Developer Glossary
Key real estate terms explained simply. From carpet area to RERA to variation orders.
Carpet Area
The net usable area within the apartment walls, excluding walls, balconies, terraces, and common areas. RERA mandates that carpet area must be the basis for property pricing in India.
Built-up Area
Carpet area plus area occupied by walls and balcony/verge. Typically 10 - 15% more than carpet area. Used by builders for pricing, but RERA now requires carpet area as the base.
Super Built-up Area
Built-up area plus proportionate share of common areas (lifts, lobbies, clubhouse, etc.). Typically 15 - 25% more than built-up area. Builders often quote this to make apartments seem larger.
RERA
Real Estate (Regulation and Development) Act, 2016. A central law regulating the Indian real estate sector to protect homebuyers, ensure transparency, and mandate timely project completion. Each state has its own RERA authority.
BOQ
Bill of Quantities. A detailed document listing all materials, parts, and labor required for a construction project, with quantities and rates. The backbone of accurate cost estimation and tendering.
Stamp Duty
A state-level tax on property transactions, making the sale deed legally valid. Rates vary by state (4 - 8%) and buyer gender. Some states offer concessions for women buyers.
Loading Factor
The percentage by which built-up or super built-up area exceeds carpet area. Typical loading: 10 - 15% for built-up, 25 - 40% for super built-up. High loading means paying for areas not exclusively owned.
Variation Order
A formal document authorizing changes to the original scope of work during construction. In real estate, variation orders cover design changes, material upgrades, or buyer-requested modifications after agreement signing.
Apartment Personalization
Allowing homebuyers to customize their units - from flooring and kitchen finishes to structural layout changes. Personalization commands 3 - 8% price premiums but requires robust operational systems.
Designated Account
A separate bank account mandated by RERA for each registered project. Developers must deposit 70% of all collections here and can withdraw only based on construction completion certification.
Possession
The legal transfer of property ownership from developer to buyer, marked by handing over keys, completion certificate, and occupancy certificate. RERA entitles buyers to interest compensation for delayed possession.
Completion Certificate
An official document issued by the local municipal authority certifying that a building has been constructed as per approved plans and complies with all building codes and safety norms.
Occupancy Certificate (OC)
A certificate issued by the local authority confirming that the building is fit for occupancy. Without OC, buyers cannot claim property tax benefits or get home insurance. RERA projects must obtain OC within the timeline.
Rework
The process of repeating construction work that was done incorrectly the first time. Rework costs include material, labor, and time. In personalized residential projects, rework rates of 8 - 15% are common without proper systems.
Construction Wastage
Material consumed beyond what is theoretically required for the specified work. Average wastage in Indian construction: 10 - 15%. Poor inventory management, inaccurate measurement, and rework are primary causes.
BOM
Bill of Materials. A comprehensive list of raw materials, components, and quantities needed to manufacture or construct a product. In real estate personalization, BOMs are generated dynamically for each customized unit.
Project Margin
The profit percentage or absolute amount earned on a real estate project after deducting all costs. Developers track margin through development margin, sales margin, and operational margin. Personalization can improve margins by 3 - 4%.
UID
Unique Identifier for a unit in a real estate project. UIDs enable tracking of individual unit configurations, buyer selections, material requirements, and procurement status throughout the project lifecycle.
Circle Rate
The minimum price per square foot or square yard fixed by the state government for a particular area. Stamp duty and registration fees are calculated on the higher of circle rate or transaction value.
Carpet Area Ratio
The ratio of carpet area to super built-up area. A 1000 sq.ft super built-up apartment with 800 sq.ft carpet has a carpet area ratio of 80%. Lower ratio means more area is consumed by common areas and walls.
Ready Reckoner Rate
A government-published annual rate card for property valuation in a specific area. Used to calculate stamp duty and registration fees. Also known as circle rate, guideline rate, or collector rate.
Common Area
Areas in a residential complex shared by all unit owners: lifts, lobbies, staircases, clubhouse, swimming pool, gardens, and security. Included in super built-up area calculation.
