The plain-English glossary.

AIF (Alternative Investment Fund)

A SEBI-registered pooled investment vehicle that raises capital from sophisticated investors and deploys it into unlisted or alternative assets. Category II AIFs are commonly used in Indian real estate — they invest in unlisted equity or debt of projects, acting as a flexible capital layer between senior bank debt and promoter equity.

Area Sharing JDA

A Joint Development Agreement structure where the land-owner receives an agreed percentage of the completed saleable area (e.g. 30% of flats or plots) instead of cash. The share is defined in super area or saleable area terms and is handed over after the project receives development authority approval. Common in residential plotted developments.

CA Advisory (Chartered Accountant Advisory)

Transactional advisory provided by CA-trained professionals covering deal-level due diligence, tax structuring, RERA compliance, and lender documentation. Distinct from statutory audit — CA advisory applies the same rigour to investment and lending decisions rather than financial statement certification.

CAGR (Compound Annual Growth Rate)

The annualised growth rate at which an investment would have grown from its starting value to its ending value if it had compounded steadily every year, smoothing out year-to-year volatility into one comparable figure. Formula: CAGR = (Ending Value ÷ Starting Value)^(1/Years) − 1. This is the metric used in our ROI Calculator to project future property values from historical 5-year appreciation by location and property type — a high historical CAGR is a reference point, not a guarantee of future performance.

Cap Rate (Capitalization Rate)

A quick screening metric for income-producing property, calculated as annual Net Operating Income (rental income minus operating expenses) divided by the property's current market value, expressed as a percentage. A commercial unit earning ₹12 lakh net annual rent on a ₹2 Cr valuation has a 6% cap rate. Cap rate lets investors compare income assets — commercial space, LRD-funded properties — independent of how the purchase is financed. Typical Indian commercial cap rates run 6–9% depending on location, tenant quality and lease tenure.

Capital Gains Tax (LTCG / STCG on Property)

Tax on the profit from selling real estate. Property held for more than 24 months before sale qualifies for Long-Term Capital Gains (LTCG) treatment; 24 months or less is Short-Term Capital Gains (STCG), taxed at the seller's regular income-tax slab rate. Following the Finance Act 2024 changes, indexation benefit on LTCG is available only for properties acquired before 23 July 2024. Sections 54, 54F and 54EC allow reinvestment of gains into another residential property or specified bonds to reduce the tax payable — always confirm the applicable rate and exemption route with a CA before the sale.

Carpet Area vs Built-up Area vs Super Area

Three progressively larger measures of a unit's size. Carpet area is the actual usable floor space within the walls — the only measure RERA permits for pricing since 2016. Built-up area adds wall thickness and balconies (roughly carpet area + 10–15%). Super area (or saleable area) further adds a share of common areas — lobbies, stairs, lifts, clubhouse (roughly built-up area + 20–30%). A unit marketed at 1,500 sqft super area may carry a carpet area of only ~1,000–1,050 sqft — always ask for the carpet area and loading factor before comparing price per sqft across projects.

Circle Rate / Guidance Value

The minimum value per sqft/sqyd at which a property can be registered in a given locality, notified by the state government (also called guidance value, ready reckoner rate or DLC rate depending on the state). Stamp duty and registration are charged on whichever is higher — the circle rate or the actual transaction value — and a large gap between the two can trigger additional tax exposure for both parties under Sections 50C and 56(2)(x). Circle rates are revised periodically and vary by sector/zone — confirm the current notified rate before estimating any transaction's total cost.

CMA (Credit Monitoring Arrangement)

A standardised financial report format required by Indian banks and NBFCs for project finance appraisal. It includes 3 years of historical financials, projected P&L, balance sheets and cash flows, and DSCR calculations. A CA-prepared CMA is typically mandatory for any loan sanction above ₹5 Cr.

Construction Finance

Short-to-medium tenure project debt provided by banks, NBFCs or AIFs specifically to fund construction costs of a real estate development. Disbursed in tranches tied to construction milestones (plinth, slab, finishing). Repaid through project sales receivables routed through an escrow.

DSCR (Debt Service Coverage Ratio)

A credit metric calculated as Net Operating Income ÷ Total Debt Service (principal + interest). It measures how comfortably a project's cash flows can cover its loan obligations. Indian lenders typically require a minimum DSCR of 1.2x–1.5x across the loan life. Below 1.0x means the project cannot service its debt from operations alone.

EC (Encumbrance Certificate)

A government-issued document that records all registered transactions — mortgages, charges, sales, gifts — on a specific land parcel over a given period. A clean EC is mandatory for any property purchase or mortgage. Available at the sub-registrar office or via state government portals. Always verify EC independently — do not rely solely on the seller's copy.

