The builders can only sell built-up area or the Carpet Area. It is only this area which can be Registered and can be transferred to others. Let us look at a typical real life case of actor Salman Khan property that he bought in Bandra sometime back.
Khan purchased flat 401 on the 11th floor of The Address, a high-end luxury building at Bandra Bandstand. The stamp duty registration itself worked out to Rs 1.64 crore for the three-bedroom triplex. The building has only nine flats and has been constructed by Samudra Developers, an arm of Dheeraj Realty. Both Khan and the developer were unavailable for comment.
Activist Y P Singh said the registration shows that Khan has paid six times the market value, as the flat size is shown as just 1,079 sq ft. “But there is no mention of the fact that the apartment comes with a swimming pool, refuge area, lobby, an MTNL room, filtration room and parking area, exclusively for the actor,” he said.
“These areas are common amenities and cannot be provided on an individual basis. What Khan has bought is 1,079 sq ft of habitable area and an additional 6,766 sq ft free of floor space index,” said Singh. These additional areas cannot be merged into the apartment.
Ex-civic chief Subodh Kumar had amended the Development Control Rules to stop such violations. Property documents registered with the stamp duty office show the flat’s carpet area as 1,079 sq ft, affiliated area of 6,766 sq ft and 1,917 sq ft for car parking. The sanctioned flat plan and part of the registered agreement shows a litany of concessions given by the civic authority.
To control this exploitation of “Free of FSI” area by the builders, the Govt. of Maharashtra came up with a concept called “Fungible FSI”
The Floor Space Index is defined in the DCR as “the quotient of the ratio of the combined gross floor area of all floors, excepting certain areas specifically exempted under the DCR, to the total area of the plot, viz.:
FSI = Total covered area on all floors / Plot area
Simply put, FSI is the ratio that determines how much can be built on a plot. It is clear from the above definition of FSI that certain areas are specifically excluded from the computation of FSI, which means these are “Free of FSI” areas.
Prior to the said Notification, areas covered by balconies, flower beds, individual terraces, ducts, voids, niches, refuge area, new or additional lifts, staircases, swimming pools, fitness centres in Cooperative Housing Societies, sun decks, clubhouse, ornamental projections etc., were not included while computing FSI. Thus, these areas were known as “Free of FSI”.
It is pertinent to note that the carpet area of a flat is the net useable area or the habitable area of the flat. In other words, the carpet area is the area of a flat, which can be covered by carpeting from wall to wall. The Built Up area of a flat is the gross area of the flat i.e. the carpet area together with the area covered by wall thickness and ducts. The Super Built Up area, as per the current trend, is the saleable area of a flat, which includes the Carpet area, Built Up area and common spaces/ amenities and ornamental features. Thus, Super Built Up areas also includes areas that are non habitable for consumers.
Although certain areas as mentioned above were “Free of FSI”, the same were included in computing area of a flat by Builders/ Developers and sold to the consumers at a market price under the garb of Super Built Up area or Useable area or Saleable area of a flat, or by whatever name given. These areas, under the name of Super Built Up area or Useable area or Saleable area, were included in the area of the flat while selling the same to the consumer.
Section 4 of the Maharashtra Ownership of Flats Act, 1963 (“MOFA“) makes it mandatory for Builders/ Developers to mention the carpet area of a flat in any agreement of sale to be executed with prospective flat purchasers.
Hence in an attempt to put a final halt against these practices, the said Notification provides that these areas shall no longer be exempted from the computation of FSI and shall no longer be available as “Free of FSI” areas.
In order to compensate for the loss of “Free of FSI” areas, Builders/Developers may now avail of Fungible Compensatory FSI, which may be used like regular FSI. Fungible FSI is made available to Builders/Developers to the extent of 35% for Residential projects and 20% for Industrial and Commercial projects on payment of premium. The premium to be paid by Builders/ Developers is calculated at the rate of 60% for Residential projects, 80% for Industrial projects and 100% for Commercial projects at the prevailing Ready Reckoner Rates (“RR Rates”).
Thus, the said Notification is a step towards curtailing malpractices propagated by Builders/ Developers by envisaging a compact plan where all areas are included for the computation of FSI and a cap of 35% is fixed (in case of residential projects) so that there is no room for the Builders /Developers to manipulate the rules by creating excess non-habitable areas and overcharging consumers. Fungible Compensatory FSI may also be used to construct larger dwelling units and/or to construct additional dwelling units. Hence, it may be used in the same manner as regular FSI.