CHAPTER 18- Fair Rent

The need for Architects to know what fair rent is and how it is calculated
arises on two counts. the economic factor including fair rent of
Firstly,
premises is an important element while planning a project. Secondly there
are disputes between the owner of a property and his tenants about payment
of rent. These disputes involve many issues.

Meaning of Fair Rent : Fair Rent means a reasonable rent charged by the
owner or landlord to his tenants for the use of his premises. The degree of
fairness depends upon the prevailing economic situation in thc country,
demand and supply position of premises available for renting out and the
capacity of tenants to pay rent-especially for residential accommodation.
Every owner expects return from investment in property comparable to
other forms of investments. In the case of acute shortage of premises some
owners are prone to charge exorbitant rents. If the tenant's right of
occupation is not protected by law, he will have to either pay the rent
demanded by the landlord or vacate the premises and move into smaller
or distant premises.

Need For Rent Control: During early 1930's-the years of world-wide

Depression, many residential premises were vacant. In most cities and
towns, there were boards displayed announcing availability of premises
on rent. Hov ever during late 1930'3, the cities and towns started growing
in terms of population, resulting in scarcity of premises. The landlords
this situation by charging exorbitant rent. It was for this reason
exploited
the then government introduced The Bombay Rent Restriction Act, 1939,
in order to curb this malpractice. This act was superseded by the Bombay
 201

Rents. Hotel and Lodging House Rates Control Act, 1947. In order to
obtain higher rents without creating a permanent tenancy, landlords resorted
to the system of* Leave & Licence". The premises were given for a period

of 1Imonths at time. The consideration charged was known as

a

"compensation". To make it appear as ifa furnished flat was given to the

licencee a list of furniture used to be attached to the agreement. Since
the Rent Act amended in 1973.
such a practice became wide- spread, was

Over the years experts have been advocating drastic changes in the existing
rent act to improve the housing situation.

The method of calculating fair rent has been evolved on the basis of certain
landmark judgements given by courts over the last five decades. Before
into this aspect further it would be pertinent to understand the
going
terms connected with fair rent.
meaning of certain technical

Technical Terms
Contractual Rent: It is the rent which is agreed between the landlord

and the tenant for use of premises. Such a contractüal rent could
be
exorbitant or fair depending upon the attitude of the landlord, need of the
tenant and the position of supply and demand of
rental premises available

on rent.

Protected Tenant :A tenancy is secured under the Rent

tenant whose

Control Act is called the protected tenant. He cannot be evicted by

the

landlord unless he creates some kind of default such as non-payment

of
etc.
rent, carrying out illegal additions, creating nuisance,
Fair Rent

Deemed Tenant : In order to avoid creation of a permanent tenancy

some landlords resorted to the
system of "Leave & Licence". Under
this system premises given for
were
period of 11 months. The
a

occupier or the licencee had to renew the agreement by paying higher

"compensation".every 11 months. When this system became
widespread the government amended the Rent Act in 1973 to declare
Occupiers of such premises as "Deemed Tenants" who could
approach the court for fixation of standard rent.

Monthly Tenant : A monthly tenant is a person who is given the

premises on month to month basis. The period of his occupation
depends upon the tenant's need or the landlord's will. The rent paid
is contractual. A monthly tenant after
prolonged occupation can
become a deemed tenant or protected tenant.

Gross Annual Return (GAR) : Gross Annual Return is the sum

of
total rent paid by all the tenants to the landlord
during one year. Out of
this gross rent, owner or landlord is
required to pay taxes and spend
monies for repairs, insurance, etc.

Net Annual Return (NAR) : This is the amount which

is left with the
landlord after paying all the outgoings such as
municipal taxes, repairs,
collection charges, fire insurance
premium, sinking fund, etc.
Statutory Outgoings : All the expenses which a landlord incurs for
maintaining his property such as municipal taxes, repairs, collection
 202

charges, fire insurance premium, non-agricultural tax, etc. which are

permitted as deductions or the same can be recovered proportionately
from tenants as provided in the Rent Act and income tax rules, are
known as statuary outgoings.

