Why Developers Charged For Super Built-Up Area

In Kindergarten, we were graded on punctuality. When we grew older, we were punished to kneel before the classroom for being late. In adult life, however, punctuality is a rare gem to be found. In fact, working on some twisted psychological tactic, people purposefully show up late for appointments to achieve greater coordination. Then, why do adult parents and teachers ask children to be punctual? Deep inside, adults know that if people were punctual, it would have done a great deal more good for coordination.

Also Read: How To Calculate Carpet Area, Built-Up Area And Super Built-Up Area

The Real Estate (Regulation and Development) Bill, 2016, expects developers to charge for the carpet area and not for the super built-up area, perhaps, for the same reason. It is the concretes that differ here; the underlying principle is the same.

Playing on ambiguity

Carpet area is the area of your house where a carpet can be laid. Carpet area, according to the recently passed Bill, includes the usable spaces such as kitchen and bathrooms. A clear definition of the term will benefit home buyers in two important ways. Developers will not be able to charge for super built-up area, which includes common areas, such as the lobby and elevators, in residential developments.

Why did developers charge according to super built-up area?

Ankur Dhawan, chief business officer (Resale), PropTiger.com, says, “Buyers have always wanted to know the carpet area. The carpet area can always be measured by customers, but the super built-up area cannot be measured. The calculation is so complex that no buyer will ever understand it.” This means that buyers were often on the losing end, because of the information asymmetry that existed.

However, couldn't developers have charged for the carper area to show their commitment to higher values like transparency? The answer is, they could have but when most developers charge for carpet area, it would seem those who charge for super-built up area have more to offer.

To understand why, consider this analogy. Restaurants tend to not mention how much everything on their menu costs, including all taxes. This is because the dishes are not quantified. The quality and quantity of food often vary according to the subjective preferences of people. So, the price will play an important role in the decision. People are more likely to buy the same dish, if it costs less, for purely psychological reasons. So, even if a restaurateur is willing to list the price of a dish, including all taxes, he will be bargaining from a weak point. It may well be true that he charges less when all things are considered. However, the dish still appears pricey. The calculation involved is mind-boggling for most of his customers.

It feels good to order a meal when it costs less; it feels good to a buy a home when it sounds more spacious. But this does not mean that it is in the rightful interest of home buyers. People need to know what they are paying for, and whether or not they get value for their hard-earned money. This should begin somewhere.

Anuraj Jhanwar, head of consulting and data insights at PropTiger.com, says, “The market is highly fragmented, and buyers still do not clearly know the difference between carpet area and super built-up area. Buyers will have a liking for developers who advocate transparency; the question is whether developers sell houses based on carpet area at competitive prices. Is the total outflow competitive enough when compared with that of a developer who mentions the super-built up area and the price? The journey has begun and with time this will become the norm of the day.”