Escrow Account (RERA Escrow)

A dedicated bank account, mandatory under RERA, into which a developer must deposit at least 70% of amounts collected from buyers for a registered project. Withdrawals are restricted to land cost, construction cost and development expenses for that specific project, and must be certified by an engineer, architect and CA in proportion to construction progress. The mechanism exists to stop buyer funds from one project being diverted to another — verify a project's RERA registration number on the state RERA portal to confirm escrow compliance independently.

FSI / FAR (Floor Space Index / Floor Area Ratio)

The ratio of a building's total permitted built-up area to the area of the plot it sits on, fixed by the local development authority (YEIDA, GNIDA, Noida Authority, etc.). An FSI of 2.0 on a 1,000 sqm plot permits 2,000 sqm of construction across all floors — directly capping a project's saleable area and revenue potential. FSI varies by zone, plot size and road width, and can sometimes be increased through premium FSI or TDR purchase. Always confirm the applicable FSI for a specific plot with the development authority before underwriting a project.

Information Memorandum (IM)

The primary document a real estate developer or project presents to lenders and investors when raising debt or equity. A well-structured IM includes: executive summary, promoter profile, project overview, sources and uses, financial projections, DSCR analysis, security structure, market overview, and risk mitigants. A CA-signed IM carries more credibility with institutional lenders.

IRR (Internal Rate of Return)

The annualised rate of return at which the Net Present Value of all cash flows from an investment equals zero. In Indian real estate, IRR is the standard metric used to model and compare investment returns across projects. Typical target IRRs vary: plotted development 18–25%, residential apartments 14–20%, commercial 10–16%. Always stress-test the IRR against slower absorption scenarios.

JDA (Joint Development Agreement)

A contract between a land-owner and a developer that transfers development rights without a cash sale. The land-owner contributes the land; the developer contributes capital, approvals and construction capability. Returns are shared as either area (a % of completed units) or revenue (a % of project sales). A JDA must be registered with the sub-registrar to be enforceable and triggers tax obligations at signing.

JV (Joint Venture)

An equity partnership between two or more parties for a specific real estate project. Unlike a JDA (which is a development rights arrangement), a JV typically involves a Special Purpose Vehicle (SPV) company or LLP where both parties hold proportionate equity and share profits, losses and control rights. Used more commonly for larger or institutional transactions.

Khata / Mutation

A Khata (called by different names across states — Pattadar Pass Book, property tax record, etc.) is the revenue record identifying who is registered as the owner of a property for property-tax and civic purposes. Mutation is the process of updating this record after a sale, gift or inheritance to reflect the new owner. A property can have clean Title per its Encumbrance Certificate while the Khata still shows the previous owner — both should be checked, and mutation completed promptly after every transaction to avoid future tax notices and title disputes.

Loan Syndication

The process of arranging a large loan from multiple lenders simultaneously rather than from a single bank or NBFC. A lead arranger prepares the Information Memorandum, approaches 6–10 lenders concurrently, negotiates competing term-sheets, and executes a unified facility agreement. Syndication improves pricing tension, reduces concentration risk, and allows mandates above any single lender's exposure limit.

LRD (Lease Rental Discounting)

A structured loan against future rental income from a leased commercial property. The lender discounts the expected rentals (over a defined period) and disburses a lump sum to the borrower, who repays from ongoing rentals deposited into an escrow. LRD is popular for funded commercial real estate assets with long-term lease agreements.

LTC (Loan to Cost)

The ratio of loan amount to total project cost (land + construction + all other costs). A key leverage metric for construction finance. Typical LTC for Indian real estate: 60–70% for bank-funded projects, up to 75–80% for NBFC-funded. The balance (30–40%) must come from promoter equity or pre-sales.

LTV (Loan to Value)

The ratio of loan amount to the current market value of the asset pledged as security. Used primarily for mortgage-backed lending. Regulatory caps apply: RBI guidelines generally permit up to 80% LTV for home loans below ₹30 lakh, 75% for ₹30–75 lakh, and 70% above. For commercial real estate, lenders typically work to 50–60% LTV.

Mezzanine Finance

Structured capital that sits between senior debt and promoter equity in the capital stack. Mezzanine is typically provided by AIFs or private credit funds at higher interest rates (18–24% p.a.) than senior debt, with repayment linked to sales milestones or project cash flows. Used to bridge the gap between the LTV a bank will fund and the total capital a project requires.

NA Conversion (Non-Agricultural Conversion)

The process of converting agricultural land to non-agricultural (NA) use to permit construction. Required by state revenue laws before any development can begin. The conversion order is issued by the Collector or designated revenue authority. Without NA conversion, a bank or NBFC will not lend against the land, and no building plan can be sanctioned.