Built-up Area Ratio
The ratio of built-up area to carpet area. A 1000 sq.ft built-up apartment with 850 sq.ft carpet has a built-up area ratio of 85%. Higher ratio indicates more walls and balconies relative to usable space.
Sale Deed
A legal document that transfers property ownership from seller to buyer. Must be executed on a non-judicial stamp paper and registered at the Sub-Registrar office. Stamp duty is payable on the sale deed.
Gift Deed
A legal document for transferring property ownership without monetary consideration. Stamp duty for gift deeds is lower in some states, especially when transferring to family members.
Lease Deed
A contractual agreement granting possession of property to a tenant for a specified period in exchange for rent. Lease deeds require stamp duty based on lease value and duration.
Mortgage Deed
A legal document creating a charge on property as security for a loan. The property remains with the borrower but is mortgaged to the lender until the loan is repaid.
Agreement for Sale
A preliminary contract between buyer and seller agreeing on the terms of property transfer. Not a sale deed, but a binding agreement that creates obligation to execute the sale deed later.
Allotment Letter
A formal letter from the developer to the buyer confirming allocation of a specific unit in the project. Includes unit details, payment schedule, possession timeline, and terms and conditions.
Advance Amount Paid
The initial payment made by the buyer to book a property, typically 10 - 20% of the total cost. Also called booking amount or token amount. Used as the base for calculating RERA delay compensation.
Handover Date
The date when the developer physically hands over possession of the unit to the buyer, accompanied by the completion certificate and all necessary documents. RERA penalties apply from the committed possession date.
Penalty Clause
A contractual provision specifying the penalty payable by the defaulting party. In RERA projects, the penalty for delayed possession is automatically SBI MCLR + 2% per annum on the amount paid, without needing a specific penalty clause in the agreement.
Workman Compensation
A statutory insurance policy covering employees in case of accidental death, disablement, or injury during employment. In construction, contractors must maintain workman compensation insurance for all site workers.
Site Engineer
A qualified civil engineer responsible for overseeing construction activities at the site. Duties include quality control, progress monitoring, coordination with contractors, and maintaining daily progress reports (DPRs).
Daily Progress Report (DPR)
A daily document recording site activities, work completed, workforce deployed, materials used, and issues encountered. DPRs are the primary record for tracking construction progress and resolving disputes.
Bill of Materials (BOM)
A comprehensive list of all materials, components, and quantities required for construction or manufacturing. In real estate personalization, BOMs are generated dynamically for each customized unit to ensure accurate procurement.
Material Procurement
The process of sourcing, purchasing, and delivering construction materials to the site. Effective procurement involves vendor selection, price negotiation, quality assurance, and just-in-time delivery to minimize wastage.
Inventory Management
The systematic tracking and control of construction materials from procurement to consumption. Digital inventory management reduces wastage, prevents theft, and ensures materials are available when needed.
Quality Control
The process of ensuring construction work meets specified standards through inspections, testing, and documentation. Effective quality control reduces rework, protects brand reputation, and ensures RERA compliance.
GST on Construction
Goods and Services Tax on construction services in India. Currently 18% on construction of residential apartments. Input tax credit (ITC) is available for certain inputs, but developers often face ITC denial due to anti-profiteering rules.
Interest During Construction (IDC)
The interest paid on loans taken during the construction period, capitalized as part of the project cost. IDC can add 5 - 10% to total project cost and is a major component of soft costs in real estate development.
Soft Costs
Non-construction costs in real estate development: legal fees, approvals, marketing, sales commissions, interest during construction, and project management fees. Typically 15 - 25% of total project cost.
Hard Costs
Direct construction costs: materials, labor, equipment, and subcontractors. Hard costs make up 60 - 70% of total project cost and are the primary focus of BOQ preparation and cost estimation.
Approval Process
The sequence of statutory clearances required before construction can begin: land use conversion, building plan approval, environmental clearance, fire NOC, and RERA registration. Delays in approvals are a major cause of project delays.
No Objection Certificate (NOC)
A certificate from a statutory authority confirming no objection to the proposed construction or use. Required from fire department, pollution control board, environment department, and local municipality before starting construction.
