All you need to know about Floor Area Ratio

Of the many jargons that one would invariably come across in real estate transactions, are FAR and FSI. The two terms, which stand for one and the same thing, confuse many buyers, sometimes because of the complexity associated with it. Let us try to understand it in more simple terms.

What is FAR or FSI?

Floor area ratio (FAR) or floor space index (FSR) denote the maximum floor space that can be constructed on a piece of land. It is a ratio between a building’s total constructed floor area and the land area.

Understanding FAR and its calculation

The FAR of a project is the total floor area of the building (including the space covered by all the floors in the building) divided by the area of land on which the project is being constructed. The FAR is decided by municipal corporations or the development authority, according to the Development Control Regulations (DCR) and varies from one city or even locality, to another.

Example

If the size of the plot or land being used for a project is 500 sq ft and the FAR determined for that particular city/locality is 1.5, then, the total floor area that can be constructed will be 750 sq ft (500×1.5). As the maximum space available on the ground floor will be around 500 sq ft, hence, with the remaining built-up area of 250 sq ft, it is possible to construct just one more floor. Therefore, considering the plot area and the FAR applicable in that particular locality, a developer would be permitted to construct a one-storey building.

Floor Area Ratio and Floor Space Index

FSI, meaning Floor Space Index, also known as Floor Area Ratio (FAR), is the ratio of the total built-up area to the total area of the plot. FAR and FSI are used synonymously, the only difference being that while the former is expressed as a ratio, the FSI is an index and is expressed in percentage. The municipal council of a particular area is responsible for establishing the FSI limit in a certain range, in order to regulate the amount of construction and the size of the buildings in that area. Since FSI is a measure that combines the height and footprint of a building, regulating it ensures flexibility in the design of the building.

How is Floor Area Ratio calculated?

For example, if for a particular plot area of 10,000 square metres, an FSI of 1 is allotted, then, a construction of 10,000 square metres would be allowed for the project.

Similarly, if the FSI is 1.5 and you have a land of 1,000 sq ft, then, you can build up to 1,500 sq ft of covered structure. The formula is quite simple:

Plot Area x FSI = Built-up area 

Note: FAR of 1.5 is expressed as FSI of 150%

Note that FSI is applicable on commercial buildings also.

What is premium FSI?

Recently, the Brihanmumbai Municipal Corporation (BMC) allowed a premium payment of 20% land value of ready reckoner rate (RR), for converting an industrial land into commercial or residential use. This can be done at the time of obtaining the commencement certificate (CC). Technicalities aside, what does this premium payment mean? Irrespective of the exact location or even the zone or the building type, a premium FSI will help you extend the permissible FSI. Premium FSI is a fee paid to the government for allowing flexibility.

Criteria for premium FSI:

Hence, if you have a road with a width of 30-40 ft, you will be able to build 20 % more than the permissible FSI, on payment of the required premium FSI charges.

Land area x normal FSI x premium FSI in percentage = Built-up area

The importance of FAR for home buyers

The FAR value is determined by local municipal corporations, to ensure the best possible living conditions for residents in that area, keeping in mind the density of the population, availability of open spaces, environmental impact of the project and preparedness in the eventuality of a natural disaster. Although the methods of computation of the FAR differ from one city to another, the value generally does not exceed 2.5.

The more floor area available to a developer, the taller the building can be. Therefore, if you buy a property in such a project, you will most likely live in a denser area with many other residents and will share common amenities and the expenses on electricity, water, clubhouses, swimming pools, elevators, etc.

However, the resale value for a project with low FAR, will most likely be higher than for a property that was in a high-FAR project. This is because a low-FAR project usually means shorter buildings, lesser population density and more open areas around the project.

Why is Floor Area Ratio important for developers?

Floor area ratio is a crucial factor for real estate developers. The approval for the building’s height is provided, based on the available FAR in the locality or city. We have heard about plot owners and builders demanding an increase in FAR. Clearly, a high FAR makes way for more saleable space and it will result in more construction in a structure, leading to the growth of high-rises. This way, the demand for housing units will be met while benefitting developers, in terms of increased sales and leases.

Benefits of Floor Area Ratio

Rules and guidelines with respect to FAR helps keep the construction in check and also ensures the structural safety of a building, to some extent. In the absence of FAR/FSI rules, unauthorised constructions will increase. Here are some of the benefits of FAR:

• There is a clear demarcation between open spaces and built spaces.
• Helps authorities to foster stable, planned growth

What to know about FAR violation?

