Home Truths: How much can you build on a plot of land?

If you own land or are thinking of redeveloping, the floor space index (FSI) number for the plot is a vital piece of information. This determines the number of square feet you can construct, which influences the sale value of the plot. FSIs are also increased from time to time, and so it is important to understand how it influences how much you can build.

What is FSI?

In simple terms, FSI is the ratio of total amount of usable floor area that you can build to the total area of the plot. While it is also called Floor Area Ratio (FAR), the subtle difference is that FAR is given as a percentage while FSI is a number.

A higher FSI means you can build more on the same piece of land. For example, if a plot of say, 2,400 sq ft has an FSI of 1.5, then you can build 3,600 sq ft on it; this will increase to 4,800 sq ft if the FSI was 2. Given that the value from a land ― when you buy the land or during redevelopment ― depends on the FSI, knowing this is important.

What determines the FSI of a plot?

Governments ― at the State and city levels ― fix the FSI, based on a number of parameters and revise them from time to time. For one, it depends on the type of building ― low-rise, commercial, public buildings, and high-raise, among others. It is also based on the zone the land is in ― primary residential, mixed residential, industrial or commercial. Another important factor is the width of the adjacent road in the city ― the wider the road, typically, higher the FSI. The FSI also depends on the plot size ― typically it tends to decrease as the size increases. In cities such as Delhi, redevelopment projects get a higher FSI than new developments.

What is counted as built-up area for the purpose of FSI?

Not all constructed area is counted towards FSI and there are many exemptions. For example, area covered by staircase and lift rooms and stilt parking floor area are not included in the calculation. Structures for housing sewage treatment plants and utility areas such as for electricity meter and pump rooms are often excluded. These rules vary with the type of building and locality; you must hence check the specifics for your case.

If I have a certain FSI, does it mean I can use all of it without issues?

Not really. You still need to meet various other rules. For instance, you cannot exceed the ground or plot coverage ratio ― total area covered at the ground floor to the land area. Say, the land area is 2,000 sq ft with FSI of 2.8 and plot coverage is 70 per cent. You can theoretically build four floors of 1,400 sq ft each. However, if there are restrictions on the number of floors ― say, only three floors can be built ― you can utilise an FSI of just 2.1. Other factors such as front, side and rear setback space required for the plot may also limit the area you can build and prevent you from building the permissible FSI.

What factors lead to an increase in FSI by the government?

Typically, FSI is increased to promote denser developments in certain zones, designated as influence zones. For example, there have been cases of higher FSI rules for developments within one kilometre of metro lines in cities. However, while FSI can help regulate construction activities, governments also consider the availability of infrastructure such as water supply, sewage, road and transport networks before bumping up the FSI.

As land is a sizeable cost, does higher FSI reduce property price?

It is theoretically possible, but often higher FSI does not lower prices. This is because increase in FSI leads to jump in land prices, offsetting any benefit to the buyer.

But it does not mean that higher FSI will always boost land prices. For example, if you have a small plot by a narrow road, due to height restrictions and setbacks, increase in FSI may not lead to higher built-up area. Also, when FSI increases in suburbs, more homes may come up on the same piece of land, decreasing the demand for land.

Can I get higher FSI than what the rules allow?

Yes, you can purchase premium FSI in certain areas where it is permitted. In Chennai, for instance, on a plot with a road width of 18 meters and above, you can avail 40 per cent premium FSI. The premium FSI allowed decreases to 30 per cent and 20 per cent as the road width decreases to 12 meters and 9 meters respectively. The charges to be paid for the premium FSI is based on the cost of the land, as per the guideline value.

Going high

Cities increase FSI for certain influence zones, to promote development.

FSI facts

Varies with location

Differs for building type

Depends on road width

(The author is an independent financial consultant)