Bad Debt: It is a debt incurred by a tenant by way of arrears of rent

which cannot be easily recovered,; or to recover it would involve a lot
of expense and time-consuming litigation. In some cases, landlords
are willing to forgo such dues and allow a tenant to vacate the premises.
Such a bad debt can be allowed as an outgoing in certain circumstances;
but it is not allowed as a statutory outgoing.

Repairs as an Outgoing : Every owner is expected to spend a certain

amount for repairs every year for keeping his building in a proper state
of repair. It is therefore allowed as a statutory outgoing. The permissible
limit is 5% of gross annual rent or between 1/2% to 1% of the cost of
construction. Whether this amount is sufficient or not or whether it is
really spent is immaterial.

Collection Charges : Every landlord is either required to hire a Rent

Collector or do the job of collecting rent himself. All tenants do not
necessarily pay their rents on the first day of every month. Some pay it
on the Sth day or 10th day of the month depending upon their pay day.
Hence the Rent Collector is required to go round a number of times. For
this reason a sum equal to 6% of the gross annual rent is allowed as a
statutory outgoing
Fair Rent

Municipal Taxes: The civic administration levies taxes on properties as

one of the important sources of its These taxes include
revenue. Property
tax, Conservancy tax, Sewerage Benefit tax, Water Benefit tax and Education
Cess, etc. These taxes are based on the Net Rateable Value (NRV) or Annual
Letting Value (ALV) which is fixed at the time of first occupation of the
building.
Ground Rent : It is the annual rent which a lessee pays to the lessor for
taking land on lease.Usually it is 6% of the value of land per year.
Government agencies like CIDCO, MHADA etc., charge 6 1/2% to 7% of
the value of land, per year as ground rent.

Education Cess: It is a cess levied by municipal and state government on

private properties in order to provide funds for free primary education to
children in the city. It is based on the Net Rateable Value of the property.
Repairs Cess : In order to provide some funds for carrying out structural
repairs to old ruinous buildings in the island part of Mumbai (excluding
suburbs) government has levied a Repairs Cess on all tenanted residential
buildings which are more than 40 years old. 10% of this cess is borne by
the landlord while 90% is paid by the tenants. It is based on the net rateable
value of the property.

Investment in Land: When a landlord buys a property he spends additional

sums for stamp duty and registration charges, legal expenses such as fee of
solicitors, brokerage paid to broker, etc. For calculation of fair rent all these
 203

expenses together with the price of land and interest on these amounts during
the entire period of construction, constitute the total investment in land.

Investment in Building: When a landlord builds a building, in addition to the

total cost of construction and land development, he pays professional fees of
Architects and other consultants. For calculation of fair rent all these expenses
together with interest on this amount for half the period of construction constitute
the total investment in Building. For calculating investnent in building only half
the period ofconstructionis adopted for the interest because, the entire amount is
not spent at one time. It is spent in instalments as the work progresses from
foundation stage to completion stage.

Stamp Duty: When a person purchases any property he is required to pay

stamp duty for registering the conveyance deed in the government records.
This amount varies between 10% to 12 % depending upon the type and value
of property. It is either shared equally by the seller and the purchaser, or
alternatively, the purchaser pays the entire amount of stamp duty as per mutual
agreement. Unless appropriate stamp duty is paid, the government authorities
can refuse to register the conveyance deed and acknowledge change of
ownership.

