Floor Area Ratio (FAR): All You Need to Know
September 22nd, 2023
Floor area ratio, also known as FAR, is a widely used term in real estate. Foor area ratio is the ratio of a building’s total usable area and the total land area upon which the building stands. The FAR of a particular region is determined by the local municipal corporation.
Floor area ratio – a term you might have already encountered if you are in the process of buying a home or have already bought it. What exactly is the floor area ratio? What is its significance? How does knowing about the term further help you in your homebuying journey? Read on to find out the answers as we go deep into the term, which is one of the most popular terms used in real estate.
Table of Contents
What is Floor Area Ratio?
The floor area ratio, which is often shortened to FAR, is the total area of a building including all floors and outer walls to the total land area upon which it is constructed. A higher floor area ratio suggests that the building is being constructed in a densely populated urban area.
Floor Area Ratio Formula
As mentioned above, floor area ratio is the ratio of the total area of the constructed property including all floors and the total land area upon which it stands. Let’s now see how the floor area ratio is calculated. The simple formula that is used to calculate the floor area ratio is as follows:
Floor Area Ratio = Total Building Floor Area
Gross Lot Area
Total Building Floor Area is the total area that a building takes up on a piece of land.
Gross Lot Area refers to the total land area that comes within the limits of the entire property plus the centre line of the adjoining road or street.
How to Calculate Floor Area Ratio?
Let’s elucidate the calculation further with a simple example. If the floor area ratio for a particular region is fixed at 1.5 and the total land area, which is mentioned in the formula above as gross lot area, is 500 sq. ft., the floor ratio area can be calculated by the following method FAR = 500 x 1.5. In this case the answer is 750. So ideally the builder can construct a 750 sq. ft. property on the land. Likewise, if the fixed FAR is 2.5 and the total land area is 2,000 sq. ft., a developer can get to know the permissible area of the building by following the same method: 2,000 x 2.5. Hence, they can build a 5000 sq. ft. property.
Floor Area Ratio Formula – What is it?
The floor area ratio (FAR) varies from place to place based on an array of factors. Thes include the nature of the land, availability, growth dynamics, population, etc. For example, the fixed FAR for a semi-urban area may be different from the urban area, owing to the factors mentioned above.
Calculating the floor area ratio is of crucial importance as it is integral to urban planning. When the numerator (the total building area) is divided by the denominator (gross lot area), the floor area ratio, which is always in decimals, is derived. Hence the numbers need to be accurate, each component must be carefully measured and calculated.
Floor Area Ratio (FAR) and Floor Space Index (FSI) – Are they Different?
Floor area ratio and floor space index are often used interchangeably. While both denote the same, there is a crucial difference between the two. While FAR is calculated as a ratio, FSI is represented in percentage.
While floor area ratio (FAR) is widely used in India, most other countries use floor space index (FSI). As already suggested, the fundamental difference between them is the way in which they are expressed. While the former is expressed in decimals, the latter uses percentage.
Premium FSI or Floor Space Index
Premium FSI is a provision that allows a builder to increase the built-up area by paying the FSI fee to the concerned authority. For example, the authority for deciding it in Bangalore in Kranataka is Bruhat Bengaluru Mahanagara Palike (BBMP).
The bare minimum criterion to be considered as premium FSI is to have a road which is at least 30 feet wide. When the property has such a facility, the builder can pay a premium to avail the premium space index benefit.
Width of Road
Permissible Increase in Built-up Area
Premium FSI differs from regular FSI or FAR for the following reasons: the presence of a road, which is at least 30 feet wide, is mandatory to be eligible for premium FSI. With a premium FSI, a builder can go above the prescribed limit by up to 40%.
The Role and Importance of FAR in Residential Buildings
Floor area ratio (FAR) is an important factor in residential properties. FAR varies from region to region since it is determined by respective local municipal corporations. As a rule of thumb, it normally doesn’t exceed 2.5, though.
A critical component that determines various factors such as living conditions, density of the population, open space, impact on the environment, ability to deal with natural disaster, etc., FAR is important in residential buildings.
A low FAR means more open spaces, less density, evenly spaced-out towers which are not too tall, etc. On the contrary, a higher FAR means congested spaces, tall towers, and not-so-desirable living conditions.
A lower FAR will result in aesthetically pleasing design of a residential project. Naturally, the resale value of a home will be more if its FAR is lower.
FAR and Its Influence on Property Prices
We have seen that floor area ratio (FAR) is critical in the design and layout of a residential project. But does this have any say in property prices? The answer is no. FAR has no direct influence on property prices. However, from the point of view of the builder a higher FAR is beneficial for the reason that it allows them to build more units on the designated land.
The Importance of Floor Area Ratio for Developers
Floor Area Ratio (FAR) is crucial in real estate. FAR is fixed based on various aspects of an area. Sticking to the FAR is important since any violation can result in serious consequences for the builder. One way in which builders optimise the FAR is by paying premium FSI charges, provided that there is at least a 30-foot-wide road in the vicinity. If they can obtain a higher FAR, they can build more saleable space.
FAR – Why it Varies from City to City
The most important purpose of floor area ratio (FAR) is to ensure that the construction of a project doesn’t violate a city’s safe load factor. Each city has limited space and capacity, which need to be used in a safe manner.
This is referred to as the safe load factor. Depending upon the density of a city’s population, geographical features, growth patterns and construction activities, the FAR varies from city to city.
