All You Need To Know About Floor Area Ratio

Typically, any land parcel has a certain capacity to take the load. Usually, it depends upon the geography and terrain. Authorities in different parts of the country take into account this 'safe load' factor into account. It prevents, on one hand, unauthorised and disputed constructions and it ensures durability of the structure on the other.

In formal terms, floor area ratio or FAR is the total covered area of all floors divided by the plot area. Or, the number of stories divided by surface parking. Suppose on a certain plot of 1,000 sq mt and the developmental plan allows for 120 per cent FAR – the builder, therefore, is allowed to construct about 1,200 sq mt on this plot.

The logic behind FAR

Now, you may have heard developers asking for increasing FAR. What does this mean? A higher FAR allows for more saleable space. In 2014, Urban Development Minister M Venkaiah Naidu approved of the Delhi Development Authority's demand of a higher FAR in the national capital region. Plots more than 750 sq mt in size were given a higher FAR – from 150 per cent to 200 per cent. Similarly, plots above 1,000 sq mt were given a higher FAR of 200 per cent which was previously 120 per cent. The constructed area takes into account the constructed area that includes the basic structure, walls, lobby, staircase, etc. Do note that FAR varies as per variation in plot size and terrain as well. In different cities, permissible FAR value may be different too.

How does FAR impact prices?

Many believe that an increase in FAR may lead to a reduction in capital values. Some others believe that prices may go up. The truth is that while FAR increases the chances of better space utilisation, housing stock should ideally go up. If the developer is able to construct more and sell more, he may ask for a reasonable cost, too. But is that possible? There are many restrictions that builders have to take note of. For example, there are height restrictions and measures taken to ensure stilt parking. Therefore, it is not wise to believe that a higher FAR makes homes any cheaper. It could, in fact, make homes pricier because when apartments are bigger in size and the density cannot be any higher, no developer would want a cut in his asking values.

In Delhi, too, such areas where FAR is higher and plot sizes are above 750 sq mt, the impact on pricing is visible. Popular localities include Vasant Vihar, Panchsheel Park, Chanakyapuri, Greater Kailash-II, etc. Hence, mid-segment homes would not be that affected as those in prime locations. Hence, only when the density norms change with an increase in FAR, builders and buyers may be able to reap the benefits of a higher FAR. In short, if three floors were built previously, an increase in FAR should help builders think about four floors. However, that doesn't usually happen because of height restrictions etc.

At a time when most pro-investment buyers are looking at smaller, compact prices at a corrected price, a higher FAR allows bigger homes but this may be difficult to move in the market. But yes, provided that density norms favour, housing stock at cheaper prices may be welcome in the Indian real estate market.

What happens when builders violate FAR norms?

In 2016, the Haryana government allowed an increased FAR value on plots in authorised colonies and also for those plots where a Change of Land Use (CLU) was granted for residential projects. If an additional FAR increase was demanded, the authorities allowed it at a government approved fee. Such measures are allowed in almost all cities. However, violations are not uncommon. Towering buildings on small plots may have made you wonder whether the structure is actually allowed. Such unauthorised constructions are prone to structural issues and may cause a collapse. 

Sample this. A survey by the Bruhat Bengaluru Mahanagara Palike of three localities in 2014, it was recorded that out of 400 buildings, only three were structurally safe and had not violated any corporation approved norms. Nearly 70 per cent of these buildings had violated FAR norms by constructing additional floors or violated height restrictions, ground coverage or setback (minimum distance between two buildings) . The Karnataka Municipality Act is yet to introduce stringent action against such violations although penalties and action against officials involved are still in place.

In 2009, the Akrama-Sakrama scheme was introduced to help regularize unauthorised constructions. In 2007, while the penalty rates were fixed, by 2009 it was eased where violators needed to pay less than 60 per cent of the penalties.

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