Carpet Area Bill will Bomb Old Flat Owners

The new bill by the Maharashtra government has thrown up a positive, albeit unintended advantage: it may sound a death knell for the sales of apartments in older constructions.

Prior to this bill, and bouyed by the higher prices of newer and exquisite apartments in their vicinities, owners in old buildings were charging exorbitant rates for their apartments.

In many cases, they would add 40% to their carpet areas, and quote super built-up areas. For example, an owner of a 450 sq ft apartment in a building more than 40 years old, claims an area of 610 sq ft while advertising for his property, and then demands the current rates for his apartment.

While the new rates were applicable to new skyscrapers in the vicinity, these owners had the advantage to demand higher rates. They also claimed low maintenance charges and thus were able to bulldoze their way in a overheated real estate market.

However, the new carpet area bill will change all this. It will make sales of all apartments on par, while builders of new constructions to charge for additional facilities and spaces. Owners of apartments in old constructions will not have this luxury to claim super built-up areas and charge a premium.

Many experts apparently are missing out on the argument that once a society is formed, additional areas and facilities -- like passages, lift areas, terrace, balconies, parapets, ledges etc. -- are owned by the co-operative housing society and not the owner of the apartment. Thus, owners of old apartments claiming super built-up rates is not justifiable.

While no one expects the new bill to bring prices down, it will certainly make things more transparent for the buyer, but the best effect would be visible in the sale of used homes.