Streamlining Approval
Procedures for Real
Estate Projects
November 1-2, 2012
Hotel The Leela, Mumbai
Dhanendra Kumar
Chairman, Committee on Streamlining Approval Procedures for Real Estate Projects
(SAPREP), set up by Ministry of Housing and Urban Poverty Alleviation, Govt. of India
& Former Chairman, Competition Commission of India (CCI)
1
Disclaimer - The views expressed in this presentation are personal and do not reflect the views
of the Ministry of Housing and Urban Poverty Alleviation (M/HUPA).
Overview
1 Importance of real estate and construction sector and key challenges
2 Introduction to SAPREP* Committee
3 Key findings of the Committee report
4 Recommendations and next steps
5 Your feedback and suggestions
2
*Streamlining Approval Procedures for Real Estate Projects
Importance of real estate and
construction sector and key challenges
3
Importance of the sector
Real estate and construction sector has continued to
contribute significantly to the country’s GDP;
Average contribution over 2011-16 estimated to be 17.5%
• On an average, real estate contributes 8% while construction contributes 9.5%
• Both real estate (19.5% CAGR) & construction (CAGR 18.3%) have witnessed
tremendous growth since 2001
Contribution of Real estate and Construction to India’s GDP (USD Bn)
100%
80%
60%
40%
17.5%
20%
0%
4
17.5%
2001
2011
2016
GDP
242
1,346
2,080
Real Estate Services
30
128
197
Construction
28
107
164
Source: RICS Research: Real estate and construction professionals in India 2020
Given that the sector is riddled with many complex issues
threatening to slow down growth, multiple efforts are being
made by Government to address these issues
SAPREP Committee set up by
Cumbersome project
Ministry of Housing to look at
approval process
streamlining approval procedures
Absence of
regulatory body
Lack of market data
& transparency
Eg. NHB Residex, Central
registry, digitization of land
records
Draft real estate
regulation bill
Shortage of
skilled workforce
Focus on capacity building
in new JNNURM, capacity
building schemes, NSDC
etc
5
Lack of standards and
uniform practices
Land acquisition bill,
valuation standards
Land values
& acquisition
Eg. building standards,
affordable housing
standards?
Introduction to the Committee set up by MoHUPA on
‘Streamlining Approval Procedures for
Real Estate Projects (SAPREP)’
6
SAPREP Committee
Terms of Reference
SAPREP Committee was set up to study successful models in Indian states as well as
international best practices in order to suggest a methodology for fast track
Central/State building clearances.
•
Examine few best practices on streamlining building plan approval processes in
cities like Pune, Hyderabad, Mysore and Indore etc.
•
Study of Bihar model on the obtaining of building plan approvals from certified
architects.
•
Suggest a methodology for fast tracking Central/State building clearances.
•
Suggest a systematic approach through which all cities and states can develop fast
track, single window clearance mechanism giving specific focus on
– simplification of procedural aspects,
– formulating single composite form with complete listing of the set of documents
necessary to accord sanction by the authorities and
– automated system for building plan approval with special emphasis on Affordable
Housing.
7
SAPREP Committee
Work done so far
• Extensive secondary research
• Feedback collected from states via questionnaire
• Invited public comments
• Committee and sub-committee meetings
– Representatives from approval authorities invited to attend meetings
and contribute to the deliberations
Current status
• Draft report has been prepared and will be submitted to the Ministry of
Housing and Urban Poverty Alleviation in November 2012
8
Key findings of SAPREP Committee
- Magnitude of the problem
- Legal framework and other challenges
- Developer’s issues due to existing process
- Consumer issues
9
Magnitude of the problem
According to a World Bank Study, India has one of the
most cumbersome and lengthy process for seeking
construction permits
India – Overall ‘ease of doing business’
But, still a long way to go as India
ranks 182 out of 185 countries
India – ‘Dealing with Construction permits’
India has reduced time from 227 days to
196 days to process building permit
applications by implementing strict time
limits at municipalities
And it has a huge cost associated with
this process -passed on to consumers
10
Source: Doing Business 2013 – report by The World Bank and IFC
Legal framework
Numerous Central and State level laws, rules and
regulations govern the construction activity…
Land title
 Indian Registration Act ,
1908
 Various State legislations
Planning & Land



NOC from Central Govt.





