Saturday, December 29, 2001
M A I N   F E A T U R E


A REAL BONANZA!

A few days back, the Administration notified the much-awaited Apartment Act on the pattern of the one prevailing in Delhi and Mumbai. Called the Chandigarh Apartment Rules, 2001, the Act will allow owners of property to sell their real estate on a floor-wise basis. This means that different persons can own different floors of a building or a house. Now a prospective buyer of a flat, who earlier due to lack of choice was forced to buy Chandigarh Housing Board flats by paying a hefty premium, can opt for a first or second floor of a house in the city, writes Ajay Banerjee

BUYING or selling residential or commercial property in Chandigarh stands revolutionised forever, all thanks to a new Act notified by the Chandigarh Administration in one of its most significant people-friendly decisions. Now both the buyer and the seller will have more exciting options.

Till now, a buyer with a budget between Rs 10 lakh and Rs 25 lakh had very limited scope for purchasing a decent residential accommodation. The best bet was moving to the nearby townships of Panchkula and S.A.S. Nagar (Mohali). In case of commercial property also, the buyer only had the choice of buying the entire showroom that cost a couple of crores.

 


A few days ago the Administration notified the much-awaited Apartment Act on the pattern of one in Delhi and Mumbai. Named the Chandigarh Apartment Rules, 2001, the Act will allow owners of property to sell their real estate on a floor-wise basis. This means that different persons can own different floors of a building or a house. Now a prospective buyer of a flat, who earlier due to lack of choice was forced to buy Chandigarh Housing Board flats by paying a hefty premium to original allottees, can easily opt for the first floor or the second floor of a one-kanal (500 sq yds) or a two-kanal (1000 sq yds) house in the northern sectors which are considered more upmarket. Actually those who own houses bigger than 1400 square yards can divide each floor into two units thus paving the way for a block of apartments standing three storeys high. Now an entire clan can live under the same roof while being in separate apartments owned by each of them and also meet the demands of modern nuclear families with varied tastes and lifestyles.

The Act has the potential to change the dynamics of property, says Ashok Bansal, Secretary, Hotel Association of Chandigarh, and the man who originally mooted the idea of the Apartment Act about five years ago.

The seller or the owner too has a lot to gain, for he can continue to live in the same house while enjoying good cash liquidity by selling off the first and the second floors. This will help the aged whose cash resources are stretched due to the rising cost of living. Two legal heirs dividing their ancestral property can now have a floor each. Real estate consultant Amarjit Singh Sethi uses only one word, "revolutionary", to describe what the Apartment Act will do to the property scene in the city.

The new rules allow subdivision of a residential building into separate and independent units. Each such sub-building will be recognised as a distinct identifiable property to which the owner shall have ownership rights along with proportionate rights in the declared common areas. Recognition of each such sub-building as an apartment by the Estate Office shall be accorded by way of a fresh letter of allotment or a fresh conveyance deed, as the case may be in supersession of the previous allotment letter. Each subdivision shall be the sole and exclusive property of the declared owners. Under the Capital of Punjab (Development and Regulation) Act,1952, all the covenant and liabilities contained in the original allotment letter shall be shifted onto the new owner/s.

All thanks to a futuristic approach adopted by straight-talking UT Administrator Lieut Gen J.F.R. Jacob(retd), who took personal interest in the issue and kept in mind the aspirations of the people, each apartment will have separate water, power and sewerage connections. Thus no day-to-day hassles. In case of residential buildings that are less than 1,400 square yards in area, only one dwelling unit will be allowed on each floor. In case of plots bigger than 1,400 square yards, one floor can have two dwelling units on each floor.

What if builders will step in to take over old houses to build apartments? Sethi predicts this will not happen. He, however, adds that if a big joint family wants their old house converted into sleek apartments there should be nothing wrong with that. The Administration has said that the basement shall form part of the subdivisions on the ground. In case of more than one subdivision on the ground floor, each subdivision may have a separate basement if building regulations permit so. In case the basement provides for facilities such as parking area or other plant and equipment required for apartments in the building, the basement or portions may constitute a part of the subdivision on floors, other than the ground floor. Praising the Act, Bansal says it has kept in mind the socio-economic factor as buyers did not have huge sums to invest, while sellers did not want to let go of property in Chandigarh.  

The garage, servant quarter, outhouse, mali hut or store, not forming part of the main residential building, shall not form a separate subdivision. These have to be a part of one of the floors. This is a good move, says a property dealer, otherwise even the garages would have been sold just for the sake of money.

To keep day-to-day bickering at the minimal, the Administration has decided that common structures like foundations, columns, beams, supports, main valves, common roofs, corridors, staircases, fire escapes, entrances and exits of the building shall be demarcated. So would be the case with parking areas, passages, driveways, gardens, storage spaces, spaces for security, as are required or specified for common use.

