Session II: Cost Sheet Study

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Objective of this chapter

• The objective of this chapter is to make you understand about cost sheet, the basic terms and calculations in real estate.

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Sample Cost Sheet for Flat

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Cost sheet Terminologies

1. Registration2. Stamp Duty3. Valuation4. Fungible FSI

• Free of FSI• Carpet Area• Saleable Area Concept• S.A (Saleable Area) = B.A (Built-up Area) + C.A (Common

Area)• FSI Efficiency

5. New Development Control Rules• Downward Loading• Upward Loading

6. Saleable Area Definition

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Registration

Registration means recording of the contents of a document with a Registering Officer and preservation of copies of the original document. The documents are registered for the purpose of conservation of evidence, assurance of title, publicity of documents and prevention of fraud. Also, registration helps an intending purchaser to know if the title deeds of a particular property have been deposited with any person or a financial institution for the purpose of obtaining an advance against the security of that property.

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Stamp Duty

• It is a type of tax which is paid for the transaction performed by way of document or instrument under the provisions of Bombay Stamp Act, 1958 and Indian Stamp Act, 1899. It is payable on instruments and not on transactions. The payment of proper Stamp duty on instruments bestows legality on them. Such instruments get evidentiary value and are admitted in evidence in Court of law. The stamps are required to be purchased in the name of one of executors to the instrument.

• Certain kinds of documents viz. Mortgage deed, release, security bond, settlement, bond etc. in the case of conveyance, the grantee and in the case of lease the lessee shall pay the stamp duty, in the case of exchange of property, both the parties in equal share shall pay stamp duty. In case of partition, the parties thereto in proportion to their respective shares should pay stamp duty.

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Valuation

Valuation can be defined as the process of ascertaining the market values of the immovable properties so that the executants of the document can be correctly guided on the amount of stamp duty required to be paid. In short valuation is a supplementary function of registration aimed at assisting the officers for deciding upon the value of the property.

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Fungible FSI

As per new DC Regulation, any area near/inside an apartment, not included in the carpet & which can be enclosed inside, for eg: flower bed area, dry area, passage etc has to be taken into consideration while submitting approval plans, and these areas would be included in FSI. A builder can buy maximum of 35% area(in case of residential development) as fungible FSI by paying the ready reckoner rate of the region. Do note that this is over and above the total FSI consideration. Thus here the equation for the constructible area becomes as below:

C= L * (F+35%F)

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Fungible FSI

1. Free of FSI:

As per the new DC rules, the only areas that will not be considered inside FSI are Car Parking, Meter rooms, DG rooms, thus being free of FSI.

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Fungible FSI

2. Carpet Area:

As per new DC rules, any area inside the apartment, and adjoining it can be considered to be the carpet area of the apartment, this would not include the common area, but will include internal areas such balconies, dry area, etc & passage area to the apartment.

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Fungible FSI

3. Saleable Area Concept:

In conventional terms saleable area of an apartment includes the built up area (wall thickness + carpet area) & the common area of the floor in which the apartment is located, the common area can also include the common lobby & lift area as per the developer’s discretion .Thus giving rise to the equation:

S.A (Saleable Area) = B.A (Built-up Area) + C.A (Common Area) The thumb rule used by most developers to obtain saleable

area is Carpet Area + 40 % (Carpet Area), This 40% is called the upward loading on Carpet Area.

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Fungible FSI

4. FSI Efficiency:

The FSI Efficiency is the index used by the builder so as to calculate efficient use of FSI in the plan. The more the FSI Efficiency, the more the returns from the project. FSI Efficiency can be equated as below:

FSI Efficiency = S.A (Saleable Area)/Carpet Area

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New Development Control Rules

Downward Loading• D.L (Downward Loading) = ((S.A (Saleable Area) – Carpet Area)

/ Saleable Area) * 100

Upward Loading• U.L (Upward Loading) = ((S.A (Saleable Area) – Carpet Area) /

Carpet Area) * 100

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Saleable Area Definition

• How does a developer arrive at the saleable area for their apartments?

• It’s truly a magical figure for customers, since they are charged on the basis of the saleable figure. Most people think that the architects decide upon on the saleable area, and there are also those who think that the builder just makes up the saleable area without any consideration. Both the assumptions are not true. There is a definite scientific approach in arriving at the saleable number. Since this post would involve certain technicalities associated with the real estate industry, I will request the novice to read my earlier posts before reading this one.

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Summary

• Cost sheet informs us about the total amount that is to be paid to the builder and also to the government.

• Government Charges are always fixed and compulsory to be paid.

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Assignments

1. Create a cost sheet.

2. Write a report on • Stamp duty• Registration

3. Collect cost sheet and brochure of any 4 apartments and make a study on it.