An FAR violation by a developer usually comes to light, only when the relevant development authority issues a completion certificate. Therefore, home buyers should ask to see the completion certificate, before buying a property in the project. Buying a property in a project that has violated the FAR regulations of the city/locality, could have serious repercussions on your credit worthiness, if you were to apply for a loan.

Exceptions to Floor Area Ratio

Some important exceptions to the FAR are amenities like common spaces, parking areas, any interior open space such as the balcony, basements exclusively used for parking, attics, exterior spaces, sports courts, etc. These areas are not included in the FAR.

Floor Area Ratio: Myths and facts

It is often believed that increasing the Floor Area Ratio can reduce the cost for the builders. However, in such cases, it may usually lead to additional cost, since the authorities charge a premium on the additional FAR or FSI. In cases where the FAR/FSI does not come with such additional charges, the increased FAR/ FSI results in taller building constructions and this could involve increased costs on firefighting, parking, environment clearance, etc.

Frequently asked questions about Floor Area Ratio

Will an increase in FAR bring down property cost?

There is a reason why FAR in different areas is fixed or needs to be decided by the authorities. For example, in high-seismic zones, allowing real estate developers to construct high-rises, without any limit, is unsafe. On the other hand, a higher FAR will help the builder to develop more units, thereby, bringing down the cost of development. Nevertheless, the input cost in construction is also a major determinant of what the final price will be. Hence, a mere increase in the FAR, cannot lead to a decrease in property prices.

Do small cities lag behind due to lower FAR?

The FAR depends on the development control regulations (DCR) and it is calculated, keeping in mind the safety of the structure and its surroundings. Tier-2 and tier-3 cities have comparatively lower job opportunities and underdeveloped or developing infrastructure and hence, avenues for growth are lower, which leads them to lag behind. FAR is not the only factor which affects the development of a city.

Floor Area Ratio in Indian cities

Real estate developers often ask for a higher FAR, to bridge the demand-supply gap. Often, unscrupulous builders may even violate FAR regulations. It is very important to follow the rules, so as to provide safe living conditions for everyone. In India, the FAR ranges between 1 and 3.5.

See also: Development code pertaining to residential and non-residential premises

FAR in residential premises: Plotted housing

Source: MoHUA

FAR in group housing

The number of dwelling units is calculated on the basis of the density pattern given in the development plan, taking into consideration a population of 4.5 persons per dwelling unit. The maximum FAR is 125 or 1.25. Higher FAR may be given, depending on the pattern of development and should not exceed 150.

Latest updates on FAR

UP government hikes FAR

The Uttar Pradesh government allowed amendment of the Greater Noida Industrial Area (Fifth Amendment) Building Regulations, 2021. Hereon, information technology and other such companies will be able to construct double the number of floors than what has been allowed so far, as the FAR allowed for such housing complexes was increased from 1 to 2. Similarly,  non-polluting industrial units will be allowed to construct 4.25 times of space over the size of the plots. While the FAR for 2 will be given to them at the time of the allotment, an additional 2.25 FAR can be bought by paying the required premium. The FAR for new residential group housing, commercial and mixed-use projects will remain the same and capped at 5.25.

MCG’s town planning wing to recover FAR dues

In order to recover losses and add to its revenue, councillors have raised a demand for a town planning wing with the Municipal Corporation of Gurgaon (MCG) that would recover dues on the purchasable FAR. As of now, there is no chief that heads the town planning wing. The MCG has 134 sq kms within its jurisdiction but is able to raise barely Rs 10 crores from purchasable FAR, compounding fees and approval, while a lot of collection remains pending.

Registrations on hold in some NCR regions, due to violation of building codes

In spite of an increase in the FAR for residential plots in colonies, serious violations had been noted in Gurgaon, due to which the Department of Town and Country Planning (DTCP) has sought to halt the registration of properties in such places. The sale and purchase of such properties will, hence, become difficult for such owners. RS Batth, district town planner (enforcement) has directed that registry of residential floors, which have been constructed by violating building rules, after receiving the occupation certificates (OC), should be put on hold in Gurgaon, Wazirabad, Manesar, Badshapur, Kadipur and Garhi Harsaru, till the time property owners restore the buildings as per norms.

Haryana amends Building Code 2017

Chapters 6 and 7 of Haryana building code have been amended and the revised rules are as follows:

Premium FSI in Karnataka

First mooted in 2017, the Karnataka government gave its sanction to premium FSI in 2020. The permitted FAR carries no fee but those who want premium FAR will have to shell out 50% of the guidance value of the additional area that they will construct using the extra space, according to the draft rules notified by the government. This plan is now open for citizen feedback.

