All that paper work

All that paper work

Annoying delays The most common problem that developers have to face is the lengthy procedures in getting approvals from government bodies. File photo

The real estate market in Bangalore has witnessed inexorable growth. Reputed real estate developers have entered the market and have come up with world-class residential and commercial projects.

 Major developers have announced new projects but the most common problem that these developers have to face is the lengthy procedures in getting approvals from several government bodies.

One-stop solution
The single window clearance process will provide a one-stop solution to all the developers in obtaining the required approvals.

It will also eliminate hassles that they face for various regulatory and other clearances. This will not only reduce the time incurred in taking approvals but will also bring in more transparency in the Indian real estate industry through a simplified legal framework.

A developer has to get 55 no objection certificates (NOCs) before any project takes off. These NOCs take about two years to come through after all the checking and counter checking by various government departments.

Opines Jitendra Jain, CEO & MD of Neev Group of Companies, “in the real estate industry, the process of obtaining an NOC clearance itself takes a long time. The government bodies have to simplify the paper work for sanctioning of scrutinised documents and the person heading the department should do this personally. This concept provides guidelines in a specific time frame of giving clearance for the developer, also helping out the developer by pointing out whom to approach for this. There is a unit approval committee under the development commissioner to take care of the single-window clearance mechanism.” The entire procedure of getting clearances from various bodies takes a good 12 to 18 months.  These lengthy procedures cause both time overruns and cost overruns, which is passed on to the ultimate buyer.

High stakes
A critical requirement to meet the growing need for housing in the country as well as a solution to unlock the potential of this sector is the simplification and liberalisation of the overly regulated multiple clearance system.

Many direct and indirect side-effects of the complicated clearance system have resulted in delays at various stages from the start to the handover of a project eventually leading to higher construction costs to the extent that projects have become dearer by Rs 500 - Rs 2000 per sq. ft.

Santosh Rungta, President, Confederation of Real Estate Developers’ Association of India (CREDAI) explains, “the real estate industry which is considered the growth engine of Indian economy and has major linkages with more than 200 associated industries having a cascading effect on them. It is sad that the issue of single window clearance has been plaguing the industry till date, dampening the growth of the sector. The impact of de-regulation can be huge. What’s at stake is 8.53 per cent (Rs 366,946 crore) contribution to the GDP, seven per cent the total work force – nearly 30 million people and the biggest common Indian dream of owning a home.” 

Says Samir Chopra, CMD, RE/MAX India, “single-window clearance will bring in greater transparency and standardisations in their disclosure. The basic aim of single-window clearance is to provide a single point for time-bound clearances, required for establishment and operation of industrial undertakings.

Every applicant seeking to apply for clearance(s) required for establishment or operation of an industry shall apply to the nodal agency.”

Adds Suryavir Singh, Head - Strategic Planning, Sahara Prime City Limited adds, “the absence of single window clearance not only discourages investments, but also leads to delays, cost overruns and corruption, thus, making the project unviable. It also results in too much bureaucracy. To expedite activities in the real estate and infrastructure sector, the government should introduce single-window clearance facility and make everything online so that processing becomes much easier.”

Challenges galore
While it is common knowledge that getting a building approval is a tiring and cumbersome process, it is also important to know that the sanction is just one part of this.

One must look at the kind of approvals that are required and then try and understand how a ‘single window’ approval process can succeed. 

There are several questions that remain unanswered. “We will examine the approvals that are required for a building that is above 15 metres in height - also referred to as a high rise structure as this is where the approvals are cumbersome,” says Koshy Varghese, Managing Director, Value Designbuild Pvt. Ltd.

He also goes on to explain the processes and paper work involved to get approvals. Varghese points out that “the applicant has to submit all title documents and latest EC, khatha, tax-paid receipts and conversion orders if applicable, apart from NOCs from BWSSB, Telecom Department, Bescom, Airport Authority of India, Fire Force, State level Environment Clearance Board (Pollution Control Board) and from traffic department (am not sure this has become mandatory yet).”

He explains that except for the Airport Authority the remaining clearances are from within Karnataka.

“I understand that Airport Authority clearance is also now decentralised to Bangalore. Based on the above, how effective will a single window clearance be? Will the above mentioned departments actually allow their powers to be limited? In this case powers include the ability to benefit too.”

“Another question is - by making it a single window clearance how will costs come down? Will the official fee be lowered? Will liaison costs come down? What is the mechanism to bring down costs and time as departmental approval will still be required. For example the State Level Environmental Clearance itself can take over a year. There are so many presentations but meetings of all members happen only once a month,” Varghese asks.
Certificates, NOCs galore

Additionally, the builder has to get the commencement certificate after the columns are raised to the ground floor level.

At the end of the development, the builder has to go back to every one of the above departments to get a certificate to confirm that the building has been completed as per the NOCs given and then submit all these papers to the BBMP to get the occupation certificate.

In the interim, the builder would have had to approach the BWSSB and Bescom authorities to get their respective connections of water and electricity. Another major problem that developers face is scarcity of land.

If the FAR (Floor space Index) that is the ratio of total floor area of buildings on a certain location to the size of the land of that location, is increased, then more houses can come up and it will also save costs, opines a leading developer. Implementation of the system depends on the integration of approval related processes of the relevant authorities that seems to be the biggest challenge.

A state subject
Further, land is a state subject and at present, the system and authorities from whom approvals are required may differ state to state.

Uniform willingness and initiatives on part of various state governments to carry out reforms is needed while introducing single window clearance system across the country is another challenge.

Challenges not withstanding, if implemented, this could just be what the doctor ordered!
Farook Mahmood MD, Silverline Realty Pvt Ltd & President of Bangalore Realtors Association, India concludes, “the concept of single window agency would help in tackling corruption.”

“It makes officials more responsible and answerable to the concerned developer. It brings in transparency in the entire system, apart from saving the time of developers and allowing them to start their construction work on time,” Mahmood says. 
Till this gets implemented, one needs to wait in hope.