What is UDS and why should this be a part of your agreement?

Anyone even remotely related to real estate would have come across the term ‘UDS’ or Undivided Share of Land. However, there still exists a lot of ambiguity about what it really means and its importance while purchasing property. Magicbricks finds answers.

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Buying a home is everyone’s dream. It is not just a necessity but also a life time investment. This explains the elation one feels when the price of your home appreciates even if you do not intend to sell it. However, is your property really appreciating? Do you really own the part of the property that really appreciates – the land?

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To introduce the term ‘Undivided Share of Land’ or UDS as it is commonly referred to. Undivided Share of Land is the share of land owned by you when you purchase a property. When you buy an apartment, you are basically buying two things:

-The constructed building – where you actually reside

-The proportionate share on the land, where the whole property is built

Surabhi Arora, associate director, Colliers International explains the importance of having the ownership of the land along with the apartment. “Price appreciation in real estate is actually the appreciation of land prices because technically the building depreciates over time. For instance, have you ever thought what will happen if there is an earthquake and the building collapses? What if the government wants to acquire the land and provide compensation to you? Or, what if the building needs to be re-constructed for re-development? It is at such times that the amount of land you own would matter.”

Let’s take an example to understand this better.

Consider a township consisting of 100 units of 2BHK flats (1000 sq ft) and 50 units of 3BHK units (2000 sq ft).

The total constructed area thus becomes (100 units * 1000 sq ft) + (50 * 2000 sq ft) = 2,00,000 sq ft. This means that a person owning a 1,000 sq ft flat would have 0.5% share in the total land (as 1000 is 0.5% of 2,00,000) and a 3BHK owner would have 1 per cent UDS (2000 is 1% of 2,00,000).

Note: The above example is for apartment system. If it is a co-operative society, then the land share is equal for each member, irrespective of their property size.

Points to consider

-Always check the agreement for details of the “Undivided share of land”. This will be mentioned in percentage terms like “0.45%” or exact area in sq ft terms. Just read the whole thing carefully.

-Importance of the UDS while selling a property: In real estate, while the land on which the building is built appreciates, the building itself depreciates in value. Thus, when you try to sell your property, a smart buyer or investor would definitely look for the UDS. As UDS is a ratio depending on how many flats there are and how much land the complex sits on, yours could be very low

-Importance of a Car Park: An allotted car park is very prized for the same reason. If you have a car park, your UDS becomes UDS calculated + car park land in sq ft. “Thus, it is important to see that the developer documents the car park in your name,” says Arora.

-Finally, Shveta Jain, head residential services, Cushman and Wakefield adds that in some cities, particularly southern cities such as Chennai and Bangalore, one needs to register a separate agreement for UDS

Sruthi Kailas, Magicbricks.com Bureau

Sruthi Kailas is a keen market researcher and is currently a part of the content and research team of Magicbricks.com

Source:http://content.magicbricks.com/industry-news/what-is-uds-and-why-should-this-be-a-part-of-your-agreement/75080.html