11
Environnent Impact Assesment
(EIA) Notification S.O. 1533 (2006)
Ancient Monuments and
Archaeological Sites and Remains
Act, 1958
Works of Defense Act 1903 (WDA)
Environment (Protection) Act, 1986
Forest Conservation Act, 1980
Land Revenue Acts by all
State Governments
Town and Country Planning
Acts by all State Governments
Master Plans/ Development
Plans
Construction of buildings
 National Building Code
2005
 Local Building Bye-Laws
NOC from State Govt.
 Water (Prevention &
control of pollution) Act,
1974 and Air
(Prevention & control of
Pollution) Act, 1981
Service Installations




Water connection
Sewerage connection
Gas connection
Telecom connection
Power / Electricity
connection
…resulting in a lengthy and cumbersome process where
developer needs to approach multiple authorities
Developer issues
Applicant / Developer
3b
1
Land Title
Planning & Land
3b
NOCs from
Central Depts
NOCs from State Depts
Central / State - MoEF
Central/State – NHAI /PWD
State Board
Urban Local Bodies (ULB)
Environmental Clearance
Road Access
Water Connection
2
Revenue Department
(Tehsildar)
No
Ownership Certificate /
Patta /Chitta
Conversion of Land OR
Land Use required?
Yes
Developer
submits
Application
Building plan
Approval
Developer
submits
Application
for
Demarcation
Central - AAI
Sewerage Connection
DG Set Installation
Central - NMA
In accordance
with Building
Bye-Laws?
3
State Board
Consent to Establish / Operate
NOC for Heritage buildings
Conversion of land or
Change in Land Use
Non encumbrance
Certificate
Service / Utilities
Installations
State – State Pollution Board
Distance & Height Clearance
Department of Town Planning
(State Level)
State Town Planning / ULB
6
Construction of
Buildings
Engineer
handed
over plot?
State / Private
Central – Ministry of Defense
Central/State – Forest Department
(MoEF/State Dept)
NOC for Defense Establishments
Tree Cutting Approval
Gas Connection
State / Private company
Power / Electricity Connection
Urban Local Bodies (ULB)
Developer submits
Application for Zoning
Approval
Central – Central Ground Water Authority
State/Local – Fire Service Dept.
Bore well Registration Certificate
NOC for Fire
3a
LOI for Building
Plan Approval
MTNL / Private Operator
Phone Connection
Central – Coastal Zone Mngt Authority
NOC for Coastal Zone
Department of Town Planning
(State Level)
PARRALEL PROCESS OF OBTAINING VARIOUS NOCs
LOI for building plan
approval obtained?
All NOCs obtained?
In accordance with
Master Plan/City Dev
Plan?
PARRALEL PROCESS OF SERVICE
INSTALLATIONS
4
Zoning / Site Layout
Approval
Building Permit /
Development License
LEGEND
Construction begins
Commencement inspection
5
IMPORTANT SEQUENCE/STEPS
CATEGORY OF APPROVALS
Completion inspection
Completion Certificate
12
12
#
7
Occupancy Certificate
DEPARTMENT
TYPE OF APPROVAL
Developer issues
Multiple factors add to the complex process, leading to
uncertainties and delays in building approvals
‘Land’ is a state subject
resulting in multiple laws,
rules and
regulations
Lack of
transparency
and corruption
Complex building
bye laws with
excessive control
13
World Bank Study estimates
Rigid urban
planning processes
Ambiguity and
discretion
Lack of
institutional
clarity
Complexity and
coordination hurdles
with multiple depts.
• If procedures are too
complicated or costly,
builders tend to
proceed without a
permit.
• By some estimates
60–80% of building
projects in developing
economies are
undertaken without the
proper permits and
approval
Consumer issues
Whilst building laws are framed for safety and protection
of people and environment, complexity of the procedure
results in uncertainty for consumers as well as developers
9
Who do I approach for
delays and un-kept
promises by developers?
8
Has the property received
the completion certificate
after necessary
inspections?
1 Is the location good with
adequate urban Infrastructure?
2
3 Have all statutory
planning and building
approvals been
Is the paper work /
received?
