Real Estate Investment in India: Know the Jargon

Are you considering real estate investment in India? Read on to know real estate terms commonly used during the sale and purchase of property.

India’s real estate sector has witnessed investment of about $10 billion since 2015, the highest since 2009. However, this investment has mostly been in debt form, which poses a high refinancing risk if housing sales remain slow, according to the Economic Survey findings published in an article in NDTV Profit in February 2016. Real estate investment in India is ideal for both small and big investors. You can invest in this sector with as low as Rs 500. You can park your surplus money in this sector through three different channels: by directly buying a property, through India real estate funds and through real estate investment trusts (REITs).

Real Estate Jargon Deciphered

Property buying and selling holds a special place for the Indian investor. If you looking to buy a house in the country, you might feel overwhelmed and confused with the terms brokers use. Given below is a list of such terms that you should know.

· Carpet Area — The actual usable area in a flat. It is the area minus the thickness of the wall.

· Built-up Area — This includes the carpet area as well as the wall thickness.

· Super Built-up Area — This refers to the plinth area plus the common shared areas (such as corridors, staircase, etc) of all the owners.

· Appraisal — This is the written copy of the estimated valuation of a property, given by a certified Real Estate Appraiser.

· Fair Market Value — This is the valuation of the property, determined when market forces are under play.

· Assessed Valuation — This is the valuation that a tax authority places on a certain property for the purpose of taxation.

· Due Diligence — This refers to the act of confirming the authenticity of the contract/title of the deed.

· Deposit — This is the amount that you must pay in order to block the property from being sold to another person. It also acts as advance of funds in case of processing of a loan. You might also have to give a similar deposit while renting a flat.

· Encumbrance Certificate — This is issued by the Sub-Registrar’s office after proper evaluation. It states that the property in question is free of all encumbrances, such as lease, mortgages and other dues.

· Occupancy Certificate — This is generally issued by a local authority. The certificate states that the property in question has received all necessary clearances, such as electricity, water and sewerage, and is ready for occupation.

It is wise to make yourself aware of realty terms so that you are not duped by any developer or broker. If you do not wish to invest a huge chunk of money in this sector all at once, then you can park your money in an Indian real estate fund or REIT.