FSI or Floor Space Index is sometimes also referred to as FAR or Floor Area Ratio. In simple terms, it is the maximum floor area that you can build on your land as a ratio of the total land available.
A simple example to explain FSI would be: if there is a plot measuring 250 square feet and the FSI in that area is 1, then the construction allowed on this plot will be 250 square feet. A FSI of 2 on the other hand would mean that the construction allowed on this plot will be 500 square feet. The constructed area also includes staircase and other basic structures. Some regions allow balcony to be free of FSI i.e. the balcony area is not included in the constructed area. Similarly, there are other areas which do not include basements or stilt parking in the constructed area.
FSI varies from place to place and is decided by the local administration in that area. FSI can also vary depending on the type of building being constructed. A commercial building can have a different FSI while an industrial building will have a different FSI in the same area.
Most states also allow you to buy extra FSI and this called premium FSI. This would enable you to construct a larger area on the same plot.
FSI is an important aspect of controlling the amount of construction in an area and ensures that adequate thought is given to aspects like safety, ventilation, and other norms. It also helps the administration in ensuring area do not get over congested thereby leading to pressure on local resources. As the larger cities are seeing large scale migrations, FSI limits help control the construction activity as well as the growing population in an area.
An increase in the FSI limit in an area implies an increase in the supply of constructed area and hence should lead do a decline in price. However, this does not always happen especially in the larger cities since the landowners peg the price of the land to the permitted FSI. If there is an increase in the FSI, they generally increase the price of the land.
Buyers in condominiums and group housing societies would generally prefer options where the permitted FSI is lower. A higher FSI would mean a higher load on the common amenities like the clubhouse, park, play area etc.
However, plot owners who bought plots with a lower permitted FSI would see the value of their plots increase if there is an increase in the FSI in that area.
It is important for home buyers to be aware of FSI norms in an area before finalizing their home. Similarly plot buyers and land buyers should also check on all applicable FSI regulations before any decision is taken.