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FUNGIBLE FSI – VIDEO INTERVIEW GIVEN BY THE AUTHOR DILIP SHAH TO LEGALPANDITS.COM

http://www.youtube.com/watch?feature=player_detailpage&v=bHVw4ioYSGg

FSI is the ratio of permissible built-up area vis-à-vis the land size. For example, if the land size is 1,000 sq ft and if the FSI granted is 2, then one can construct twice the plot size, i.e. 2,000 sq ft. Anything over this is either illegal, or requires special permission from the Civic Authority. 

What is fungible FSI? 

Fungible FSI means a compensatory FSI permitted in lieu of flower bed, niche area, private terrace, ornamental elevation area etc in the flat to be constructed by the developer / land owner. The word ‘fungible’ suggests something that is freely exchangeable or replaceable, either in whole or in part. This means, Fungible FSI if not used in various features above, can be used to build bigger habitable carpet area of flat.

What has caused the amendment in DCR this concept of fungible FSI is brought in? 

Earlier, the developers used to build about 30 to 40 per cent more as ‘free-of-FSI’ space which was popularly known as ‘super built-up’ or ‘saleable’ area. However, in both the cases, the developer used to charge the buyer for every inch of this external space at the same rate as that of the flat.

For example, one such developer builds 40 per cent additional space over and above the flat size of say 800 sq ft carpet area i.e. 320 sq ft aggregating 1120 sq.ft identified as built up area. If the rate is Rs 20,000 per sq ft, he would earn on entire built up area, an additional Rs 64 lakhs whereas in reality, the buyer get only 800 sq.ft as habitable carpet area. One can easily calculate the profits the developer stands to make from every other flat.

Now, under the DCR amendments, these features are no more available free of FSI.  

Please explain the difference between earlier DCR provisions for FSI and fungible FSI provisions after amendment.

Prior to the said Notification, areas covered by balconies, flower beds, individual terraces, ducts, voids, niches, refuge area, new or additional lifts, staircases, swimming pools, fitness centres in Cooperative Housing Societies, sun decks, clubhouse, ornamental projections etc., were not included while computing FSI. Thus, these areas were known as "Free of FSI". Similarly, according to the new DCR Amendments, balconies, flower beds, terraces, voids and niches would now be counted in the Floor Space Index (FSI).

Now, under the DCR amendments, these features are no more available free of FSI. A specific premium is charged which is based on the market value decided by the state government and is levied at 60 per cent premium for Residential, 80 per cent for Industrial and 100 per cent for Commercial at the Ready Recknor Rates.

How does one calculate the fungible FSI?

The Fungible FSI is calculated on Built-up area of flat.  In suburbs, private buildings get 2.7 FSI including fungible and in cess buildings and slums, the FSI of 4.05 (335% of 3) including fungible will be available. The fungible FSI can be included in the flat and thus the area of the flat goes up. 

Why the redevelopment activities are excused from paying premium for this compensatory FSI?

There is no impact of this Fungible FSI method in projects under redevelopment. The Developer will not have to pay premium on the area used by the existing member while giving him space in the Redeveloped Project. He is free to use TDR option. Fungible FSI on the FSI already consumed in the existing buildings will be available free of premium.

The new DCR rules do not apply to cessed, non-cessed old buildings, MHADA layouts, chawls and slums undergoing redevelopment. This would mean waiver of premium for buildings meant for rehabilitation. The Fungible FSI for the saleable component of these structures will, however, be governed by the new rules.

 How does this concept avoid misuse of FSI by builders?

The primary motive of bringing in transparency and eliminating the ambiguity that was largely prevalent earlier with respect to disproportionate saleable area. There was no limit of construction that was possible earlier. MCGM modified the Development Control rules, restricting the same to 35% for the residential area and for commercial area 20% of the permitted FSI including TDR.

In what ways this provision brings transparency in?

Although certain areas as mentioned above were "Free of FSI", the same were included in computing area of a flat by Builders/ Developers and sold to the consumers at a market price under the garb of Super Built Up area or Useable area or Saleable area of a flat, or by whatever name given. These areas, under the name of Super Built Up area or Useable area or saleable    area, were included in the area of the flat while selling the same to the consumer.

Thus, by envisaging a compact plan where all areas are now included for the computation of FSI and a cap of 35% is fixed in case of the residential projects so that there is no room for the Builders or the Developers to manipulate the rules by creating excess non-habitable areas and overcharging consumers. Fungible Compensatory FSI may also be used to construct larger dwelling units and/or to construct additional dwelling units. Hence, it may be used in the same manner as regular FSI.

Since the "Free of FSI" areas are now included in the computation of FSI, thus bringing in greater transparency. Builders/ Developers will have to pay a premium for availing Fungible Compensatory FSI. This will curb Builders/ Developers from making exorbitant profits at the cost of consumers.

Will this provision help in expediting clearance of projects and in what way?

There are numerous departments to whom the developers have to approach to seek permissions, clearances and certificates and I do not think a single factor of DCR amendments would encourage an early clearance of projects. The time frame though fixed by the authorities is not adhered to on pretext of one reason or another.

How is this concept going to benefit the home buyers?

The confusion of ‘super built-up’ and ‘saleable’ areas is no longer there and the buyer knows exactly what is he paying for. In addition, the entire transaction is recorded officially in the agreement, and the buyer is relieved of blackmail by the developer. The said amendments will enable consumers to calculate the total area of the flat / unit sold to them and the exact price they pay for such area.

Black money transactions would reduce, which also means a reduction in the black money payment component for the buyer.

How the Fungible FSI provisions are going to affect the realty market? Do they prove to be boon or bane for the current market situations?

Under the existing DCR, including many areas the passage, lifts and staircases are charged with premium paid, which, earlier was given free of FSI and within the power of Municipal Commissioner. It is not going to benefit the builder fraternity as it has to pay premium and it will be additional cost and burden which ultimately transfers to the buyers of residential and commercial premises.

Developers used to provide elevation features (balcony, flower beds etc) in the past without paying any premium to the government. As per the new policy of fungible FSI, a developer has to pay for balconies and flower beds. So, instead of a balcony, developers are increasing the size of the house to increase their revenue. However, as a result, the character and beauty of the city shall gradually be lost. Most buildings will be block- like structures similar to MHADA buildings.

Under the new norms developers will have an option of 25% more parking over the DCR limit without premium and without being counted in FSI.

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