The Karnataka Legislative Assembly has passed the Karnataka Town and Country Planning (Amendment) Bill, which introduces a premium floor area ratio (FAR) system. This new bill allows developers to construct additional floors by paying a premium charge, thereby fostering vertical growth in the state’s real estate sector. The bill amends Section 18-B, permitting the grant of premium FAR up to 60% above the ordinary permissible FAR, with premium charges set at no less than 40% of the guideline value.
This measure is expected to boost the utilization of land, increase housing stock, and help address the demand-supply gap in real estate. However, experts warn that this could strain existing infrastructure, including water supply and waste management, as the increased population density might exceed the current capacities. The impact of this bill extends beyond Bengaluru, potentially influencing real estate practices across India’s top cities facing land shortages. While the move is seen as a step forward for real estate growth, balancing infrastructure development with the increased FAR will be crucial to its success.
“This Bill entails amending Section 18-B, which provides for the levying of premium charges for the grant of premium floor area ratio and allows the competent authority to grant premium FAR as additional FAR, in accordance with the Zonal Regulations of the approved Master Plan. The premium charges shall be payable at the rate not less than 40 per cent of the guideline value and the maximum premium FAR shall not exceed 0.6 times or 60 per cent of the ordinary permissible FAR,” explains Samreen Paloba, Associate Partner.
Industry experts believe that this move would help increase utilisation and housing stock, enable vertical growth of real estate, and bridge the demand-supply gap. However, experts caution that this could put a strain on the infrastructure and basic amenities of the city.
The increased FAR could benefit in the following ways:
- “Increased utilisation and housing stock: When FAR/FSI increases, developers can build more on the same parcel of land, leading to better utilisation of available space;
- Vertical development: Higher FAR/FSI encourages vertical development. This often leads to more space efficiency and can help conserve land resources;
- Bridging the demand-supply gap: By allowing intensive land use, can help bridge the demand-supply gap for housing as the number of housing units increases. This is especially important in rapidly growing urban areas where there is a shortage of housing units;
- Reasonable charges to homebuyers: With increased housing stock and competition, developers may face pressure to offer more competitive pricing to attract buyers. This could potentially lead to more reasonable charges for homebuyers,” explains Paloba.
The downside of this move:
Paloba adds, “The initial beneficiaries of such additional FSI are developers, as they gain more flexibility and potential profit margins in their construction projects. However, the extent to which these benefits are passed on to the common people, particularly in terms of affordable housing, depends on various factors such as market dynamics, regulations, and developer priorities. The reliance on developers to transfer these benefits to common people could be a concern, in the absence of well-defined regulations. Intensive construction and development can strain natural resources, contribute to pollution, and significantly deteriorate the environment, demanding complete environmental considerations and mitigation measures. In some cases, increased FSI/FAR can lead to migration by marginalised communities, where rising property values and rents displace low-income residents and small businesses as the developers may prioritise luxury developments or high-end housing.”
