Evaluating Land-Use Restrictions concerning the Floor Area Ratio of Lots

Abstract

In Japanese city planning, the effective floor area ratio (FAR) of land lots, or housing density, is delimited by zoning and restrictions on the form of buildings (shape controls). To evaluate this system comprehensively, the authors analyze how the maximum allowable FAR (effective FAR) of residential lots affects land prices with a hedonic approach. Based on data on Tokyo, the analysis reveals that lots with an effective FAR of less than 110%, or between 170% and 210%, were significantly cheaper than those with an effective FAR of between 110% and 160%. The result for the low effective FAR group was explained by restrictions on floor space, and the result for the 170% to 210% group applied to areas with relatively unattractive landscape. Further examination showed that the FAR currently specified by zoning is more often effective when it is low, and that restrictions in the form of shape controls are more often effective when the effective FAR is high. These analyses provided criteria for evaluating the current land use control system. Based on the results, concrete proposals are made for improving the regulation system.