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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) &
Executive Director, World Bank
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Overview
SAPREP Committee
Key Findings of the Committee Report
*Streamlining Approval Procedures for Real Estate Projects
Recommendations
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Next Steps going forward 5
Problems
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Problems
• Real Estate and Housing Sector, despite being a crucial sector of economy, suffers from a number of complexities and opaqueness during approval process, adding to avoidable delays and additional costs, which ultimately get passed on to consumers.
• It is the second largest employer after agriculture and is slated to grow at 30% over the
next decade. Tremendous importance in the context of rapidly growing urbanisation. • Its contribution to India’s GDP estimated at 6.3% in 2013 – multiplier effects additional. • As per 12th Five Year Plan (2012-17), housing shortage estimated at 58.8 million units. • Over 90 per cent of this demand is from low-income households who suffer the most. • As per World Bank’s “Doing Business” Report 2014, India ranks 182 out of 189
economies on ‘ease of dealing with construction permits’. • Essentially a state subject, there are wide variations among procedures in States.
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SAPREP Committee Set-up - April 2012, Recommendations made – Jan 2013
• Committee comprised representatives of Ministries, States, experts, other stakeholders.
• To examine select best practices in India on streamlining building plan approvals.
• To study prevalent models - where building plan approvals by certified architects.
• Suggest a methodology (with IT) for fast tracking Central/State building clearances.
• Suggest approach for single window clearance mechanism, giving specific focus on
– simplification of procedural aspects,
– formulating single composite form with complete listing of requisite documents
– measures to boost Affordable Housing.
• Examine problems of Consumers.
• Examine need of Capacity Building.
• Methodology adopted - before making recommendations, extensive consultations with stakeholders – and recommendations kept on website – comments fully considered.
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• Extensive secondary research on current practices followed in various States & challenges
• Feedback collected from states via questionnaire
• Invited public comments
• Discussion in Committee and Sub-Committee Meetings
• Industry consultation was undertaken through conferences & forums
• Suggestions from industry bodies CREDAI, NAREDCO, FICCI, TCPO, Govt of Rajasthan, Value Budget Housing Corporation, HDFC as well as international best practices shared by RICS were collated
• Process flow charts shared by industries bodies studied to draft an indicative comprehensive flowchart for the country, identifying sequential and parallel activities
• Technology systems evaluated in detail through separate meetings & discussions
• Studied various application forms and NOC formats to recommend a sample ‘Composite Application Form’ which can be used to supply information required by various departments
Multi-pronged approach taken to study the issues in detail; views taken from State & local Governments, industry bodies and few private players
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Problems examined - 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 framework
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PARRALEL PROCESS OF SERVICE INSTALLATIONSPARRALEL PROCESS OF OBTAINING VARIOUS NOCs
Land Title Planning & Land Construction of Buildings
NOCs from Central Depts
Service / Utilities Installations
Revenue Department (Tehsildar)
Ownership Certificate / Patta /Chitta
State Town Planning / ULB
Non encumbrance Certificate
Department of Town Planning (State Level)
Zoning / Site Layout Approval
In accordance with Master Plan/City Dev
Plan?
Urban Local Bodies (ULB)
In accordance with Building Bye-‐Laws?
LOI for Building Plan Approval
Central / State -‐ MoEF
Environmental Clearance
Central -‐ AAI
Distance & Height Clearance
Central -‐ NMA
NOC for Heritage buildings
Central – Ministry of Defense
NOC for Defense Establishments
Central – Central Ground Water Authority
Bore well Registration Certificate
Central – Coastal Zone Mngt Authority
NOC for Coastal Zone
Central/State – NHAI /PWD
Road Access
State – State Pollution Board
Consent to Establish / Operate
DG Set Installation
Central/State – Forest Department (MoEF/State Dept)
Tree Cutting Approval
State/Local – Fire Service Dept.
NOC for Fire
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3a
Building Permit / Development License
Completion Certificate
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NOCs from State Depts
Applicant / Developer
3b 3b
Occupancy Certificate7
LOI for building plan approval obtained?All NOCs obtained?
Urban Local Bodies (ULB)
Developer submits Application for Zoning
Approval
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Conversion of Land OR Land Use required?
