Of the many jargons that one would invariably come across in real estate transactions, are FAR and FSI (floor space index). 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 and know more about the floor area ratio formula and FSI calculation formula.
What is floor area ratio in real estate?
Floor area ratio (FAR in real estate) or floor space index (FSI) denote the maximum floor space that can be constructed on a piece of land. FAR in real estate is a ratio between a building’s total constructed floor area and the land area. Going forward in the article, we have mentioned about the floor space index, the floor area ratio formula that can be used for calculation purposes.
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How to calculate floor area ratio?
Floor area ratio is basically the ratio between the total covered area of all floors of a building to the plot area.
For example, if for a particular plot area of 10,000 square metres, a floor space index (FSI) of 1 is allotted, then, a construction of 10,000 square metres would be allowed for the project.
Similarly, if the floor space index -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 FAR calculation formula is quite simple:
Plot Area x Floor Space Index = Built-up area
Note: FAR of 1.5 is expressed as FSI of 150%
Note that Floor space index (FSI) is applicable on commercial buildings also.
Understanding Floor Area Ratio formula
In real estate, FAR of a project is the ratio between the total covered area of all floors of a building to the plot area i.e. 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 in real estate or the floor space index 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) according to far calculation. 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 calculation formula applicable in that particular locality, a developer would be permitted to construct a one-storey building.
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What is the difference between floor area ratio and floor space index?
Floor Space Index (FSI) 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 floor area calculation is expressed as a ratio, the Floor space Index is an index and FSI calculation is expressed in percentage. How to calculate FSI? 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.
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What is premium FSI or floor space index?
Criteria for premium FSI:
| Road width | Premium Floor Space Index |
| 30-40 ft | 20% |
| 40-60 ft | 30% |
| Over 60 ft | 40% |
Hence, if you have a road with a width of 30-40 ft, you will be able to build 20 % more than the permissible Floor Space Index, on payment of the required premium FSI charges.
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 Floor space index is a fee paid to the government for allowing flexibility.
Land area x normal FSI x premium FSI in percentage = Built-up area
Importance of floor area ratio for residential buildings
FAR calculation formula is based on the ratio of a building’s total constructed floor area and the land area.
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 using far calculation formula differ from one city to another, the value generally does not exceed 2.5.
So, how to calculate floor area of a building? 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.
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Effect of FAR on property prices
The impact of FAR on property prices is often misunderstood. Contrary to popular belief, FAR does not directly influence property prices. Its primary effect is on the profitability of the project for developers, as higher FAR allows for more units on a given land. Adhering to designated FAR is important for developers to avoid violations and consequences. Homebuyers should consider FAR to assess project density before making a decision.
Floor Area Ratio: Importance for developers
Floor area ratio that is reached using floor area calculation 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.
Why does the Floor Area Ratio vary from different cities?
All cities have limited space and a limited capacity that can be safely utilised. Any use beyond this safe limit can put excess stress on the city and the available resources. This is referred to as the safe load factor of a city or a region. This is where the floor area ratio comes in. The floor area ratio varies from city to city based on various factors like population dynamic, construction activities and growth patterns. Residential, commercial, industrial, agricultural and nonagricultural spaces have diverse safe load factors. For this reason, they have varying floor area ratios. All in all, the local government takes all of these factors into account to establish regulations and limitations that determine the area’s FAR.
What factors affect the floor area ratio?
FAR, or Floor Area Ratio, is determined by the municipal corporation of the respective zone and can vary from city to locality. It is influenced by city regulations and geographical constraints. Factors such as property size, building type, location and availability of amenities impact the FAR. Old and established areas of a city often have different FAR compared to upcoming and developing areas. The city can modify the FAR value based on land value and development requirements. Additional constraints like porches, driveways, lifts, and service areas can affect the understanding of FAR. For instance, in Mumbai, basement and stilt parking areas are not included in the FSI, while other cities may include covered parking areas.
Floor Area Ratio: Benefits
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
Floor Area Ratio: Limitations
There is a significant two-way impact of the floor area ratio on land value. In some cases, a high floor area ratio can increase the value of a property if, for instance, an apartment complex can be constructed that permits more spacious rentals or more tenants. However, developers who can construct larger apartment complexes on a piece of land can decrease the value of a nearby property with a high sale value enhanced by a view that is now blocked.
Floor area ratio 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.
Floor Area Ratio: Exceptions
Some important exceptions on how to calculate floor area ratio 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
Myth: Properties with high FAR have a low value
This is one of the most popular myths regarding FAR. High FAR value means there would be additional infrastructural costs. However, it has no direct connection with the value of the property.
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.
Myth: Developmental projects are affected in the absence of FAR
Contrary to the popular belief, there is no hindrance or obstruction in the construction of developmental projects where FAR is absent. This is because the developers take into consideration the overall health of the projects before constructing them.
Floor Area Ratio: Inclusions and exclusions
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.
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
Floor Area Ratio in group housing
How to calculate floor area ratio 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.
Floor Area Ratio: Latest updates
Update on June 9, 2023
Delhi High Court passed an order that schools will not have to pay extra money if they require additional floor area ratio to expand.
Update on August 25, 2023
The Yamuna Expressway Industrial Development Authority (Yeida) board has approved numerous changes in the building bylaws to provide residential and industrial buildings with more space. For residential houses, the 1.5 m-wide balcony will no longer be part of Floor Area Ratio. The Floor Area Ratio for industrial plots has been increased from 1.5 to 2. For electronics manufacturing, it has increased from 1.5 to 3.
FAQs
Yes, these are used synonymously. FAR is the Floor Area Ratio and FSI stands for Floor Space Index. This ratio is determined by dividing the built-up area of a building with the total size of the plot.
If the FSI is 2.5, this means that a builder with a plot of 1,000 sq metres, can construct 2.5x1,000 sq metres, that is 2,500 sq metres, according to FSI calculation formula.
GFA refers to Gross Floor Area and is used to calculate FAR. tenant area, meeting rooms, mechanical equipment area, stairwell, lobbies, restrooms, etc., are included in the GFA.
Most developers look for a high FAR. However, a good floor area ratio will also depend on the city and different localities within the city. In metropolitan cities such as Delhi, the FAR ranges from 1.25 to 3.
The floor area ratio does not include unoccupied spaces like parking, garages, etc.
The Floor Area Ratio (FAR) is calculated as per the formula: Floor Area Ratio (FAR) = Total area of the building / plot size. Is FAR and FSI the same?
What is 2.5 FSI?
What is GFA?
What is a good floor area ratio?
Does floor area ratio include garage?
What is floor area ratio formula?
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.
Who decides FSI in India?
FSI regulations fall under the jurisdiction of municipal or local authorities at the state level. These norms are typically established in accordance with the National Building Code. The FSI is determined by dividing the cumulative covered built-up area across all the floors of a building by the area of the plot on which it is constructed.
(With inputs from Sneha Sharon Mammen and Harini Balasubramanian)
Dhwani is a content management expert with over five years of professional experience. She has authored articles spanning diverse domains, including real estate, finance, business, health, taxation, education and more. Holding a Bachelor’s degree in Journalism and Mass Communication, Dhwani’s interests encompass reading and travelling. She is dedicated to staying updated on the latest real estate advancements in India.
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