Why should You Know Your 'Undivided Share of Land' (UDS)?
Undivided Share of Land, popularly known as UDS, is a term that has always existed in the Indian real estate market, but has received the least attention of buyers. However, its importance for the purpose of taxations, selling and inheritance of the property cannot be ignored.
Keeping it simple and understandable, we may define UDS as the buyer's share in the total land area. When you purchase a property you not only get the flat where you are going to live but also your proportionate share in the land. Though this share of land does not have any specific boundaries, its consideration becomes indispensable while selling or inheritance of the property in future. Unless your share in the land is properly defined, how would you decide your compensation in case of a natural calamity like earthquake, or in case of redevelopment or if the government wants to take over the entire property?
To get a better understanding, we can mathematically define UDS as:
Apartment Size*Total Area of Land / Combined sum of the areas of all apartments
For example, let's take an apartment project that has a total land area of 50,000 sq ft and offers 100 units of 1 BHK apartments (500 sq ft each) and 50 units of 2 BHK apartments (1,000 sq ft each) .
Combined sum of the areas of all apartments:
(100*500) sq ft + (50*1000) sq ft = 1,00,000 sq ft
Now for a person who owns 1 unit of 1 BHK apartment, the UDS becomes:
(500*50,000) / 1,00,000 = 250 sq ft (0.5% of the total area)
And for a person who owns 1 unit of 2 BHK apartment, the UDS is:
(1000*50,000) / 1,00,000 = 500 sq ft (1% of the total area) This is a standard method for calculating the UDS. However, different developers may have different procedures. For a clear understanding one should discuss the UDS matter with the developer. If it's a cooperative society, all buyers get equal share in the total area of the land.
Here we should note that the appreciation in the value of your property is actually the appreciation in the UDS you own. The value of the building depreciates over time; it is the land value that appreciates. So when you sell the property you get a lower compensation on your flat but a higher compensation on the share of land you own.
Generally, UDS adds to the registration charges and in some cities like Chennai and Bangalore, one has to file a separate agreement for it. Due to this reason, many of the buyers accept lower UDS as it helps them save cost during registration. However, this can cause trouble in the long run (e.g.-in case of redevelopment) as you would get a lower compensation based on your UDS.
Now that you have realized the importance of UDS, here are a few points you should note before signing your property agreement:
Read all documents, know what you are doing, ask questions, clear all your doubts and be a smart buyer.
If you want to know more about UDS, feel free to get your queries answered by commenting in the box below.