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Riya Tayal | 15 Feb 2022

# What is Floor Space Index? - Meaning, Calculation and Importance

Investing in real estate is always a life-changing experience. The single decision of investing in a property has a long-lasting impact not only on the present but also on the future of the investor. The entire process of purchasing a property can get overwhelming as the real estate world is complex. It is highly important for you to orient to the real estate sector during the process.

Whether you are buying a new apartment, planning to build your own house, or purchasing land, there are a handful of rules and regulations that you will need to follow and keep in mind. Besides this, it is also essential to get acquainted with the terms, concepts and abbreviations used in the real estate segment, as it will help you make this daunting task a bit easier than before.

So, in this article today, we will let you know everything about FSI or Floor Space Index, along with its meaning, calculation and much more.

## Meaning of FSI

FSI is one of the most used terms in the real estate industry that many people don’t know the meaning of. This abbreviation stands for Floor Space Index or also referred to as FAR, i.e., Floor Area Ratio. The Floor Space Index is the maximum permissible floor area that a builder can build or construct on a specific piece of land or plot. If converted mathematically, Floor Space Index is the ratio of building floor covered area to area available on the piece of land. It is important to note that Floor Space Index differs from one place to another as per the rules and regulations by the administration of the city in which the land is located.

FSI is a ratio that helps decide how much construction work must be done on a particular piece of land. In simple words, Floor Space Index is the total area covered by all the floors of the building, divided by the total area of the plot on which the building is constructed.

The value of the Floor Space Index entirely depends on the factors like building type, amenities and zone category of the city. While carrying out the construction work, the developers and builders need to follow the Floor Space Index decided by the government. In addition to this, the Floor Space Index involves multiple components defined by various local authorities and State governments. Luckily, developers are entitled to some part of FSI for free of cost as well. And, the other area is required to be bought from the authorities by paying a premium.

As you have got to know the meaning of Floor Space Index, let’s now move ahead and gain an insight into how Floor Space Index is calculated.

## Calculation of Floor Space Index

The calculation of Floor Space Index or Floor Area Ratio is as follows:

The formula of Floor Space Index = Total built-up area or total area constructed / Total area of the plot

Also, the Total built-up area = Total area of the plot X Floor Space Index permitted

Let us understand the use of this formula with the help of an example.

For example, there is a piece of the plot of area 1000 Sq.Ft. If the FSI of 2.0, then a total construction of 2000 Sq.Ft can be done on that given piece of the plot. (2000/1000=2). Also, if, in the same case, the Floor Space Index permissible is 1.0, then only 1000 Sq.Ft. of the construction can be done on that plot measuring 1000 Sq.Ft.

## Importance of Floor Space Index

Laying down the rules and regulations relating to Floor Space Index is of the maximum importance for a simple and straightforward reason to control the population density pressure in a particular area. Each plot and each area can only take into account a certain amount of population density. It eventually increases the burden on a particular area, especially in terms of basic amenities like electricity, water, etc. Many times in the past, cases of illegal construction were seen. However, in the absence of the Floor Space Index, such illegal cases will increase even more.

Apart from this, Floor Space Index also plays a great role in pricing the building. The plots or buildings with lower FSI indicate less population density pressure on the area. Thus, there’s better market value of the property. However, if it is said that the price of real estate is low just because of high FSI, then it will be wrong because multiple other factors become the reason behind the final property price.

In a nutshell, the importance of FSI involve:

1. It maintains the skyline of the city

2. It maintains the ratio of open spaces to built spaces

3. Helps in maintaining equilibrium between sustained, planned growth and development

4. An average FSI value ensures a good development of the real estate project

## Factors that create an impact on Floor Space Index

As stated above, the Floor Space Index depends on various factors that differ from one city to another. So, if you are wondering about the key factors on which the maximum permissible Floor Space Index depends, this section is for you.

Below we have mentioned the factors that create an impact on FSI:

1. Location of the plot

In general, the urban areas near the city centre have a higher Floor Space Index than the distant suburban localities or the localities located beyond the city limits. The main reason for the higher Floor Space Index in urban areas is the scarcity of open land.

2. Size of the plot

Another thing that greatly impacts the Floor Space Index is the size of the plot. In many areas, the Floor Space Index is higher for the plots with larger sizes in comparison to the ones that are small in size. This is nothing but to promote vertical development in land deficient cities.

3. End-use of the building being constructed

All the plots intended to be used for commercial purposes usually have a higher Floor Space Index than the ones being constructed for residential purposes. For example, in Mumbai, a maximum FSI of 3.0 is permissible for residential real estate projects, 4.0 for slum rehabilitation and mass housing projects and 5.0 for commercial projects.