If you deal in real estate matters, the floor area ratio is one of the commonly used terms you must have come across. This is a very important factor and is mainly an indicator of the flooring, the project density and indirectly how much the home is likely to cost.
This is why the floor area ratio term holds a lot of importance for all home buyers as it carries plenty of weightage.
You are going to learn a lot of important details about floor area ratio here. We will talk about what the term means, why it is so important, how you can calculate it, and tons of other things.
A lot of times, these terms might just seem baffling to you. Until and unless, you know the specifics, it may be hard to paint a clear picture regarding what this term is and how you can calculate it. We all know that buying a home is no small deal and this is the reason, you need to be mindful of every minuscule detail. The floor area ratio is one of the important dynamics and no matter how complex it may seem to you; it is important to grasp the full details of the term.
This is exactly what we are going to do here.
The Floor Area Ratio – Meaning Mapped
The floor area ratio is also known as floor space index is a commonly used real estate term. It means the maximum floor space that can be constructed on a certain piece of land. So, it is essentially a ratio between the total constructed floor area in the building to the complete land area.
There are specific formulas that will help you arrive at this number and we are going to share the in-depth detail of what this parameter means and how can you get to it as well. It is important not to rush through the process as some of the details can be a little complex for a layman to understand. This is why we will try to break down the details into smaller sub-topics so that the next time you go out to buy a property, you will be able to have all details handy with you.
What Is The Floor Area Ratio Formula?
The floor area ratio is the ratio between the total covered area of all the floors in the building combined with the complete plot area. Let us explain with an example.
If suppose there is land spanning 5,000 square meters. The floor area ratio allotted during construction is 2. In this case, 10,000 square meters of construction have been permitted on the land. This would bring the ratio to 2.
Likewise, if the plot is 15000 square meters and the FAR allotted is 2, it means that the area of construction permitted is 30,000 square meters.
So, essentially the formula is simple and it is:
Built-up area = Plot area * FAR
Another similar term is the FSI which is Floor Space Index. The FSI is expressed in terms of percentage while FAR is expressed in the form of a ratio. The percentage is applicable in commercial buildings as well.
Mapping The Formula
You need to clearly understand the importance of this formula. It isn’t just a mere number but helps the builder in gauging how many floors can he construct, the amount of flooring space he can allot, and plenty of other things.
As we have told you, the FAR of a real estate project is the ratio between the total covered area of all floors of the building to the complete plot area. This ratio is decided by either the municipal corporation or the development authority. The guidelines come from the Development Control Regulations and it is going to vary from one locality to another.
Different stages and even areas in the same cities will have varied FAR numbers allotted.
Let us once again give you an example to clear things up.
If suppose the complete plot area is 1000 square feet and the allotted FAR is 1.5. this means that the net floor space that has been allotted to the developer is 1500 square feet.
As the plot area is 1000 square feet, the ground floor area that the developer will get is 1000 square feet. So, with the additional 500 square feet, he will only be able to construct one floor. This means that the plot will only have a single-storeyed building. Similarly, if the FAR was higher, the net floor area would be more and the builder will be able to draw more floors.
This is why the FAR is not just a measure of the flooring space. But it is also an indicator of how many floors can be present in a building.
The Floor Space Index
FSI or floor space index is a term that is often used interchangeably with the floor area ratio. The key difference between both the term is that while FAR is expressed in the form of a ratio, the FSI is an index and hence represented in percentages.
It is the municipal council of the area that calculates the FSI and lets the builder know about it. The government has full control over establishing the FSI limit. They select a certain range for it and it is mainly done to make sure that the size and height of the building are well regulated.
It is important to note that these details are to be well regulated or else there will always be a risk of the whole building collapsing. This percentage thereby assesses the height and footprint of the building and therefore regulates the overall flexibility.
It is an extremely important ratio that ensures the safety of the constructed building.
What is FSI Premium?
FSI premium comes with an extra charge and is applicable when the road has a minimum width.
- If the road width is in the range of 30 to 40 feet, you can get a premium FSI of 20% on paying the charges.
- For a road width of 40-60 feet, the premium FSI stands at 30%
- For a road width of over 60 feet, the premium FSI can be 40%
This premium FSI means that you can build that percentage over the permissible FSI. For instance, for the premium FSI of 20%, if the FSI is 5, you will end up having an actual FSI of 6 as you get an additional 20% over the regular FSI of 5. The premium floor space index fee is always paid to the government for the sake of allowing more flexibility and relaxation in land construction.
The Brihanmumbai Municipal Corporation (BMC) recently permitted a premium payment of 20% land value of the ready reckoner rate. This helped them convert industrial land to commercial or even residential property. However, this change should be done when you procure the commencement certificate.
Therefore, the key formula to bear in mind is as follows
Built-up area = plot area * regular FSI * premium FSI (percentage-wise)
You can use this formula to do the calculations at your end and understand the permissible floor space you have been allotted.
Why Is FAR Important For Developers?
FAR remains one of the most important terms for property builders and real estate developers. It is only after the ratio has been provided that the boulder will be able to determine the number of floors that will be permitted.