4 contracts neutral and
not one-sided?
5
7
Is the construction
quality and
specification as
promised/shown in
the apartment
brochure?
14
Does the developer
have clear land title?
What is the
actual carpet
area that I can
use?
6 How can I know the status of the project and
approvals to estimate when construction may get
completed?
15
International best practices
What have other countries to reform their systems?
Introducing or improving one-stop shops was among the most common
features of construction permitting reforms in the past 8 years
16
Source: Doing Business 2013 – report by The World Bank and IFC
Source: Doing Business 2013 – report by The World Bank and IFC
Recommendations and next steps
17
Key recommendations
6 Key Pillars
to streamline real estate project approvals
1
Bring
transparency,
predictability
and
accountability
to protect
consumer
interest
18
5
3
2
Review
existing
systems
and
procedures
Single
Window or
‘One-Stop
Shop’
enabled by
IT
4
Reforms to
promote
affordable
and green
housing
Share best
practices
and
incentivize
States
6
Capacity
building in
private
and public
sector
1
State wise compendium of all processes and timelines for
Transparency, Predictability and Accountability
Transparent
processes
Shift from
paperwork
and chaotic
processes
Clarity of sequential
and parallel processes
State wise
compendium
of process and
timelines
- what approvals
- where to go and
- by when to expect
19
Composite
Application Form,
Standard
checklists and
timelines
While Central Government can
facilitate these, States will be
responsible for implementation
1
Contd.
Transparency, Predictability and Accountability
With consumer interest at the heart of all reforms…
Access to building approval
information and status
updates to avoid pre-sales of
projects without requisite
approvals
Strengthening regulatory
mechanisms to enforce
building standards; ensure
quality
20
•
Uploading a list of all approved projects on
websites of local authority
•
Online information on the status of building
approval applications
•
Prompt notification of application approvals
•
Projects to be registered with (proposed) real
estate regulation authority
•
Enforcement of various state building laws
by local building authorities or private/third party
inspectors
•
To provide consumer redress for building
defects
2
Review of systems and procedures
Remove redundancies, simplify process, automate or delegate powers
21
1.
Remove duplicity or unnecessary approvals and documentation
•
Eg dual process of getting conversion of land use approval from revenue
department as well as town planning / local dept may be done away with
2.
Simplify or improve process by clarity in rules and restrictions
•
There are opportunities to eliminate the need for NOC from certain
authorities such as NMA, AAI, if the restricted areas are marked as red,
green, yellow
3.
Identify activities that can be automated
•
Eg online submission of building plans, e-payments
4.
Identify approvals that may be delegated
•
Eg planning approvals (zoning plan or change in land use) can be
delegated to local bodies after adequate capacity building
3
Developer submits all
information and
documents in a
Composite
Application Form
IT Portal
acting as
‘Single
Window’
will connect
various
departments
Developer /
Applicant
Responses / status
updates from various
authorities returned to
the applicant
22
National Services Delivery
Gateway (NSDG)
Single Window or ‘One-Stop Shop’ enabled by IT
Approval authorities
/ Department Users
Department Portal
•
•
•
•
Application Routing
Processing (Scrutiny, Approval)
Communication
MIS Reporting
Source: Graphic representation adapted from e-Biz being developed by DIPP
International best practices
3 Contd.
With the help of IT enabled one-stop shop, Hong Kong SAR, China
and Singapore have achieved no. 1 and no. 2 ranks respectively for
‘dealing with construction permits’
Hong Kong
Singapore
• A One Stop Centre (OSC) was set up under the
administration of the Efficient Unit (EU)
• Many departments have been inter-connected
and manual procedures automated by
leveraging IT
• Hong Kong takes only 6 procedures and 67
days to get a construction permit
• Singapore takes 11 procedures and only 26
days to get a construction permit
23
International best practices
3
Contd.
