Loading Factor in Apartments: What is it?

As a first time home buyer, you will encounter several terms used by a builder that can confuse you, such as super built-up area and carpet area. While some of these terms are regularly used when buying and selling an apartment, there are other terms which do not appear in common usage. However, these are as important as the former and can be a deciding factor in your property purchase. Loading factor is one such term. Let us see what it is and how it affects your apartment size.

What is loading factor?

In order to understand loading factor, we should understand two commonly used terms. They are carpet area and super built-up area.

Carpet area: Carpet area is essentially the floor area you get inside your apartment for utilizing. In technical terms, it is the total area available in your flat where carpet can be laid, excluding walls and utility ducts. Carpet area includes space available in your living room, kitchen, bedroom, bathroom and other rooms. Some builders tend to add the balcony in this carpet area while others don’t.

Super built-up area: The super built-up area includes the total built-up area of the flat including the carpet area and walls, as well as common areas such as lift, lobby, staircase, gym, clubhouse, community centre and other amenities. It also includes open areas such as terrace, play areas and gardens in proportion to the unit.

Loading factor: Loading factor essentially creates a relationship between the super built-up area and the carpet area. It is the factor which when added with 1 and then multiplied by the carpet area gives the super built-up area. The correct formula for calculating loading factor is:

Super built-up area = Carpet area (1+ loading factor)

We must also understand that the genesis of Loading for a builder is to recover the cost of additional facilities that he is providing such as lifts, lobby, maintenance room, generator room, parking, and terrace, to name a few. He also needs to recover the opportunity cost of land used. For instance, in premium projects, the developer provides amenities/facilities that are far more superior than the prescribed norms and hence forgoes the opportunity of utilizing the available FAR for developing an additional saleable unit. So, the developer passes on the additional financial burden to buyers in the form of both as an increased base price as well as higher loading.

The following figure illustrates what constitutes the loading factor in apartment projects.

The loading factor is always calculated as a percentage. This varies across projects and cities. The following table gives the loading factor in the four major cities across the country.

Table 1: Loading factor in different cities

While most of the builders do not mention the loading factor of a property while talking to a prospective buyer, it is important that you know this term. This is because, if calculated properly, the loading factor gives the real value for your investment.

An Example

To simplify the above mentioned formula for better understanding let us take the following example:

Let us assume, a builder offers a super built-up area of 1000 sq. ft. and the carpet area is 700 sq. ft. The extra that the builder is charging is equal to 300 sq. ft. which is said to be the loading factor of the unit.

Let’s do a forward calculation using the formula which is said to be ideally correct where carpet area is used for calculation:

Carpet area x Loading Percentage = Loading Factor x 100
Loading Percentage = (Loading Factor x 100)/ Carpet Area
Where Loading Factor = Super built-up area – Carpet area
Loading Percentage = (300 x 100)/ 700 = 42.85%

Interestingly, the formula which is most prevalent in the country, considers the super built-up area as against Carpet Area. And this brings down the Loading Percentage to a large extent which the buyer might feel is beneficial to him.

Super built-up area x Loading Percentage = Loading Factor x 100
Loading Percentage = (Loading Factor x 100)/ Super built-up area
Where Loading Factor = Super built-up area – Carpet area
Loading Percentage = (300 X 100)/ 1000 = 30%

This shows that there is a clear difference of almost 13 % between the two. Hence, buyers must be aware of what the builder is using in his calculations for the Loading Percentage. This will help him know the actual space for which he is being charged extra.