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 amp Former Chairman Competition Commission of India CCI ID: 232272
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Streamlining Approval Procedures for Real Estate Projects
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)
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).
November 1-2, 2012 Hotel The Leela, MumbaiSlide2
Overview
Importance of real estate and construction sector and key challenges
1
Introduction to SAPREP* Committee
Key findings of the Committee report
Recommendations and next steps
*Streamlining Approval Procedures for Real Estate Projects
Your feedback and suggestions
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5Slide3
Importance of real estate and construction sector and key challengesSlide4
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
Source: RICS Research: Real estate and construction professionals in India 2020
Importance of the sector
Contribution of Real estate and Construction to India’s GDP (USD Bn)
17.5%
17.5%Slide5
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
Cumbersome project approval process
Absence of regulatory body
Lack of market data & transparency
Land values
& acquisition
Shortage of
skilled workforce
Lack of standards and uniform practices
SAPREP Committee set up by Ministry of Housing to look at streamlining approval procedures
Draft real estate regulation bill
Eg. NHB Residex, Central registry, digitization of land records
Focus on capacity building in new JNNURM, capacity building schemes, NSDC etc
Eg. building standards, affordable housing standards?
Land acquisition bill, valuation standardsSlide6
Introduction to the Committee set up by MoHUPA on
‘Streamlining Approval Procedures for Real Estate Projects (SAPREP)’Slide7
SAPREP CommitteeTerms of Reference
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.
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.
Slide8
Work done so farExtensive secondary research
Feedback collected from states via questionnaireInvited public commentsCommittee and sub-committee meetingsRepresentatives from approval authorities invited to attend meetings and contribute to the deliberations
Current statusDraft report has been prepared and will be submitted to the Ministry of Housing and Urban Poverty Alleviation in November 2012
SAPREP CommitteeSlide9
Key findings of SAPREP Committee
- Magnitude of the problem
- Legal framework and other challenges- Developer’s issues due to existing process- Consumer issuesSlide10
India – ‘Dealing with Construction permits’
According to a World Bank Study, India has one of the most cumbersome and lengthy process for seeking construction permits
Source: Doing Business 2013 – report by The World Bank and IFC
Magnitude of the problem
But, still a long way to go as
India ranks 182 out of 185 countries
India has
reduced time
from 227 days to 196 days to process building permit applications by
implementing strict time limits
at municipalities
India – Overall ‘ease of doing business’
And it has a
huge cost
associated with this process -passed on to consumersSlide11
Numerous Central and State level laws, rules and regulations govern the construction activity…
Land title
Planning & Land
Construction of buildings
NOC from Central Govt.
NOC from State Govt.
Service Installations
Indian Registration Act , 1908
Various State legislations
Land Revenue Acts by all State Governments
Town and Country Planning Acts by all State Governments
Master Plans/ Development Plans
National Building Code 2005
Local Building Bye-Laws
Water connection
Sewerage connection
Gas connection
Telecom connection Power / Electricity connection
Water (Prevention & control of pollution) Act, 1974 and Air (Prevention & control of Pollution) Act, 1981
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
Legal frameworkSlide12
Developer issues
…resulting in a lengthy and cumbersome process where developer needs to approach multiple authorities
12Slide13
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
Ambiguity and discretion
Complex building bye laws with excessive control
Complexity and coordination hurdles with multiple depts.
Rigid urban planning processes
Lack of transparency and corruption
Lack of institutional clarity
Developer issues
World Bank Study estimates
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 Slide14
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
Is the location good with adequate urban Infrastructure?
Does the developer have clear land title?
Have all statutory planning and building approvals been received?
Is the paper work / contracts neutral and not one-sided?
What is the actual carpet area that I can use?
How can I know the status of the project and approvals to estimate when construction may get completed?
Is the construction quality and specification as promised/shown in the apartment brochure?
Who do I approach for delays and un-kept promises by developers?
Has the property received the completion certificate after necessary inspections?