Besides, regulations implemented by local governing authorities as well as urban planning policies also have an important role in determining the FAR of a city or the FAR of each region in a city.
Factors that Influence FAR
What are the key factors that influence the floor area ratio? First and foremost, it is the area. It’s quite possible that a city can have different FARs based on the area. The municipal corporation fixes the FAR for the respective zones.
For instance, within a city, the old and established areas may have a different FAR from the new ones. Other criteria include the size of the property, the location of the building, its size, location, infrastructure including roads in the vicinity, etc.
The Benefits of Floor Area Ratio
Floor area ratio is significant in terms of proper urban planning and development. The most important advantage is that it keeps uanuthorised construction in check.
It is crucial in proper urban planning and helps the planned growth of a city by ensuring that construction activities are regulated by the concerned authorities based on the location, population density and other such parameters.
The Limitations of Floor Area Ratio
While floor area ratio is of great importance, it is not devoid of limitations. For example, a higher floor ratio can result in increasing the value of a property, for the reason that a developer can build a high rise with more saleable area.
The same high-rise can cause a dip in the value of a hitherto highly valued property in its neighbourhood by blocking the view which its residents had previously enjoyed.
Violation of Floor Area Ratio and its Consequences
Floor area ratio is meant to be stringently adhered to. Any violation of FAR can have serious consequences for both the developer and homebuyer. Often, if there is any violation on FAR, it is found out only during the time of issuing the completion certificate.
For a developer, violating the FAR can have an impact on their reputation. It also affects the safety of the building.
For homebuyers, applying for loans to buy such a project will have serious implications on their credit worthiness.
Exceptions to Floor Area Ratio
While floor area ratio includes all the floors of a residential project and its outer walls, there are certain areas that don’t come under the purview of FAR. The areas that are regarded as exceptions are as follows: common areas, basement, parking lot, balcony, sports court, etc.
Myths and Facts about Floor Area Ratio
Two of the most common myths about floor area ratio are:
1) Properties with a high FAR have low value. In fact, this is a mere assumption. Higher FAR results in constructing more floors and in turn, it will increase the cost and maintenance significantly.
2) The absence of FAR can have an impact on developmental activities. It is yet another myth because there is no such restriction even if the region has no FAR.
The Floor Area Ratio: What Does it Tell You?
For a homebuyer, understanding the floor area ratio will be of help in many ways. If the FAR is low, it can be safely assumed that there is enough open space in the project. If there is a premium FSI, it gives a hint that the project is well-connected with a wide road.
Likewise, if the FAR is higher, it suggests that the building will likely have more floors and less open spaces.
FAR has a critical role in the design, layout, and density of the buildings as well as in urban planning and development.
Floor Area Ratio and Lot Coverage: The Difference
Floor area ratio means the total area of the residential project including all the floors. However, lot coverage area goes beyond this. Every building and facility come under lot coverage such as garage, shed, swimming pool, etc.
Floor Area Ratio: The Limitations
India is a highly populated country. The cities are densely populated and the only option for accommodation is vertical development. A low FAR means the area that can be developed is limited. This results in decreased employment opportunities and severe shortage of housing.
We have seen the role of floor area ratio (FAR) in urban planning and how important it is for developers and homebuyers. Before we conclude, let’s take a look at FAR once again.
A low FAR suggests that the project will have a lot of open areas whereas a high FAR indicates that project will be a high-rise. A premium FSI is allowed when the project has a road which is at least 30 feet wide.
1. Are FAR and FSI the same?
Two important terms that are often used interchangeably in real estate are FAR and FSI. While FAR stands for Floor Area Ratio, FSI stands for Floor Space Index. While both terms are the same, the difference is in the ways they are expressed. FAR is expressed in ratio whereas FSI is expressed in percentage.
2. What is 2.5 FSI?
FSI stands for floor space index. A 2.5 FSI indicates the permissible development upon it. If the total land area is 1,00 sq. ft., by multiplying 2.5 by 1,000 the builder can derive the maximum area that can be constructed. In this case, it is 2.5 x 1,000 = 2,500 sq. ft.
3. What is gross floor area (GFA)?
A critical component in floor area ratio (FAR), it is of utmost importance to get accurate measurement of gross floor area. The gross floor area refers to the total built-up area, which includes the external walls of the building. GFA also includes lobbies, meeting rooms, common areas, stairwells, basement, rest rooms, and storage rooms.
4. What is a good floor area ratio (FAR)?
A lower FAR is regarded as good for the simple reason that there will be more open spaces in the project. On the contrary, a higher FAR suggests that the project is congested. Calculating the FAR varies from city to city or even region to region within a city. The presence of wide roads, density, etc., are also crucial in determining the FAR. A floor area ratio of 1.5 to 2 is regarded as good.
5. Does the floor area ratio include garage?
The floor area ratio is a crucial component in real estate which is determined by the respective local governing body. Floor area ratio includes the total amount of usable area in a building. However, garages do not come under the purview of floor area ratio.
6. What is the floor area ratio formula (FAR)?
FAR or floor area ratio formula is the method of calculating the FAR. Floor area ratio indicates the relationship between the total usable area of a building and the total land area upon which the building stands. By multiplying the given FAR of a region with the total land area upon which the building is being constructed, a builder can arrive at the permissible built-up area.