Need for Fixing Fair Rent: The need for fixing fair rent by the court
arises because a tenant may agree to pay higher contractual rent in order
to obtain possession of premises from the landlord. Once his tenancy is
secured he is inclined to apply to the court for fixation of fair rent, if he
thinks that the contractual rent is exorbitant.
 Fair Rent

Procedure For Fixing Standard Rent; When atenant makes an application

Ao thecourt for fixation of fair rent. he is required to submit a report from an
expert specifying the rent which the tenant claims to be fair.The court directs
theTandlord to file a report prepared by his expert justifying the rent he is
charging he court thereafter askes the parties to make oral and written
submissions and lead evidence in support of their respective cases. If the value
of land is based on some relevant and specific sale instances of comparable
lands, it is not sufficient to merely give extracts from the Reyistrar of Assurances
records: Certified true copies of conveyanee or leasedecds are required to be
authenticated by producing parties to such transactions as witnesses. Aftergoing
through allthe documents and evidences the court fixes the rent which is regarded
as the standard rent. At times the court may fix interim rent so that thhe tenant
may deposit theamount fixed as interim rent and the landlord may be allowed to
withdraw the sums at fixed intervals. The amount of interim rent paid by the
tenant is finally adjusted when the court fixes the standard rent.

Investigations for Fair Rent Reports: An expert is required to make

xhaustive investigations before he prepares his Fair Rent Report. These include
measurement of premises occupied by the tenant; search of municipal records
to ascertain the area of land total built up area. year of construction, etc.
search of records of sale transactions of comparable lands which have taken
place in the relevant year (i.e. year of first occupation of building) obtaining
copies of such relevant sale instances, making inquiries about the cost of
constructionofsimilarbuildings, prevailing rates ofbuilding materials. labour.
etc. A specimen survey form for gathering relevant information is shown in
the Appendix.
 204

Net Return on Investment in Land : The percentage of net return on

investment in land has risen from 4 1/2% in 1940 to 5 1/2 % after 1958. At
present it is calculated (@ 6%.

Net Return on Investment in Building:The percentage of net return

investment in building has risen from 5 1/2% in 1940 to6 1/2% after 1958. At
present it is calculated ( 7 %.

Value of Land: Ifthe land is purchased just before the construction is begun
the value of land is adopted on the basis of purchase price. However, if it was
purchased much earlier, its current market value needs to be determined on
the basis of sale instances of comparable lands.

Cost of Construetion : If the landlord has given a contract which includes

labour as well as material, the actual amount spent by the landlord is adopted
as cost ofconstruction.Ifhe has done the work departmentaliy, 10% to 15%
is added to the amount he has spent on material and labour. The cost of
construction claimed by the landlord can be compared with the cost of similar
buildings built at the same time.

Expected Future Life of Building: The future life of a Class I buildin

built with RCC frame construction having either brick
masonry or concrete
block partitions is taken at 60 years. The
sinking fund is therefore caleulated
for a period of 60 years. In the case
ofsemi-permanent building the future
ife is taken at 30 to 40 years
depending upon the nature ofits construction.
The life of a temporary building is considered to be
anywhere between 10
Fair Rent

and 20 years depending upon the nature of its construction. The sinking
fund is calculated according to the respective expected future life.

Fire Insurance Premium: Every wise owner is expected to insure

his building against the risk of damage due to fire. The annual
amount of insurance premium depends upon the nature of
construction, nature of occupation and the location of building.
For example, a Class I residential building in a suburban area
will have the smallest risk of fire. The premium in case of such a

building will be about 0.10 1% to 0. 12% of 9/10th cost of

construction. 1/10th is deducted for foundation and plinth which
is never affected by fire even in the case of total loss. The premium
in the case of a temporary building is higher because of poorer
construction. It could be as much as 0.25% of 9/10th cost of
construction.

cost of construction
Sinking Fund : Sinking fund for redemption of
over a period of 60 years in the case of
Class I building also is calculated

on 9/10th cost of construction.