A lot of time property owners and even builders end up requesting the government an increase in the FAR. These requests and demands aren’t always met. However, land owners and builders want to increase the rate so that they can have larger floor space. This, in turn, means more apartments to sell and here helps in offering a larger number of house units. Of course, there is almost always a huge demand for increased housing units. It is only with the help of a higher FAR that builders will be able to offer more housing units.
The Benefits Of The FAR
Here are some of the key benefits of the FAR term.
- It helps in offering clear demarcation between the open space and the built-in part
- It helps in ensuring the structural safety of the buildings
- All the construction of the buildings is in turn duly authorized
- The ratio aids in the planned, stable, and structured development of buildings
- If no such ratio was present, builders and land owners will have their free will and to make more profits, they will end up making way taller buildings than what should be otherwise permissible.
If the developer chooses to violate the FAR, it will only come to notice when the development authority gives a completion certificate. This is a serious offence and home buyers should always check the completion certificate when they are buying a property.
This is important because if you choose to buy a flat in a property that has violated the FAR, you might end up having a badly impacted credit worthiness. This will therefore have repercussions when applying for a loan as your credit score will take a beating.
The Exceptions To The FAR
When calculating the FAR, some spaces are not included. These include common amenities offering space like the parking lot, exterior spaces, balcony, sports area, attic, basement reserved exclusively for parking and so on. These areas are usually not counted in the FAR assessment.
FAR For Home Buyers
A lot of factors are taken into consideration when you are calculating the FAR for real estate. The local municipal corporations take into account the best living conditions that can be given to the residents by governing the number of floors and the area of the floor. Along with this, the population density, the possibility of open spaces in the apartment, the preparedness of the property in the course of a natural disaster, and also the environmental impact which the project will have, are the factors that are duly assessed.
While the formula is going to differ from one locality to another and also one state to the other, it is mostly seen that the value is least likely to exceed 2.5. A ratio above this might be detrimental to the safety of people living in the building.
What Does A Bigger Floor Area Signify?
Usually, if a project has a large floor area, it means that the developer is going to have the scope to build several floors. This infers that the building is going to be tall. So, if you choose to buy a flat in the building, you will be living in a population-dense area given most of the flats are sold out. This also means that the common amenities will be shared by a larger number of people. At the same time, it also entails that the overall expenses of swimming pools, elevators, electricity, and more will also be shared.
It has been mostly seen that projects that have low FAR have a better resale value as compared to those with a high FAR. The main reason behind this logic is that a low FAR denotes a shorter building and thereby the population density is low and the building is likely to have more open space as well. Such projects can be resold much more easily. However. this is a generalization and a lot depends on other factors like locality, property trends, amenities, maintenance of the building, the different clearances, and so on.
The Myths And Facts
There are several myths associated with FAR and here we are going to talk about them to help you dissect the details and know what is true and what is not.
High FAR properties have a low value
A lot of people believe that if a property has a high FAR, it means that the value will be less. This is because the property will have infrastructural costs that can get very high. This is however a myth that needs to be debunked. The FAR value has no relation to the property value.
A high FAR reduces the building cost
This is again a myth. It is not always true. In most cases, the reverse happens. When builders ask for an increase in the FAR, they need to pay the premium FSI charges. This entails increased building construction costs and even the environment clearance, the parking area allotment, and design would all entail a greater amount of money. So, the net cost ends up shooting high.
In absence of FAR, the developmental projects are deeply impacted
This is also not true always. All the developers make it a point to assess the health of the project and the impact and feasibility before they construct a building. In case the building falls, the developers will end up tarnishing their image and it can lead to immense loss of life and property.
So, all builders are always mindful. However, the presence of this ratio is always appreciated because the government should ultimately have a say and keep things in check.
The FAR in Indian cities
Most real estate developers seek higher FAR so that they can bridge the gap between demand and supply. Some builders end up usurping the regulations to satiate their bid to make taller buildings with more housing units. However, it is extremely important to stick to the rules or else the building’s reputation will be impacted.
Mostly it has been seen that the FAR value in India ranges anywhere from 1 to 3.5
The Group Housing
When there is a group housing project, you may wonder how is FAR calculated. To calculate the number of housing units, the key is density pattern, a part of the development plan.
In such group housing projects, the upper max limit of FAR is usually 150. Mostly, it is in the range of 125. Before assigning the number, the pattern of development and the plot area and demand for housing is thoroughly studied and assessed.
The FAR Updates
Here are some of the key updates with regards to the floor area ratio that the different states released.
The UP government hikes the FAR
In their bid to promote greater and quicker development, the UP government allowed IT technology and other companies to build double the number of floors that were allowed so far. Along with this, the industrial units that fall under the non-polluting category have been given the authority to construct 4.25 times of space over the total plot size.
During the allotment phase, the FAR allowed will be 2. However, those units who want to extend their floors, can pay the premium FSI.
The FAR for commercial, mixed-use, residential and group housing projects will remain the same. It has been capped at 5.25.
