There has been multiple requests to explain PLOT RATIO in order to be prepared for Questions in D04 Property Taxation. Below is a verbatim from iProperty.
What do property buyers need to know about Plot Ratio in Malaysia?
Most purchasers might not concern themselves with the term plot ratio but it is a big deal for property developers as it is used to calculate the amount of gross floor area they can build on a plot of land. Plot ratios are put in place to control development density or the amount of development in an area.
What is plot ratio?
Plot ratio, also known as floor area ratio (FAR), is the ratio of the size of a plot of land to the amount of floor area that can be built on it. However, bear in mind that the plot ratio does not determine how high a building is. If less land is used as the base of the building, it can be built higher. If there are above-ground car parks, those do not count either.
In some cases, there is also a building height restriction in addition to the plot ratio. The property developer will then have to work within these restrictions, building underground if necessary.
How to calculate plot ratio?
Plot ratio is the total floor area of a development divided by the size of the land. For example, if the approved plot ratio by the local council is 1:5 and the land size is 1,000 square feet, the development can have 5,000 square feet of total floor area.
Total floor space which could be developed = 1000 sq ft (land size) X 5 (plot ratio) = 5,000 sq ft.
What is Gross Area/Gross Floor Area (GFA)?
Gross Floor Area is the area within the perimeters of a building’s walls. In Malaysia, the Town and Country Planning Act 1976 defines floor area as “the total area of floor space within a building, as measured between the external sides of walls or, in the case of party walls, between the centres of such walls”.
However, in the calculation of total floor area in a plot ratio, areas like car parks, lift shafts and stairwells are excluded.
How do you calculate Gross Area/GFA from plot ratio?
To calculate how much gross floor area a development can have, just multiply the plot ratio with the land size. For example, with a plot ratio of 1:5 and a land size of 5000 square feet, you will get 25,000 square feet of gross floor area (5 x 5000).
What are the factors that determine plot ratio?
In Malaysia, plot ratios are determined by local councils and guided by state guidelines.
Some of the factors that determine plot ratio are:
- Land use: For example, commercial land will have a higher plot ratio than industrial land.
- Land topography: Land located near or at risky areas like hill slopes generally has a lower plot ratio.
- Location: Land within a central business district will have a different plot ratio compared to land of the same category within a suburban residential area. Some authorities allow higher plot ratios for developments close to LRT or MRT stations.
For instance, in the capital of Malaysia, the plot ratio is set to a maximum of 1:10 (both commercial and residential property) as laid out in the Kuala Lumpur City Plan 2020. The high plot ratio in prime areas is meant to offset the high land cost and to enable the construction of more homes/units within a piece of land.
Say for instance a property developer is planning to develop a housing project on a 20,000 sq ft plot of land in Bangsar, Kuala Lumpur with a Gross Development Value (GDV) of RM200 million. A 1:10 plot ratio would enable the construction of 200 units of 1,000 sq ft condo units (gross floor area of 200,000 sq ft) whereas a 1:5 plot ratio would make it possible for only 100 units. For the former, each unit will cost RM1 million (RM200 million/200 units) while the latter would cost each home buyer a whopping RM2 million for the same unit.
How and where to find the plot ratio?
Plot ratios for areas within a local council are usually stated in its local plans (or rancangan tempatan). These plans go through public consultation before being gazetted. Information about plot ratio can be obtained from local councils.
Can plot ratio be increased?
Plot ratios in local plans that have been gazetted cannot be increased without going through a process of consultation and review. One example is when a special area plan was drafted in 2008 to covert the industrial area of Petaling Jaya’s Section 13 to commercial use.
Individual owners of land can also apply to change the land use on their title to allow for a higher plot ratio.
Some local councils allow developers to increase plot ratios if they fulfil certain requirements such as providing landscaped pedestrian walkways, escalators in public spaces and overhead or underground pedestrian bridges. The increase in plot ratio is to offset the expenses for these facilities.
What is green plot ratio?
Another term that has cropped up in recent years is the green plot ratio (GPR). It is used to calculate the amount of plants and greenery within a development. The GPR is not something that is required by law but is becoming increasingly significant as architects and planners attempt to incorporate more green spaces into urban buildings.
How to calculate green plot ratio?
The calculation of green plot ratio is similar to that of the plot ratio, but using a parameter known as the “leaf area index” (LAI) instead of floor area. The leaf area index is the single-side leaf area (the area of foliage that is exposed to the sun) per unit of ground area. Basically, the more leaves a plant has, the higher its LAI. For example, a 10 square feet plot with trees or shrubs will have a higher index than the same-sized plot with grass.
As a home buyer, why do you need to know about plot ratio?
Plot ratio affects the density of a development. You would want to know if the infrastructure in the area can cope with the corresponding population. For example, will the roads be able to cope with the traffic? Is the drainage system sufficient?
If you are buying a property that has already been advertised with the number of units, you probably won’t need to know the plot ratio. However, if you are buying (or already own) a property with undeveloped land nearby, it might be useful to know the plot ratio of that land so you know what to expect in your neighbourhood.
Plot ratio is often used by residents’ associations and special interest groups in arguments against high-density developments in residential areas.
If you enjoyed this article, read this next: When is the best time to buy a house in Malaysia?