NBFC (Non-Banking Financial Company)

A financial institution registered with the RBI that provides loans, advances, and other financial services but does not hold a banking licence. NBFCs are the primary source of construction finance and working capital for Indian real estate developers — they move faster than banks, accept earlier-stage collateral, and price higher (typically 13–18% p.a. vs 9–12% for banks).

OC / CC (Occupancy Certificate / Completion Certificate)

Documents issued by the local municipal/development authority confirming a building has been constructed per its sanctioned plans. A Completion Certificate (CC) confirms construction is complete as approved; an Occupancy Certificate (OC) additionally confirms the building meets safety and habitability norms and may legally be occupied. Taking possession without an OC exposes a buyer to risks including denial of utility connections, difficulty selling or mortgaging the unit later, and potential penalties for unauthorised construction — always verify OC status with the developer and local authority before possession.

Power of Attorney (PoA) in Property Transactions

A legal instrument by which one person (the principal) authorises another (the attorney-holder) to act on their behalf in property matters — commonly used by NRIs or owners unable to be present for documentation or registration. A General Power of Attorney (GPA) grants broad authority; a Special/Specific Power of Attorney (SPA) is limited to a defined transaction. Critically, under Indian law a PoA alone does not transfer ownership of property — following the Supreme Court's ruling in Suraj Lamp & Industries, any "GPA sale" without a registered sale deed confers no title. Such arrangements should be avoided or independently verified by legal counsel before any money changes hands.

REIT (Real Estate Investment Trust)

A SEBI-regulated investment vehicle that owns and operates income-generating commercial real estate — office parks, malls, warehouses — and is listed on a stock exchange, letting retail investors buy units much like shares. REITs must distribute at least 90% of net distributable cash flows to unit-holders, typically yielding 6–8% annually plus potential gains from unit price movement. Unlike a direct property purchase or an AIF, a REIT is liquid (tradeable daily) with a low entry ticket — but returns depend on listed commercial real estate performance generally, not any single project.

RERA (Real Estate Regulatory Authority)

The regulatory body established under the Real Estate (Regulation and Development) Act, 2016 to protect home-buyers and promote transparency in Indian real estate. Developers must register projects with RERA before launching sales; agents must also register. RERA mandates: 70% of collections into a project escrow, quarterly progress updates, and defined penalties for delays. Verify RERA registration at your state's RERA portal before any transaction.

Revenue Sharing JDA

A Joint Development Agreement structure where the land-owner receives an agreed percentage of the project's gross sales revenue rather than a share of area. Revenue flows through a jointly-monitored escrow account with a waterfall — typically: land-owner share → project costs → developer profit. Preferred by land-owners who want cash flow rather than physical units.

SPV (Special Purpose Vehicle)

A separate legal entity — typically a Private Limited Company or LLP — incorporated solely for a specific real estate project. SPVs ring-fence the project's assets and liabilities from the promoter's other businesses, making it easier for lenders to take security and for investors to participate. Most institutional lending for real estate is done at the SPV level.

Stamp Duty & Registration Charges

A state government tax levied on property transaction documents (sale deed, JDA, lease deed) at the time of registration, calculated on the higher of the transaction value or the circle rate/guidance value. Registration charges are a separate fee for recording the document at the sub-registrar's office. Rates vary by state — typically 5–7% stamp duty plus around 1% registration, with concessional rates for women buyers in several states. Confirm the current rate under the applicable state Stamp Act before budgeting any transaction.

TDS on Property Purchase (Section 194-IA)

Under Section 194-IA of the Income Tax Act, a buyer purchasing immovable property (other than agricultural land) for ₹50 lakh or more must deduct 1% TDS from the sale consideration and deposit it with the government via Form 26QB before the sale deed is registered. Failure to deduct or deposit can attract interest and penalties for the buyer and delay the seller's tax refund claims. This step is frequently missed in resale transactions — confirm it has been actioned before registration.

Term Sheet

A non-binding (usually) preliminary document issued by a lender or investor outlining the key commercial terms of a proposed financing: loan amount, interest rate, tenure, security, covenants, drawdown conditions, fees and repayment structure. A term sheet is not a sanction — the full credit approval and legal documentation follow. Always have your CA or lawyer review a term sheet before accepting.

Title Search (Chain of Title)

A review of the registered ownership history of a land parcel to confirm clear, marketable title. A thorough title search traces the chain of ownership back 30 years (minimum 13 years), verifies every transfer is backed by a registered document, and confirms no gaps, disputes or encumbrances. Title defects — missing links in the chain, unregistered transfers, court orders — can make a property unfinanceable and unsaleable.