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Consumer issuesSlide15Slide16
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
Source: Doing Business 2013 – report by The World Bank and IFC
Source: Doing Business 2013 – report by The World Bank and IFC
International best practicesSlide17
Recommendations and next stepsSlide18
6 Key Pillars
to streamline real estate project approvals
Bring transparency, predictability and accountability to protect consumer interest
1
Review existing systems and procedures
2
Single Window or ‘One-Stop Shop’ enabled by IT
3
Reforms to promote affordable and green housing
4
Share best practices and incentivize States
5
Key recommendations
Capacity building in private and public sector
6Slide19
State wise compendium of all processes and timelines for
Transparency, Predictability and Accountability
1
Composite Application Form, Standard checklists and timelines
State wise compendium
of process and timelines
- what approvals
- where to go and
- by when to expect
Transparent processes
Clarity of sequential and parallel processes
Shift from
paperwork and chaotic processes
While Central Government can facilitate these, States will be responsible for implementation Slide20
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
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
1
Contd.Slide21
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
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
Identify activities that can be automated Eg online submission of building plans, e-payments
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
Review of systems and procedures
Remove redundancies, simplify process, automate or delegate powers
2Slide22
Single Window or ‘One-Stop Shop’ enabled by IT
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National Services Delivery Gateway (NSDG)
Application Routing
Processing (Scrutiny, Approval)
Communication
MIS Reporting
Department Portal
Approval authorities / Department Users
IT Portal
acting as
‘Single Window’
will connect various departments
Developer / Applicant
Developer submits all information and documents in a
Composite Application Form
Source: Graphic representation adapted from e-Biz being developed by DIPP
Responses / status updates
from various authorities returned to the applicantSlide23
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’
International best practices
3
Contd.
Singapore
Many departments have been inter-connected and manual procedures automated by leveraging IT
Singapore takes 11 procedures and only 26 days to get a construction permit
Hong Kong
A One Stop Centre (OSC) was set up under the administration of the Efficient Unit (EU)
Hong Kong takes only 6 procedures and 67 days to get a construction permitSlide24
Taiwan, China, made the biggest improvement in the ease of dealing with construction permits in the past year
Source: Doing Business 2013 – report by The World Bank and IFC
By improving one-stop shop and introducing private inspections by building inspectors, 14 procedures were eliminated and 31 days were saved
Source: Doing Business 2013 – report by The World Bank and IFC
International best practices
3
Contd.Slide25
Reforms to promote
for affordable and green housingthrough planning/development policies and approval procedures
4
Clear ‘definition of affordable housing’ projects
Fast track process
/
green channel
with
60-90 day
clearance window
Exemptions
from certain NOCs or
‘deemed approval’
to expedite supply of affordable housing
Nodal agency
to act as
‘Single window’
and coordinate all approvals from different authorities
Green certified projects to be exempt from environment clearance
Revision of building codes
with
specific provisions for ‘affordable housing’ including
revised densification (built-up area) norms
and
standardization of building specificationSlide26
Share best practices and incentivize States
Recognize and reward States and individuals to build competitive spirit
5
Nodal agency (Avas Vikas Limited) for affordable housing; Clear processes and time limits
Consolidation of building laws (
AP Building Rules 2011) to make
building stipulations clear, easy to comprehend, user friendly
Rajasthan
Andhra Pradesh
Hyderabad
Building plan automation
has been a mandatory reform under JNNURM which has resulted in many cities developing custom software/website for online building approvals
Fast tracking G+4 houses by empowering empanelled professionals (
Green channel
)
JNNURM Cities
1. Many best practices exist which need to be shared amongst States
2. States need to be
incentivized by Central Govt.
to reform procedures
3. States and individuals could be recognized through
National AwardsSlide27
Capacity building in private and public sector
Training in-house staff; outsourcing and empowering private sector
6
Architects
Empanel/Outsource - to review and verify (self-certify)
building plans and zonal/layout plans
for building projects
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
Urban Planners
Train – ULB staff to be able to
approve land-use/zonal plans
*
*India needs ~40,000 urban planners for 7935 towns;
only 616 planners annual supply from educational institutionsSlide28
Technology platform is being identified
Review of processes,
Composite Application Form
Facilitation window in ULB, Empowered committee, Ombudsman or Appellate Authority
Consider nodal agencies, special exemptions
Document processes, checklists, timelines, automatic/deemed approval
Land surveyors, urban planners, building inspectors
Summary
SummarySlide29
Next steps
National workshop of all states to discuss implementation – end NovemberPilot implementation of the recommendations in one or two states Slide30
Your feedback and suggestions….Slide31
Your feedback and suggestions…
Which approvals prove to be the biggest bottleneck?Areas where
standardized documents and checklists would be most helpfulIdentifying redundant processes (which can be eliminated) and areas of duplicationSuggestions to streamline approvals from MOEF/AAI/NMA/ Defense Ministry
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?What kind of incentives will be effective to motivate States to implement procedural reforms?
Can the simplified norms of Andhra Pradesh be adopted
in other states to incentivize housing What special exemptions should be considered for affordable housing
What facilities/functionalities should be made available in e-platform as a single window shop for building approvals
Is there need for an
appellate authority or ombudsman to hear appeals
against building approval related cases
Other suggestions on how building approvals can be facilitated and expeditedSlide32
Thank you!
Dhanendra Kumar,
ChairmanCommittee on Streamlining Approval Procedures for Real Estate Projects (SAPREP)and Former Chairman, Competition Commission of India (CCI)Email -
dkumar1946@gmail.com