Maharashtra government increases the FSI for slum rehab projects
This incentive is taken to promote slum-free cities. The Maharashtra government has thereby pushed the FSI to 4 from 3. This change in the index comes in for the slum rehabilitation projects. As there will be more housing units available, more people can leave their slum areas. They can then choose to stay in better localities. This is a well-appreciated move and aims at improving the quality of life.
NCR regions face hold of registration
A lot of FAR violation has been noted in Gurgaon. Because of this, several residential plots have been put on hold. The department of town and country planning came into action. They decided to halt the registration of properties that chose to violate the FAR.
This has made the sale of these properties very difficult. A lot of areas are under scrutiny and floors that were constructed by violating the FAR will not get the registration done. This step is important to make sure that the safety protocols concerning building units are not flouted.
Centre approves coastal zone management plan in Mumbai
The coastal zone management plan has been approved for Mumbai and the suburbs. This was done by the ministry of environment, forest and climate change. Owing to this move, several land parcels located along the coastal region of the city have opened. Based on the different listed categories; these, in turn, can be used for real estate development projects.
This gives opportunities to different housing societies and slums to carry out redevelopment projects. These areas will be given FSI which will be equal to other parts of the city. Therefore, a lot of new promising opportunities can come up.
MCG all set to recover the FAR dues
The municipal corporation of Gurgaon is all set to recover the losses that happened because of the violation of FAR. If the builders choose to raise more floors than the designated FAR, they need to pay the premium FSI fee. However, a lot of builders have been refraining from doing so. This has led to a massive loss in revenue.
The MCG has 134 square kilometres in its jurisdiction. They can barely raise revenue of 10 crores from the FAR fee. So, they have decided to start the recovery work so that they can push their revenue significantly.
Master plan for 2041: Delhi
A new master plan is in place for Delhi. It is believed that it can map the biggest transformation for the capital city.
Colonies that are more than 50 years old are likely to see redevelopment work. The old FAR which was 1.33 and led to single-floor houses are likely to witness extra floors. The FAR may be pushed to 2 after considering other factors.
The MPD 2041 for Delhi has been drafted and the public hearing was extended till November 24th, 2021. Both objections and suggestions of the public will be entertained. The need for more housing units has been felt and the government wants to achieve this objective to ensure homes for all.
Redevelopment of housing societies in Ahmedabad to witness speedy growth
The old housing societies that were undergoing redevelopment ended up facing a halt owing to the global pandemic. However, as per the government rules, this redevelopment work is going to be expedited. As many as 105 different housing societies that were low rise and located in posh areas of Hyderabad have signed MoU with the developers. They are going to rebuild the houses. They are keen on taking full advantage of the underutilized FSI of 3.6 and 2.7 and these, in turn, can transform the low-rise buildings into as high as 14-storeyed apartments. This will open a new wave of opportunities and development work.
So, the next time you set out to buy a property, make sure to check the FAR in the completion certificate and then go ahead and make a purchase. This will end up saving you a lot of unwanted legal hassles.
As a builder, always make sure you keep the government rules and regulations in mind. Once the property is put into dispute, you will have a hard time making good sales and this can jeopardize your property significantly.
Do small towns have lower FAR?
Yes, it is mostly seen that tier 2 and tier 3 cities have lower FAR. It is mainly because in such cities, the job opportunities are comparatively less and thereby growth rate is also slow. This means the population isn’t as explosive as in metro cities. So, the need for skyscrapers is less. However, the ratio is calculated keeping the safety factors in mind.
Is the low FAR a reason for small towns to lag?
No, it isn’t the sole reason. The reason behind low FAR is that the population is usually not much and the demand for housing is less as compared to metro cities. Several other factors contribute to the towns lagging. However, job opportunities and development activities can trigger the right change.
Does an increase FAR lower the property cost?
One cannot tell for sure. When more housing units are developed, the cost of development tends to increase. But, this isn’t the only cost that is a part of the net project expense. When more units are made, the input cost will take a beating. Also, the clearances for the environment and parking will also increase. So, the net project price is hard to determine at the start.
Can you flout the FAR?
Buildings that flout the FAR will have the details mentioned in the completion certificate. This will impact the number of people who will choose to buy apartments in such areas. This is because it tends to impact the credit scores adversely.
What is GFA?
GFA stands for gross floor area. It includes the area covered in FAR along with the meeting room, the restrooms, the staircase area, the mechanical equipment area, the parking lot, and several other open spaces that are a part of the housing society.
Is FAR and FSI the same thing?
Yes, they are often used interchangeably and are mostly a measure of the same thing. The first one is the ratio and the other one is expressed as a percentage.
Does the floor area also cover parking space?
No, the floor area is not inclusive of places wherein people will not live. So, it doesn’t include a staircase area, garages, basement parking, and more. All these come under the GFA.
What is a healthy FAR ratio?
A good FAR takes into consideration a lot of parameters inching the housing demand, the population density, the structural safety, and more. In metro cities, the FAR usually ranges from 1.5 to 3
Can you request to increase the FAR?
Yes, builders and land owners can ask for an increase in FAR. If the government approves after checking the different safety measures, they will have to pay the premium FSI index and then they can increase the number of floors in the housing society.