JOIN USAre you planning to build your dream home? Then be prepared to pay a hefty fee to buy floor space over and above what the existing rules permit. The Common Zoning Rules drafted by the Urban Development department has introduced a new concept of premium FAR (floor area ratio). This could potentially burn a hole in the pockets of property owners and buyers. It has also created a lot of ambiguity among the people. DH interacted with citizens and experts to throw more light on the issue.
Shakuntala Iyer, chairperson, National Real Estate Development Council (NAREDCO), Karnataka says, “It is a known fact that the real estate is an unorganised sector. The move to implement premium FAR is a welcome decision. But the proposal to reduce the existing permissible FAR means developers have to buy premium FAR paying additional cost.”
The government, she says, should relax the rules so that the developers can take up more projects. “It has to lessen the burden on developers to encourage people to buy their dream home,” she says.
In view of the future trends in real estate, Shakuntala says the government has to substantiate the infrastructure provisions in line with urban planning. Besides, the process of Transferable Development Rights (TDR) to increase the number of floors should be made simpler and more credible for a developer.
Jaffer Khan, CEO, Jaff Design Studio, Bengaluru says according to the FAR rules, if the height is permissible and if the FSI (Floor Space Index or FAR) is not utilised, the property owner has an option to buy TDR and build on it.
He reasons that going vertical, at present, is imperative due to land scarcity. “If the developer is ready to pay a certain amount to each floor, the builder can go vertical. There are a few factors that govern the permissible FSI: plot extent, ground coverage and the road width.”
The developers say higher FSI would not necessarily encourage affordable housing as the norms have to be relaxed keeping the interests of both developer and buyer in mind. “The intensification of density per acre needs to increase in tandem with FSI for affordable housing. Also, the government has to earmark additional funds for other services such as water, electricity and sewage.”
Nagaraj Reddy, chairman, CREDAI, Karnataka says that the objective of introducing the premium FAR by reducing the permissible FAR is to collect a fee based on the market value of the property. This will generate revenue for BBMP/BDA/other municipal or corporations across Karnataka. It is not compulsory. “Only if the developers or the land owners want to increase the built-up area, they need to pay and avail the premium FAR,” he says.
The move is being touted as one that would boost ease of doing business. But Reddy reminds that its implications will be felt by both the buyer and developer. The land cost of the project will be higher and the apartments will be extremely expensive.
The prices will go up by at least 25%. The existing land prices of the land have to come down, but land owners will never reduce their prices and they will postpone their sales. There will not be much sale transactions and it will lead to revenue loss to the government, he cautions.
The government, he suggests, should not reduce the existing FAR. Instead, it should introduce premium FAR in addition to the existing FAR where the road width is more than 18 metres so that the land cost will be cheaper and the apartments can be affordable.
Premium FAR, he says will affect the public and property owners more than the builders. “The builders always calculate the FAR cost of the land before they purchase it for development. The government should encourage more affordable housing projects,” he says.