Since it is a long term and secure
investment it is normally calculated @ 4%. In the case of semi-
construction also it is on the same basis
permanent or Class II type of
of Class III building it is
but for a period of 30 to 40 years. In the case
calculated for a period of 10 to 20 years. For lifts and pumps fitted in
a Class I building the sinking
fund is calculated on full value but for a

period of 25 to 30 years which is considered to be its useful service

span.
 205

Special Outgoings: Apart from the outgoings mentioned above additional

outgoing such as Rent Collector's salary. Sweeper, lift man and pump
attendants salary, clectricity charges for lighting of common spaces such
as staircase landings. lighting of surrounding open spaces. pump and lift
operation expenses are calculated on reasonably acceptable basis.
Though municipal taxes form a sizable and important part of statutory
outgoings these cannot be calculated as directly as other outgoings because
the taxes are based on the net annual return. What is known is the level of
taxation. For example in Mumbai the aggregate tax for a residential
building is about 52% of the net rateable value or 46.80% of gross rent.
The method of calculating the gross rent on the basis of level of taxation
is explained in the specimen fair rent report in this chapter.

Loading of Rent: When fair rent is calculated on the basis of total

investment in land and building to which all the outgoings are added.
gross annual rent for the entire building is obtained. A fter dividing the
gross annual rent by 12. gross monthly rent is obtained. When this is
divided by the total carpet area of the building on all floors, average
rent per square meter per month is obtained. However all the flats or
shops in a building do not have the same advantages. Therefore it
becomes necessary to decide the loading or apportionment of rent to
each flat or shop depending upon size and location. In broad terms it
is done as under.

In a purely residential building having ground and two upper floors

the average rent will be applicable to flats on first floor. Ground
Fair Rent

floor flats will have 5% less rent while second floor flats will have
5% more rent.
and flats on upper
2) In a building having shops on ground floor
floors which is situated along 15or 20 metre wide road, the carpet
one and a half times the area of
area of shops will be calculated at
the
flats. In othcr words shopkeepers will pay one and halftimes
a

rent a flat occupier will pay. The loading

of rent for flats on upper
lower floors.
floors will be 5% to 10% more than those on the
offices on first floor
3) In a building having shops on ground floor.
is situated along a
and residential premises on upper floors which
be calculated at two
25 or 30 metre wide road. the shop area may
area of offices may
and a half or three times the area of flats. The
area of flats for loading
be taken at one and a half times the
purposes.
 206

A specimen Fair Rent report prepared by an expert who was appointed as

Commissioner by the court is given below with a few explanatory notes.
A few changes in names, location of property etc. have been made to
maintain anonymity.
Specimen Fair Rent Report

Rcf. No.295/201/R/53/76

In the Court of Small Causes at Mumbai

R.A.N. Application No. 706/SR. of 1972.

Ms ABC Industries, Applicant

Vs.

Sun Products Co. Private Ltd. Respondent.

1) By an order ofthe Court dated July 21, 1972 I was appointed Commissioner in the
above application for the purposce of reporting what is the standard rent of the
premiscs in application and for the purpose of making the report to inspect thc
premiscs and to hear and record such evidence as the parties lead before me.
2) The parties appeared before me through their respective advocatcs and led such
cvidence as they thought fit. I inspected the premises on December 12, 1973.
3) At a meeting held on October 9,1973, Shri Ajay Khale, lcarned advocate of the
applicant filed a report made by the applicant 's Architcct Shri S. D. Vaze, which is
Ex.A, He also produced a plan ofthe structure prepared by the applicant's Architects.
which is Ex.B. Shri J. M. Rcle the learned advocate ofthe respondent tendereda
report made by the respondent's Architects Shri C.R.Thakur, which is Ex. No.I.
4) At a mecting held on Nov.22. 1973 Shri Khale and Shri Rele stated that since the
parties have filed the reports oftheir respective Architects. they wanted the Commissioner
Fair Rent

to inspect the premises and thereafter the Commissioner to make his report after taking
into consideration the reports of the respective Architects of the applicant and the

respondent and his inspection of the premises. They further stated that they did not

lead any evidence besides the report Ex.A and Ex.No.I and owing to the
desire to

inspection of the property by the Comnmissioner.

