Amid protests by the opposition, the Karnataka government on Tuesday adopted the Karnataka Town and Country Planning (Amendment) Bill, which allows developers to build more floors than previously allowed on a given plot of land by paying a premium. While developers have lauded the move, real estate experts say it could lead to more pressure on existing infrastructure, thus risking more floods and building by-law violations in crowded cities like Bengaluru.
Per the amendment, a developer has to pay 40 percent of the guidance value as premium for additional Floor Area Ratio (FAR). Guidance value is the minimum price of a property, as determined by the government. FAR, which is the ratio of the plot area to the total building area, determines how many floors may be built on a piece of land.
What does the Act say?
The Act permits developers to purchase additional `premium FAR’ by paying 40 percent of the guidance value in the area. However, the premium FAR may not exceed 60 percent of the permissible limit. That is, one can develop maximum 60 percent more area than otherwise permitted for a plot (on payment of a premium).
While passing the bill, the Development Minister and Deputy Chief Minister, DK Shivakumar, said the move would allow the government to generate additional revenue. The scheme is already operational in cities like Mangaluru, and has helped the government collect over Rs 2,000 crore, he added.
The Act adds that the premium collected by the grant of additional FAR shall be utilised only for land acquisition and public infrastructure development within the jurisdiction of the planning authority, and not for repairs, maintenance, and miscellaneous works.
What do developers say?
Commenting on the development, Amar Mysore, President, Confederation of Real Estate Developers’ Associations of India (CREDAI), Bengaluru, told Moneycontrol, “Today, cities have to grow vertically. Cities like Chennai already have premium FSI. This is a sign that the city is progressing.”
Welcoming the move, developers said the Act is beneficial for both builders and homebuyers, and added that higher FAR means they can develop more high-rises.
``The amendment can help reduce the financial burden on developers, for whom land costs comprise 30-35 percent of the expenses,’’ said Nesara BS, Chairman, Concorde, a leading developer.
Mysore added that it is critical that the premium collected is used to upgrade the city's infrastructure.
What do real estate experts say?
According to experts, while premium FAR is a good revenue source for the government and allows developers to build extra floors — it will burden the already-creaky infrastructure.
“The move has probably been done without a scientific study, such as the Bengaluru master plan. This will tremendously burden the city's stormwater drains, traffic, parking facilities, and sewage networks in the city, as we expect to see an increase in population density,” said Vishnu Gattupalli, General Secretary, Bangalore Apartments’ Federation.
Experts, however, add that the move can also be used to regulate existing building violations in the city. According to the latest BBMP (Bruhat Bengaluru Mahanagara Palike) survey available, about 2,00,000 buildings in the tech capital have deviated from sanctioned plans. In 2021, a survey revealed that more than 85 percent of the buildings constructed in 2020 and 2021 had violated building by-laws.
"Developers who have deviated (say, by building additional floors) can now purchase extra FAR and regularise the violations. However, in more than 90 percent of the apartment complexes in the city, developers have not transferred the common areas to the residents’ welfare associations. In such cases, the developers can misuse the premium FAR by building more floors, putting the ownership of existing buyers at risk,” said Anil Kalgi, President, Bangalore City Flat Owners' Welfare Association.
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