Will premium floor area lead to cheaper houses in Bengaluru?

A 1300-sqft house on the fifth floor of a building on a plot of 30x45 adjacent to a narrow road in a locality in Rajajinagar gives the buyer 270 sqft of undivided share (UDS) of land. The builder promises all certificates, including an A khata and occupancy certificate for four houses. While the house on the fifth floor would be illegal, it would get the buyer 270 sqft of UDS.

This shows just one example of the need for more affordable dwelling units in the city, even at the cost of the legally available share of land and infrastructure. Many multi-floor buildings are built without regard to the road width, sometimes violating sanctioned plans and with extra floors, because the builders want to milk the best out of the project. The government passed the Premium Floor Area Ratio bill in February to curb this trend. 

The bill enables the purchase of premium floor area by paying the local planning authority 28 percent of the guidance value. It helps developers build extra floors. The bill has been seen as pro-developer and pro-real estate, while it ignores the other infrastructure-related aspects.

Citizens say the city is not yet ready for the impact of such high-density vertical growth on water, traffic, parking, and waste management. Dhananjaya Padmanabhachar, an activist working to improve laws related to home buyers, says the new law does not clearly state whether it applies to existing buildings. In such cases, the UDS of the already purchased units is likely to be modified. 

However, he adds that they cannot change the approved plan for existing buildings without the approval of a 2/3 majority of the house owners.

“The Premium FAR Bill is yet another myopic law prioritising revenue over urban planning at the cost of the quality of life of us residents, given the creaking civic infrastructure,” says R Rajagopalan, Founder and Convenor of Bengaluru Coalition.

He says it lets select builders rejoice and maximise profits from fixed land costs while ignoring its environmental impact. He adds that road width cannot be the only basis for its application, and other civic infrastructure factors should have been considered.

The bill allows the purchase of Transit-Oriented Development certificates. Rajagopalan feels this dilutes the TOD-based vertical development plan, which attracts investment around metro lines and drives the population closer to public transport, because the units built need not be smaller or fit the people from lower income categories who use public transport.

“There should have been a clear-cut land parcel criteria applicable, say above 10,000 or even 20,000 sq ft, ideally,” he adds.

When asked how it helps the developers, Suresh Hari, state secretary, Karnataka Credai chapter, said the bill allows them to make the best use of the land area vertically. However, it may not make the houses more affordable. 

“Developers would love to add more housing units for everybody and make it affordable. However, the premium FAR bill will not help reduce the prices of units because the cost of land and construction remains the same, and builders will only be able to optimise the land available. Bringing down the cost of housing requires concessions in registration costs and taxes,” he adds.

At present, the bill’s nuances are unclear, and the real estate sector and homebuyers are awaiting the rules to get clarity.