5) At a mecting held on Dccember 14,1973 Shri Rele, advocate for the respondent

stated that the shed in application was constructed in or about 1958. It was then
double the sizc of the existing shed in application. It was being used by the owner
basis from
for his business. For the first time it was given on leave and licence
as of
1.10.1965. He further stated that the first letting may therefore be taken
October I, 1965. He produced and showcd a stamped leave and licence agreement.
advocate for the
6) At mecting held on Feburary 5,1974 Shri Ajay Khale. learned
a
was first let in 1961 to Jayant
applicant stated that the premises i1n application
it. As there was a
Metal Co. and he further stated that hc is prepared to prove
the parties were
differcncc betwcen the partics as to the date of the first letting
directed to lead evidence to show which is right.
The applicant called and cxamincd the Assistant Assessor & Collector (Appeals).
7)
He identificd a letter dated March 12, 1974 and
Mumbai Municipal Corporation.
Ref.No.AC/SCL/570 from the Assistant Assessor & Collector, L Ward.
bcaring
the rateable value said premiscs from I.6.1959 and also the
of the
Kurla recording
revised ratcable valuc from 1.4.1962. This letteris Ex.F. He proluced records from
shown. In the cross examination he was unable
which contents of this letter were

fixcd on the basis of the actual rent

to say whcther these ratcablc values were

owner. He was unable

rent of the premises occupicd by the
received or on estimated
rocords with him whcther the premises was
let or was in
to say from the municipal
these years.
the occupation of the owner during
Ward Inspector in L Ward of the Bombay Municipal
8)
8) The Applicant cxamincd the
value of the
the Munic1pal records that the rateable
Corporation. He stated from 1970-71. He further
was Rs.4,320/-for the ycar 1969-70 and
premises in application
 207

stated that the rateable value was revised from 1.4.1971 to Rs. 10.480/-. This ratcable
valuc of Rs.10,480/- was based
thc rent of Rs 1.000/- per month. at which it
on

was lct. He further stated that the ratecable value of

Rs.4,320/- in 1969-70 and
1970-71 was based on a monthly rent of Rs.412/-. In his
cxanmination he eross
admitted that he had not visited the premiscs in
application in 1970 and197land
he could not verify as to the correctness of the cntrics. He was
unable to say whether
the ratcable value as recorded for the
ycars 1969-70 and 1970-71 was based on
actual rent or an cstimated rent. He was unable to say whether the premises were
let or
occupied by the owner in 1970. but from 1.4.1971 the record showed that the
ratcablc value was based on the actual rent of Rs.I.000/- per month.
9) Shri Madhukant Gopal Karadkar, a director of the Respondent Co.,
cxamined. was
He produced a leave and licence
agreement dated 1.10.1965. which is Ex.No.2A.
This agreement is between the respondent as liccnsor of the one
part and Shri M.
R. Dave and another as licencec of the other
part. The licensor granted a licence
for a period of
cleven months from the date of the license, viz. to the I.10.1965,
licensees for and occupation of the godown for storage purposes at a
use
monthly
charge of Rs.I.000/-. Shri Karadkar stated that the built-up arca of the shed was
then 3.200 sq.ft. He
similar agrecment dated Scptcmber 1,1966 and
produced
August 1.1967 betwecn the parties for grant of license for the purpose of storagcof
goods in the shed admeasuring 3,200 sq. ft. at the same monthly.charge of Rs.1,000/-
.These license agrements are Ex.3 and 4 in the proccedings. Shri Karadkar stated
that priorgiving the premises on lcave and licence under the agreement, Ex.2A
to

the respondent was occupying it for its own use. He further stated when the
premiscs
became vacant in 1968 the respondent occupicd the premiscs for its use and the
respondent continucd to be in the oecupation of the premises till March 1,1970,
when it was let to the applicant. In his cross cxamination Shri Karadkar denicd
that the premises were occupied by Jayant Metal Co. in 1961-62. He stated that he
was of the rateable value in 1958, 1959 or 1962. He admittcd that from
not aware