The proposal of the Urban Development Department and planning authorities to introduce premium FAR (Floor Area Ratio) has received an approval from the government. In June 2021, the Karnataka government issued a notification pertaining to the premium FAR, allowing developers and citizens to build additional 0.6 times the existing floor area ratio. The minimum road width for seeking the premium floor area ratio must be nine metres and only in areas that have been identified as ‘impact zones’.

The move will not only bring more revenue to the government but will also boost the vertical growth in the real estate sector.

Delhi’s master plan for 2041

The upcoming Master Plan 2041 for Delhi (MPD), it is hoped, will result in a transformation of the capital. Residential colonies that sprung up over 50 years back may see redevelopment activity picking up. The Delhi Development Authority (DDA) has prepared the MPD 2041 with the National Institute of Urban Affairs (NIUA). DDA vice-chairman Anurag Jain has said that the DDA will extend support wherever needed. Some colonies with single-floor houses will benefit, because previously the FAR was 1.33 but now it is 2. In June 2021, the DDA put the draft MPD -2041 before the public, inviting suggestions and objections within the next 45 days.

Maharashtra may ease premium payable on FAR

In an attempt to revive the ailing real estate sector in the financial capital of India, the Maharashtra government may announce a reduction of premiums payable by builders, to avail of buildable area for their projects in Mumbai. Last year, the previous government had lowered the rates from 50% to 40% of the ready reckoner values for a two-year period. This may be further slashed by 10%-15%.

Punjab Local Bodies Department to identify land for affordable housing 

The urban local bodies in Punjab are in the process of identifying land for developing affordable housing. Two categories of units, that is, apartments of 60 sq metres for the economically weaker section (EWS) and 110 sq metres for the middle income group (MIG) may come up. While the cost of the project is yet to be determined, the FAR is 3.50 for projects between one acre and five acres.

DDA extends time limit for payment of FAR charges

The Delhi Development Authority (DDA) has extended the last date for payment of additional FAR charges and use-conversion charges, in the light of the COVID-19 pandemic. The last date is December 31, 2020. This decision was taken during a meeting chaired by Delhi’s lieutenant governor Anil Baijal. Taking to Twitter, Baijal also said, “Sale of 50% of EWS flats of DDA quota in group housing projects simplified, to avoid double stamp duty, thereby, reducing cost & facilitating expeditious allotment.” Further details are awaited from the DDA office.

CHB’s housing scheme scrapped, FAR  increase plan trashed

The Chandigarh Housing Board’s (CHB’s) latest housing scheme in Sector 53, where the cost of a 1BHK property in the low income group is Rs 86 lakhs and HIG properties comprising 3BHK units are estimated to cost Rs 1.50 crores, had attracted a sizable number of interested buyers.  As per the latest development, the administration has rejected the proposal. This is the third rejection. The CHB had submitted that in order to make it affordable housing, there was a need to increase the FAR but now after the rejection, the scheme has been scrapped.

UP okays higher FAR for industrial plots

The Uttar Pradesh government has given its nod to mixed-land use for industrial plots. FAR for areas that have already been developed, will be increased to 2.5 with 1.5 as common FAR and one as purchasable FAR. For those areas that are yet to be developed, the FAR will be 3.5 including 2.5 as common FAR and one as purchasable FAR. However, this will differ from place to place.

Noida likely to change data centre building rules

The Noida Authority’s planning department has started the process of revising building regulations, to attract investors planning to set up data centres in the city. The floor height restrictions are expected to be relaxed and additional ground space and floor area ratio would be allowed for building data centres.

In January 2021, the UP government notified its data centre policy. To pass on the incentives proposed by the government to the allottees, industrial development authorities may have to ease the existing building norms. The authority may offer floor area ratio of up to 4 to data centre operators, the maximum FAR allowed for any category. 

FAR: Quick recap

What is included in gross floor area?

This consists of the lobbies, area for tenants and common area, mechanical equipment areas, staircase, basement, laundry, storage rooms, restrooms and atriums.

What is not included in gross floor area?

Exterior spaces, balconies, patios, parking, walkways and driveways that are covered, attics and outdoor sports courts, are not included in the gross floor area.

(With inputs from Sneha Sharon Mammen and Harini Balasubramanian)

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