Fire NOC
No Objection Certificate from the fire department certifying that the building design complies with fire safety norms. Mandatory for all commercial and residential buildings above a certain height. Obtained after construction and before occupancy.
Environmental Clearance
Approval from the State Environment Impact Assessment Authority (SEIAA) or Central EIA for projects above a certain size. Required for large residential complexes, townships, and commercial developments.
Building Plan Approval
Approval of architectural and structural drawings by the local municipal authority or development authority. Ensures the building complies with building bylaws, zoning regulations, and safety norms.
Development Charges
Fees levied by local authorities for providing infrastructure: water supply, sewage, roads, street lighting, and open spaces. Development charges are typically 5 - 15% of the project cost and must be paid before obtaining building plan approval.
Infrastructure Charges
Charges for connecting the project to external infrastructure: electricity, water, sewage, and roads. Infrastructure charges vary by state and local authority and can add ₹100 - ₹500 per sq.ft to project cost.
Title Search
A legal investigation of property records to verify ownership history, encumbrances, and legal claims. Title search ensures the developer has clear and marketable title to the land before launching the project.
Encumbrance Certificate
A legal document issued by the sub-registrar showing all transactions and charges on a property for a specified period. Required for property purchase, loan approval, and RERA registration.
Occupancy Density
The maximum number of people allowed to occupy a building per unit area, as per local building bylaws. Occupancy density affects layout design, number of units, and parking requirements.
Floor Space Index (FSI)
The ratio of total built-up area to the total plot area. FSI determines how much can be built on a given plot. Higher FSI allows more construction and higher density. FSI varies by city, zone, and road width.
Setback
The minimum distance a building must maintain from the plot boundary, road, or other buildings. Setbacks ensure ventilation, fire safety, and privacy. Setback requirements vary by city and building height.
Structural Design
The engineering process of designing the structural framework of a building: columns, beams, slabs, foundations, and load-bearing walls. Structural design ensures safety, durability, and compliance with building codes.
MEP Design
Mechanical, Electrical, and Plumbing design for a building. MEP systems include HVAC, electrical wiring, lighting, water supply, drainage, and firefighting. Proper MEP design is critical for functionality and comfort.
Construction Contract
A legally binding agreement between the developer and contractor specifying scope of work, payment terms, timeline, quality standards, and dispute resolution. Common types: lump sum, unit rate, cost plus, and EPC contracts.
Turnkey Contract
A construction contract where the contractor is responsible for design, construction, and commissioning, delivering a ready-to-occupy project. The developer pays a fixed price and takes possession on delivery.
Item Rate Contract
A construction contract where payment is based on actual quantities of each item at pre-agreed rates. Common for government projects and BOQ-based tendering. Requires detailed measurement and certification of work done.
Liquidated Damages
Pre-agreed compensation payable by the contractor for delay in project completion. Typically a percentage of contract value per week of delay. Protects the developer from losses due to delayed possession.
Retention Money
A portion of each payment to the contractor held back as security for defective work. Typically 5 - 10% of each payment, released after defect liability period (usually 12 months after completion).
Defect Liability Period
A period after project completion during which the contractor is responsible for fixing any defects that appear. Typically 12 - 24 months for residential projects. Retention money is released after DLP.
Punch List
A list of defects, omissions, and incomplete items identified during final inspection before handover. The contractor must rectify all punch list items before the developer accepts the project.
Snagging
The process of identifying and documenting defects in a completed building before handover. Snagging ensures quality and protects both developer and buyer. Common snags: cracked walls, plumbing leaks, electrical faults, and paint defects.
Maintenance Deposit
A lump sum collected by the developer or society from buyers at handover to fund major repairs and replacements of common assets. Typically 2 - 5 years of maintenance charges, held in a separate account.
Sinking Fund
A fund created by a housing society to meet future major repair and replacement costs: lift replacement, roof waterproofing, painting, and structural repairs. Contributions are typically 0.5 - 2% of the built-up area cost annually.
GST on Construction Services
GST applicable to construction of residential apartments: 18% on standard residential, 12% on affordable housing (below 60 sq.m carpet area). Input tax credit benefits may apply depending on construction method.