1965 the rateable valuc was Rs 4, 320/-

and that it was revised on 1.4.1971 and
Fair Rent

fixed at Rs 10,480/-. He produced the Municipal bills for the period 1.4.1965
to 30.9.1965, 1.10.1970 to 31.3.1971 and 1.4.1971 to 30.9.1971 which are
collectivcly marked Ex.K. He stated that the respondent demolished the
southern half portion of the building in or about the end of lT968 or beginning

of 1969. and he further stated that Shri Dave.one of the licensees. continued
to be a licensee for the remaining half. He further statcd that he did not notify
the Municipal Corporation about the demolition of a part of the structure. nor
did he apply to the Municipality for the reduction of the rateable valuc of the

building
10) Shri Rclc, lcarned advocate for the respondent argucd at the meeting held
on December 14.1965 that October 1.1965 may be taken as the date of first
letting bccause on that day the structure which was then double the arca of
the existing structure in application was given on leave and license. In his
argument he referred to the definition of the standard rent and specially
referred to Section 1| emphasizing the circumstances of the letting. He
argued that the letting in 1955 was for the purposc of storage of goods, that
is, godown, while the letting in 1970 was for industrial purposes. as it 1s

bcing used as a mechanical workshop. The letting in 1970 is for occupation

persons for monitory gains. He thercfore stated that the date of first
by
should be takcn Mareh 1.1970 and value of land and cost of
letting as
construction of the building should be estimated as of March l.1970. the
date on which the premises were let to the prescnt applicant. I do not agree
with this view. Storage of goods is also for monctary gain in the course of
business or trade carricd on by the occupier of the premises. Rent of premises

occupied for trade, commerce and manufacture are not agreed upon between
partics by taking into consideration the extent of gainfulness of occupation
from differcnt varieties of occupation. In the circumstances T have prepared
basis of the first letting as of October
my estimate of the standard rent on the
license
1.1965. Shri Rele also argued that the shed that was given on leave and
 208

from 1965 to 1969 had larger arca compared to the present arca. which is
a

almost half the area of the

original shed. This difference will not arise as the
cost of construction of a
building of the size which is let to the
applicant has
been estimated in arriving at the standard rent of the premises. The cost is
not taken as half of the whole
shed.
11) On evidencc before me I am of
opinion that the first letting of the structure
was from Oct.1.1965 when it was
given on leave and license basis to Shri
Dave and another as stated in Ex.2A.
12) The premises in application arc situate the
side of Lal Bahadur
on west
Shastry Marg (Agra Road) in Kurla. It is assessed under
Ward No.1256 (1A) and bears street No. 1
Municipal L
25/A. Agra Road. This is a
part of land bearing plot No.l9 of Suburban Schemc No.l.
The
Architects of applicant in his report Ex.A states that the
built-up area
of the building is 1743 sq. ft. and comes to the conclusion that the land
married to the structure is 581 sq.yds. on the basis of land
being threc
times the built-up area of the
building. He values the land at Rs.30/-
per sq.yd. He estimates the investment in construction at Rs.19,949/-
and comes to thc conclusion that the reasonable rent
of the premiscs is
Rs.276/- per month.
13) The Architccts to the respondcnt his
report Ex.No.I estimates the arca of
in

land married to thc structure at 701

sq-yds. He valucs the land at Rs. 150/- per
sq.yd. He estimates the cost of construction at Rs.49,455/- and comes to the
conclusion that the reasonable rent of the
premises is Rs. 1,153/- per month.
14) Neither the Architects of the applicant nor the Architects
of the respondent
has given any instances of salcs of land to
support the valuc of land at Rs.30/- and
Rs.150/- per sq. yd. respectively estimated by them.
15) I inspected the premises on Dec 1. 1973 when the learned advocates,
representatives of the parties and Architects of the respondent were
present. The respondent owns a large piece of land. 1 had asked for a
Fair Rent

