For investment or end-use purposes, either ways real estate is an asset class that has rapidly captured the imagination of families in India. Buying property is an integral part of financial planning for any family. For instance, perplexing to the lay person. Here is a glossary of most frequently used terms in the industry so that you are not at all a handicap when buying property in India. in the medical or legal professions, real estate also has its own vocabulary, much of which can be perplexing to the lay person. Here is a glossary of most frequently used terms in the industry so that you are not at all a handicap when buying property in India.

Built-up area: Built-up area denotes to the entire area of the floor including carpet area, walls, lobbies and corridors, atrium areas and basement. Always, check with your builder/agent on what concept they are using. In Mumbai, the basement, staircase, lift, and utility rooms like generator and electricity rooms are also taken as built-up area. In Delhi, the lift areas and staircase areas are included in the built-up area. In Chennai, the basement and atrium areas are excluded whereas in Bangalore, only basement is not included in the built up area.

Carpet area: The actual usable area within the walls of the floor is Carpet area.

Super area: This is as a rule regards to the entire area of the building which includes carpet area, lobbies and corridors, walls,  lifts, staircases basements, and other atrium and utility areas. In Mumbai, the area under water tanks and other utility rooms are included in the super areas. In Delhi, the basement is excluded in super area unless it is being used for commercial purposes. In Chennai, the basement and atrium areas are included in the super areas and in Bangalore, the basement is not included in the super area.

Efficiency ratio: Efficiency ratio is expressed as a share of carpet to super areas of the property.

Floor Space Index (FSI): Floor Space Index is the quotient of the ratio of the combined gross floor area of all floors excepting areas specifically exempted under these regulations to the total area of the plot.

Maintenance charges: These are charges taken by the maintenance society towards the maintenance of the property which includes costs of generator sets, security, landscaping, and common areas.

Market value: Valuation process evaluates the market value of the property. Demand and supply forces in the market and factors like type of property, quality and construction, its location, infrastructure and available maintenance are taken into consideration. Market value of the property is the price that the property commands in the open market.

Stamp duty: Real Estate Stamp duty is a type of tax accumulation by the Government of India. Stamp duty is established the agreement value or on the market value whichever is greater.

Sale deed: Sale deed provides the buyer the absolute and undisputed ownership of the property. With this law, the seller transfers his right of property to the buyer. Subsequently, it is executed to the execution of the sale agreement and after compliance of various terms and conditions detailed in the agreement.

Registration charges: The fees associated with getting the legal title registered in your name. This legal process takes place in the sub-registrar’s office in your local court.

In addition to the above, the following terms are normally used in the commercial real estate market and value getting familiar with, if you are consider to buy commercial place.

Common Area Maintenance (CAM): Common areas include hallways, pathways and utilities. CAM fees are accumulation by the landlords from the tenants to cover maintenance, property taxes and insurance in the case of Triple Net Lease.

Cap rate: Cap rate denotes to the capitalization rate. Capitalization rate is the restitution on investment on the property. The Capitalization rate is measured by the formula: Purchase Price / Net Operating Income from the Property.

Cash on cash: The yearly percentage return of your down payment not including appreciation. It is the first year’s cash flow divided by your initial down payment.

CPI: The Consumer Price Index is used to account the yearly rental increase so as to pay for inflation.

Full service lease: A Lease where the tenant pays rent to cover everything including utilities.

Gross lease: A Lease where the tenant only pays the rent and the landlord pays the taxes, insurance and maintenance.

Gross Leasable Area (GLA): The Gross Leasable Area or the total rentable area is the area which can be rented out for rental income. Itn’t include space for elevators, utilities room etc. does

Letter of Intent (LOI): The Letter Of Intent is a non-binding offer letter to buy a commercial place.

Mixed use: It is commercial properties with retail on the first floor and apartments on upper floors. Mixed use is the use of commercial and residential simultaneously.

Net Operating Income (NOI): Net Operating Income is the annual income after deduction of expenses like property tax, insurance, and maintenance but mortgage payments are exceptional.

Percentage lease: Percentage Lease is a lease where the tenant has to pay base rent plus a percentage of the tenant’s revenue.

If there is any real estate term that you are confuse of always check and verify. It is always better to ensure that you and the other party are working on the same understandings.