Setback is a building regulation enforced to regulate spacing between two buildings in order to have adequate solar exposer and ventilation. It is mandatory on the part of every individual who wants to construct a structure to obtain permission from the local authority before its construction. Despite rules and regulations framed for good reasons, instances of violation of development control rules (especially setback rules) are observed in the residential buildings of Qasimabad, Hyderabad. This results in the obstruction of sunlight, poor ventilation and high consumption of energy. It also results in deteriorating living conditions and narrowing of the adjacent local roads and alleys, creating congestion. So, this paper has tried to highlight the violations of setback rules in residential buildings and their impact on living conditions. For the perception of living conditions, a questionnaire survey with the Likert 5-point scale was used. Field survey technique was also carried out to measure the existing setbacks of residential buildings in Qasimabad. Standardized setbacks were determined by applying the formulas and by comparing them with existing setbacks. The comparison shows that existing setbacks are against building bye-laws. Despite discussing all building laws with various development agencies, this research is limited to discussing the setback rules mentioned in National Reference Manual (NRM). The study reveals that those residents who do not have a side setback area are more concerned with their privacy, smoke, sound and darkness; whereas, ineffective lighting, air circulation and the rise of temperature affect the living conditions and result in high energy consumption by residents. The study is imperative because it brings the focus of the development agencies towards the neglect of setback rules in high rise buildings and provides the evidence of their impact on living conditions by measuring residents’ perceptions.