Chapter II- Rent, Section 7 - Standard rent

1. ‘Standard rent’ of any premises is the rent calculated on the basis of ten per cent per annum of the aggregate amount of the cost of construction as well as the market price of the land comprising the premises. The date for this computation is the date of commencement of the construction. The standard rent thus calculated is to be  enhanced in the manner provided in Schedule I.

2. The computation involves the following factors -

(a) the cost of construction includes the cost of electrical fittings, water pumps, overhead water tanks, storage tanks and other water, sewerage and other fixtures and fittings in the premises;

(b) it is possible that some fixtures and fittings referred to in clause (a) are in common use by more than one occupant in a building. In such cases, the computation is done on the basis of the proportion of the plinth area of such premises to the plinth area of that building;

(c) the cost of construction is the actual amount spent on construction. If such amount cannot be ascertained, the cost is determined as per the scheduled rates of the Central Public Works Department for the year in which the premises was constructed;

(d) the market price of the land is the price for which the land was bought as notified in the deed of sale registered under the Registration Act, 1908. This is so if construction on that land commenced in the same year as that of the registration. However, if the construction commenced at a later date, the land rates notified by a local authority for the year of commencement of construction could be different from the original figure. In such a scenario, whichever price is higher is taken as valid for computation;

(e) the land comprised in the premises comprises: i) the plinth area of the building, ii) the surrounding vacant land, up to fifty percent of the plinth area;

(f) sometimes, the premise in question forms part of a building having more than one premise. In such a scenario, the market price of the plinth area of the relevant premise is taken for computation vis-a-vis that of the plinth area of the entire building;

(g) the cost of construction and the market price of the land which is purchased from or allotted by the Government or a local authority shall be the aggregate amount payable to such Government or the local authority. This provision is irrespective of the contents of clauses (c) and (d). In such cases, the Rent Authority may allow an enhancement of up to thirty percent.  of amount payable to the Government or the local authority, to the amount so payable for any expenditure incurred by the landlord or by the first or any subsequent purchaser or allottee for any improvement, addition or structural alteration in the premises.