Taiwan, China, made the biggest improvement in the ease
of dealing with construction permits in the past year
By improving one-stop shop and introducing private inspections by building
inspectors, 14 procedures were eliminated and 31 days were saved
24
Source: Doing Business 2013 – report by The World Bank and IFC
Source: Doing Business 2013 – report by
The World Bank and IFC
4
Reforms to promote for affordable and green housing
through planning/development policies and approval procedures
Clear ‘definition of affordable housing’ projects
Revision of
building codes with
specific provisions
for ‘affordable
housing’ including
revised
densification (builtup area) norms and
standardization of
building specification
25
Fast track
process/
green
channel
with 60-90
day
clearance
window
Nodal agency
to act as
‘Single
window’ and
coordinate all
approvals
from different
authorities
Exemptions
from certain
NOCs or
‘deemed
approval’ to
expedite supply
of affordable
housing
Green certified
projects to be
exempt from
environment
clearance
5
Share best practices and incentivize States
Recognize and reward States and individuals to build competitive spirit
1. Many best practices exist which need to be shared
amongst States
Rajasthan
26
Nodal agency (Avas Vikas Limited) for
affordable housing; Clear processes and
time limits
Andhra
Pradesh
Consolidation of building laws (AP Building
Rules 2011) to make building stipulations
clear, easy to comprehend, user friendly
Hyderabad
Fast tracking G+4 houses by empowering
empanelled professionals (Green channel)
JNNURM
Cities
Building plan automation has been a
mandatory reform under JNNURM which
has resulted in many cities developing
custom software/website for online building
approvals
2. States need to be
incentivized by
Central Govt. to
reform procedures
3. States and
individuals could be
recognized through
National Awards
6
Capacity building in private and public sector
Training in-house staff; outsourcing and empowering private sector
27
Architects
• Empanel/Outsource - to review and verify (self-certify) building plans
and zonal/layout plans for building projects
Urban Planners
• Train – ULB staff to be able to approve land-use/zonal plans*
Civil / structural
engineers
• Empanel/Outsource - to review application of building plans,
construction as well as structural design requirements
Building surveyors
/ inspectors
• Train or empanel - to review adherence to stipulated building codes
and bye laws, including site inspection
Lawyers and law
firms
• Empanel/Outsource - to verify legal documents including ownership
and non-encumbrance certificated
Other ULB Staff
• Train - ULB staff on procedures and IT
*India needs ~40,000 urban planners for 7935 towns;
only 616 planners annual supply from educational institutions
Summary
Summary
1 Leverage technology to connect
departments information flow
Technology platform is being
identified
7 Build capacity in local
bodies
2 Examine approval processes
that can be removed,
simplified or delegated
Land surveyors, urban
planners, building inspectors
Review of processes,
Composite Application Form
6 Consolidate and streamline
building laws at national and
state level
5 Clear processes and timelines
for greater clarity and
predictability
28
Document processes, checklists,
timelines, automatic/deemed
approval
3 Expedite decision making and
clearance of long pending
applications
Streamlining
building
approvals
Facilitation window in ULB,
Empowered committee,
Ombudsman or Appellate Authority
4 Introduce fast track channels
for projects that meet
‘affordable housing’ criteria
Consider nodal agencies, special
exemptions
Next steps
• National workshop of all states to discuss
implementation – end November
• Pilot implementation of the recommendations in one or
two states
29
Your feedback and suggestions….
30
Your feedback and suggestions…
1.
Which approvals prove to be the biggest bottleneck?
2.
Areas where standardized documents and checklists would be most helpful
3.
Identifying redundant processes (which can be eliminated) and areas of duplication
4.
Suggestions to streamline approvals from MOEF/AAI/NMA/ Defense Ministry
5.
Should Environment Impact assessment under MOEF should be undertaken at the Master Plan /
City Development plan or for every project approval stage? What should be the minimum
threshold for which environment clearance should be required?
6.
What kind of incentives will be effective to motivate States to implement procedural reforms?
7.
Can the simplified norms of Andhra Pradesh be adopted in other states to incentivize housing
8.
What special exemptions should be considered for affordable housing
9.
What facilities/functionalities should be made available in e-platform as a single window shop
for building approvals
10. Is there need for an appellate authority or ombudsman to hear appeals against building
approval related cases
11. Other suggestions on how building approvals can be facilitated and expedited
31
Thank you!
Dhanendra Kumar, Chairman
Committee on Streamlining Approval Procedures for Real Estate Projects (SAPREP)
and Former Chairman, Competition Commission of India (CCI)
Email - dkumar1946@gmail.com
32