In case of commercial areas, shop-cum-offices and shop-cum-flats, the Administration has allowed that they may be subdivided into a commercial unit on the ground floor, and as a separate unit on each of the upper floors of the appropriate category.

In case where a partition is allowed in the ground floor of an SCO or SCF, such SCOs or SCFs may be subdivided into more than one unit on the ground floor but not more than one subdivision shall be allowed in each bay. A bay is usually about 17 feet wide. An SCO or an SCF can have two or three bays each. One bay is the distance between two support pillars of a building. As regards upper floors in commercial establishments, each floor may be subdivided provided that there is not more than one subdivision for each bay on the upper floors.

Now there will be several small businessmen and professionals who would want to buy one of the floors of a showroom. Looking back at the annual auction of sites, Bansal says this will add more meaning to the sales and raise the auction price. Basements of any SCO or SCF shall not constitute a separate subdivision and shall form part of one of the subdivisions.

Further simplifying the procedure, owners wanting to sell portions of their property have been been asked to file a declaration that states that they intend to subdivide the building in accordance with the rules and the building regulations. This declaration shall be in the prescribed form (Form-D), and can be submitted to the Estate Officer. A decision as regards subdivision of the building shall be taken within 60 days of the submission of the declaration, the notification says.

How will the Act benefit owners?

  1. People will now have the option of selling a floor of their house. It will specially be beneficial to old couples who live alone in their houses, while their children are residing outside the city or country. Besides giving cash liquidity to the aged, it can provide them the security of having someone live near them. There has always been the option to keep tenants, but this at times leads to legal hassles like tenants not vacating the house. The second option chosen by many old couples was to sell off the entire house and move to a smaller house. This led to distress sales where prices lower than the market price were quoted.

  2. Legal heirs wanting to divide an ancestral home can now divide the floors of the house among themselves and sell their portion as and when desired or even live in it. Before the Act, the only possibility was to sell off the entire house collectively and divide the money among themselves. What came to the share of each legal heir was in most cases not enough to buy a decent accommodation elsewhere, besides they had to let go of a house they were emotionally attached to. The new Act will also bring down litigation between legal heirs and lessen family feuds over real estate.

  3. In case an owner faces financial crisis, he or she can now sell off a floor while occupying the other floor and thus continuing to live in his own house. Earlier this was not possible. A real estate agent quotes the case of an owner of a one kanal (500 sq yards) house in Sector 44. To meet the medical expenses of his child who had to undergo surgery, the owner had to sell off the house for just 70 per cent of the market value and move into a flat.

  4. In case of commercial property, the owners of the showrooms, who till now were just content with getting rent, can sell off portions or floors while retaining control over the other floors or portion of the building. The landlord can get a couple of crores in liquid cash while retaining his own space in the same building.

 

What does the Act mean?

* In case of residential properties less than 1400 sq yards, one independent dwelling unit allowed on each floor.

* In plots which are more than 1,400 sq yards, two units in each floor allowed. 

* Fresh allotment letter to be issued to all allottees.

* Independent water, power and sewerage connections to be given. 

* Basements are not separate subdivisions. 

* In commercial buildings, subdivision permitted on ground floor but not more than one subdivision in each bay. 

* The basement of an SCO or SCF (also referred to as the showrooms) not to be allowed as a separate unit but will form a unit of one of the subdivisions. 

* No subdivision allowed in industrial buildings. 

* People making new houses can earmark apartments in drawings and get them approved. 

* Applications have to be made to the Estate Officer on a specified form. 

* Subdivision to cost Rs 10 per sq ft and Rs 20 per sq ft for residential area and commercial area, respectively.


How will the Act benefit buyers?

  • Till now the buyer with a budget between Rs 10 lakh and Rs 25 lakh, either had the option of looking for a CHB flat, which could not be transferred in his name or had the choice of moving into adjoining townships. Now within this price range, the buyers can get the first or second floor in a bigger house of their choice and the ownership deed will be in their name.

  • With nuclear families being in vogue, a young working couple can easily invest Rs 15 lakh to Rs 20 lakh in say buying the first floor of a 10 marla (250sq yard) house. All this was not possible without the Act. Loans will be easier as an independent ownership deed will be signed between the purchaser and the Estate Officer.

  • People living in flats can now also consider buying a floor in a big house in a better or what is considered to be an upmarket locality.

  • In commercial areas, corporates can buy floors without having to shell out a couple of crores in buying an entire showroom. This means small businessmen or professionals who just could not even dream of buying office space in Sector 35, 22 or 17, can now buy a floor. With the ownership deeds in their own names, the same property can be mortgaged for raising loans. Without the Act, raising loans was a major problem but now this stands simplified.