How to Calculate Floor Rise Charges While Purchasing Property

When buying a home in a multi-storey building, several extra charges are added to the base price. One of these is the floor rise charge, which often confuses buyers. It’s important to understand what this charge means, how it is calculated, and how it affects the overall cost of your property.

What are Floor Rise Charges?

Floor rise charges, also known as floor rise premiums, are additional costs added to the price of a property based on the floor level. In high-rise buildings, the cost of flats generally increases as you go higher. Because upper-floor units offer better views, more privacy, less noise, improved ventilation and natural light. Builder's consider these factors and set higher prices for units on higher floors.

These charges are usually listed in the cost sheet or price breakdown and are calculated based on the per-square-foot rate.

Why Do Builders Charge for Floor Rise?

From a buyer’s perspective, a flat on a higher floor might seem more appealing due to various lifestyle benefits. From a builder’s perspective, constructing higher floors involves higher costs for raw materials, labor, and compliance with safety norms. Moreover, higher floors require more sophisticated construction techniques or technologies.

Builders add a floor rise charge to recover extra construction costs and increase profits from high-demand units.

Typical Floor Rise Pricing Structure

Though the actual rate may vary depending on the developer and location, here’s a basic example of how floor rise charges might be structured:

• ₹25 per sq. ft. for every floor above the base price.
• According to the builder's policy, the base price applies to the first or ground floor.

Suppose you are buying a 1,000-square-foot flat on the 10th floor. If the floor rise charge is ₹25 per sq. ft. per floor starting from the 2nd floor, the calculation would look like this:

• Total floors above base: 10 - 1 = 9
• Extra cost per sq. ft.: 9 × ₹25 = ₹225
• Total floor rise charge: 1,000 sq. ft. × ₹225 = ₹2,25,000

In this example, you will be paid an additional ₹2.25 lakhs just for choosing the 10th floor.

How to Calculate Floor Rise Charges – Step-by-Step

Here’s a simple way to calculate the floor rise charge:

1. Know the Builder’s Policy: Understand from which floor the builder starts charging extra. The ground floor is often free, and fees start from the second floor.
2. Find the Rate Per Floor: Builders usually specify a per-square-foot cost for every floor rise. It could range from ₹10 to ₹50 per sq. ft. or even more.
3. Determine Your Flat’s Floor Level: Subtract the base floor from your flat floor to get the number of chargeable floors.
4. Calculate Total Floor Rise Amount: Multiply the number of chargeable floors by the rate per square foot, and then multiply the result by the flat's total area.

Formula: Floor Rise Charge = (No. of Chargeable Floors × Rate per Floor per sq. ft.) × Carpet Area

Points to Keep in Mind

• Different Builders Have Different Rules: Some builders might include floor rise charges in the total cost, while others mention it separately.
• Check the Carpet Area: Always confirm whether the floor rise is calculated based on the carpet area, built-up area, or super built-up area.
• Negotiation is Possible: In many cases, especially during pre-launch or soft-launch offers, builders might be open to waiving off or reducing floor rise charges.
• Tax Implications: GST may apply to floor rise charges if the construction amount is not fully paid at the time of purchase.
• Transparency: Always ask the builder for a detailed cost sheet to understand every part of the total price.

Are Floor Rise Charges Justified?

There is much debate about whether floor rise charges are fair. While buyers might see it as an extra cost, developers justify it based on construction expenses and the added value of better views and amenities. Ultimately, it comes down to personal preference. If you value living higher up for the view or peace, you might feel the cost is worth it.

Tips to Save on Floor Rise Charges

1. Opt for Mid-Floor Units: If you want a balance between view and budget, go for a unit on the 4th or 5th floor.
2. Choose Early in the Project: The earlier you book, the better your chances of negotiating with the builder.
3. Look for Offers: Some builders offer discounts on floor rise charges during festivals or project launches.

Conclusion

Understanding floor rise charges is key to calculating the cost of your property. It might appear to be a small charge, but it can significantly affect your overall budget. Always ask your builder to explain the charges clearly and verify the area used for calculation. Now that you know how to calculate floor rise charges, you are one step closer to making a property investment decision.