to mc but
copy of thc land of this large plot of land. The plan was given
with this report.
it is not marked as cxhibit. The plan is being forwarded
on the plan.The
The premises in application are shown by hatched lines
about
building is the front part of the land. It is sctback
constructed on
storied stecl structure,
36 feet from the road. The building is a single
sides have C.I. sheet cladding.
having a built-up area of 1764 sq. ft. The
is of asbestos cement
The gables are open and have no cladding. The roof
sheets fixed on steel trusses and steel purling. Therc
is one large sliding
door on the cast and onc small door on the south, both madc of stee
the wall
framing and corrugated iron shects. There are openings in rear

without shutters. The

with expanded metal fixed in them and any
urinal or washing place
flooring is Indian Patent Stone. There is no WC,
construction at Rs 15/- per sq.ft.
in the building. I estimate the cost of
cost of construction c o m e s to
The built-up a r e a being 1764 sq. ft. The
have estimated cost of construction
Rs 26.460/-. Both the Architects
on the basis of cubical contents. The cubical contents of the building
as calculated by me is 35,260 cft. On my estimate of cost, the rate per

cubic foot comes to Re 0.75.

land estimated by the Architects of
16) There is wide difference in the value of
of land by one of my clients in the
the parties. I know of purchase of a plot
on which the shed in application is
locality. It is to the west of the property
No. 9 situate on a
constructed. This is a piece of land bearing S. No. 27 H.
land is not far from Saki Naka. By an
road from Saki Naka to Powai. The
12 1966 the purchaser agreed to purchase this
agreement dated October
,

yd. The land is situated in an industrial

land at a price of Rs 45/- per sq.
It is on a smaller road which is not as wide as the road on which
the
zonc.
The land is, however, situated in an
building in application is constructed.
have been established.
industrial locality where a number of industries
I value the land at Rs 55/- per sq. yd. The
Looking to this instance of sale,
calculated the area of the land married to.
Architects of the respondent has
estimate of the arca of land and
the structure at 70I sq. yds. It is reasonable
I accept it.
Rs 528/- per month follows:
17) The reasonable rent of the premises comes to as
 209

(A) Investment in Land

701 sq. yd at Rs 55/- per sq. yd. Rs 38,555.00
Stamp duty at half of 6% i.c. 3% Rs 1,156.65
Legal charges Rs 1.000.00
Rs 40,71 1.65
Add interest at 5% for the
construction period of 6 months Rs 1,19.57
Total invcstment in land Rs 41.831.22

say Rs 41,831.00

(B) Investment in Building:

Cost of Construction at Rs 15/-
per sq. ft (1764 x 15) Rs 26,460.00
Add Architect's fees at 4% Rs 1,058.40
Rs 27.518.40
Add interest at 6% for half period
of Construction ie 3 months Rs 447.17
Total investment in building Rs27,965.57
say Rs 27,966.00

C) Calculations for the Rent:

(1) 5.5% interest on investment
in land (41,831 x 0.055) Rs 2,300.70
(2) 6.5% interest on the cost of
construction (27,970 x 0.065) Rs 1,818.60
Fair Rent

(3) Repairs at 0.50%

(4) Sinking fund on 9/10 of
for 60 years investment
3% interest 0.51% in const.
(5) Insurance at 0.125S%
1.135%
(0.90 x 27,070 x 0.01135) Rs 285.71
(6) Rent collection, management Rs 120.00
Electricity for common lighting
Rs 4,524.46
(7) The municipal taxes in 1965-66 were 32.75% on the Net rateable value that is
28.60% on the Gross rent. The Gross rent therefore will be as under
4,524.46 x 100

(100-28.60) Rs 6,336.77 per annum

of Rs 528.06 per month

18) I am of the opinion that the reasonable rent of the premises in application as on
Oct 1, 1965 is Rs 528/- per month.

Dated this 17th day of June 1976.

Sd/- XY z
Commissioner

This report clearly explains the

process of fixing standard rent
by the court. It also shows
how two experts take
positions which are of advantage to their clients and how an
independent expert arrives at his decision.