan is up to 30 years. On the other hand, when a borrower takes money from bank for any purpose, against a property that the borrower owns, it is known as mortgage loan – the tenure of which is up to 15 years.

8. Foreclosure: Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of the mortgaged property and selling it. Typically, default is triggered when a borrower misses a specific number of monthly payments, but it can also happen when the borrower fails to meet other terms in the mortgage document. Foreclosure is a legal process that allows lenders to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property. The foreclosure process varies by state, but in general, lenders try to work with borrowers to get them caught up on payments and avoid foreclosure. The most recent national average number of days for the foreclosure process is 857; however, the timeline varies greatly by state.

9. Property Registration: In India, as per the Indian Registration Act, 1908 it is mandatory to register the transfer of property with the appropriate Registrar. The immovable property transferred has to be registered to obtain the rights of the property transferred. The Department of Revenue is liable for property registration in the State of West Bengal. In India the property registration is done at the office of the sub-registrar of the area, where the property is located.

10. Goods and Service Taxes: When it comes to meeting tax obligations, homebuyers along with property taxes, also have to pay the applicable GST on their property purchase. Over the last few years, several changes have been made to the GST regime directed towards the real estate sector. Potential investors and homebuyers must scrutinise the implications of GST on real estate to make an informed decision when it comes to investing in this sector. Fundamentally, GST is paid by investors and home buyers while investing in under-construction properties. Before the implementation of GST, several taxes including VAT, stamp duty, service tax, registration charges, etc. had to be paid by home buyers. With the introduction of GST on real estate, one has to pay taxes only on under-construction properties. Notably, one does not need to pay GST on ready for sale or completed properties that have a legitimate Completion Certificate.