Definition of "Floor Area Ratio (FAR)"

Elkin Marcillo real estate agent

Written by

Elkin Marcilloelite badge icon

Marcillo Real Estate

The ratio between a structure's total floor area and the total land area of the land upon which it is constructed. The floor area ratio definition is the ratio of the total amount of usable floor area that the building has to offer the homeowner, from the total area of the property on which the building has been constructed. The floor area ratio must conform to the building code's floor area specifications. A bigger floor area ratio is likely to represent urban highly populated areas, with high population density per square mile where there are more high rise apartment buildings and condominiums instead of detached family homes. The area ratio is used by local governments for use with zoning codes issues and delimitations.

The FAR (Floor Area Ratio) is calculated by dividing the total building floor area by the total building lot square area:

Floor Area Ratio = Total Building Floor Area/Gross Lot Area

What is the Floor Area Ratio?

When you consider the floor area ratio you don’t only look at the footprint of the building but at the whole floor area of the building. The things that are taken out of the equation in this calculation are all the unoccupied areas of the area like basements, stairs, elevator shafts, and parking garages. 

 

What variates the floor area ratio of a city are factors like population density, patterns of population growth, and activities that involve construction in a city, residential neighborhoods, condominiums, etc. This affects the nature space, parks in cities where residential areas take over. These floor area ratios of cities are determined by local governments that enforce regulations and restrictions of new constructions to stabilize the balance of this ratio.


Being a key determinant of developments in any country, the floor area ratio is a deterrent to construction but it keeps it regularized. Not only the real estate industry struggles to maintain an acceptable level of floor area ratio, but any kind of industry throughout the country in order to open up space and the resources of the land to the real estate developers. A high floor area ratio allows developers to construct buildings for homebuyers, businesses, and industries, which increases sales and provides supply for increasing demand.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

Law of the state establishing guidelines and requirements for constructing buildings. The standard may differ between the states. ...

Invests in rental property but does not manage that property. ...

People often bump into the question: "What is the statute of limitations?" So, let's shed light on the statute of limitation definition in simple words! A statute of limitations is like a ...

Giving one's approval to another, e.g., a fiduciary, to manage his or her finances. ...

Representation on a flat surface of any region that depicts the elevation of that region. ...

Financial statement with amounts or other information that are completely or partially assumed. The assumptions supporting the amounts are usually provided. The statement may be prepared in ...

People can use the term disclosure in ordinary day to day activities. The definition of disclosure is to expose yourself, to show the truth without omitting any important information. ...

Mortgage for an extended time period (e.g., 25 years) Type of real estate investment trust (REIT) that gives long-term mortgages to real estate developers and contractors on new or ...

An insect, such as a termite, that "eats into" the wood and destroys it. This can cause significant damage to the home. Most states have laws that require termite inspection and ...

Popular Real Estate Questions