Yes
Department of Town Planning (State Level)
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No
State Board
Water Connection
State Board
Sewerage Connection
State / Private
Gas Connection
State / Private company
Power / Electricity Connection
MTNL / Private Operator
Phone Connection
Developer submits
Application Building plan Approval
Developer submits
Application for
Demarcation
Construction begins
Engineer handed
over plot?
Commencement inspection
Completion inspection
Conversion of land or Change in Land Use
CATEGORY OF APPROVALS
DEPARTMENT
TYPE OF APPROVAL
# IMPORTANT SEQUENCE/STEPS
LEGEND
Developer issues …lengthy and cumbersome processes, developer to approach multiple authorities, sometimes snake and ladder situation
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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 issues
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With IT enabled one-stop shop, Hong Kong and Singapore at no. 1 and no. 2 ranks respectively, for ‘dealing with construction permits’
International best practices
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 permit
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Recommendations by SAPREP Committee
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6 Key Pillars to streamline real estate project approvals
Key recommendations
Review of existing
procedures & sharing
best practices
2 Single
Window or ‘One-Stop
Shop’ enabled by
IT
3
Special dispensation
for affordable
housing
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Capacity building in
private and public
sector
6 Transparency, predictability
and accountability
to protect consumer
interest
Compendium of process
and timelines for all Central
& State approvals
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Single Window Clearance Mechanism with all forward and backward linkages at Central Govt/State Govt/ULB/Panchayat levels
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Compendium of process and timelines for all Central & State approvals Specific Recommendations
1. Compendium of process & timelines across Central & State Government Depts
2. Clarity of sequential and parallel processes
• An indicative flowchart of the overall process for real estate project approvals has been drafted and included in the report
• Detailed flowcharts for each type of approval have been documented as starting point / reference
3. Composite Application Form (CAF)
• A sample of CAF has been drafted and included in the report
4. Standard checklists (along with listing supporting documents required) to be compiled by States to minimize error and processing of incomplete applications
5. Nodal agencies or contact points - All State Government and approving authorities are urged to compile a list of nodal agencies or list of people (designation, email id and phone numbers) responsible for each type of approval
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Review of procedures and sharing best practices Remove redundancies, simplify process, automate or delegate powers
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1. Consolidate and streamline building laws at State level
2. Remove duplicity or unnecessary approvals activities/documentation
3. Simplify approval process by clearly stating applicable 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
4. Identify procedures that can be automated • Eg online submission of building plans, e-payments
5. Identify procedures that may be delegated • Eg planning approvals (zoning plan or change in land use) can be delegated to local
bodies after adequate capacity building
6. Expedite decision making and clearance of long pending applications
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Examples of State level best practices
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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 given monetary incentives by Central Govt. to undertake procedural reforms
3. States and individuals could be recognized through National Awards
Contd.
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Single Window or ‘One-Stop Shop’ enabled by IT
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Developer/ applicant submits all information and documents in a Composite Application Form
IT Portal acting as ‘Single Window’
will connect various departments
Approval authorities / Department Users will get developer applications electronically
Responses / status updates returned to the applicant
THE BROAD CONCEPT 1. Committee is convinced that a technology enabled ‘single window portal’ is the most efficient solution to streamlining building approval process
2. Recommends two possible systems that may be suggested to States as best practice examples
a. E-Biz by DIPP b. APBAS by Indore
(MP) Govt.
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eBiz Project under National e-Governance Plan (NeGP) - by Department of Industrial Policy and Promotion (DIPP)
Wider in scope across Government depts but not customised to real estate sector
• One stop shop for investment and business related services
• Eliminates the physical interface with regulatory authorities at Central, State and local government levels
• Allows a single payment electronically for multiple services and subsequent splitting and routing of payments to individual departments and agencies
• Platform for multi-departmental cooperation in data sharing/ verification and service delivery
The Committee is of the view that the eBiz Project can be extended to real estate sector with reasonable effort
Investor
Industries Labor
Pollution Control Board
Industrial Development Corporation
Commercial Taxes
Excise
Water & Sewerage Board
DISCOM
Fire Service
Drug Controller
Municipal Authority
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Automated Building Plan Approval System (ABPAS) - developed by Madhya Pradesh with DFID support
Designed for real estate sector but current scope limited to building approvals only
• Online features: submission of building plan; scrutiny as per existing regulations; payment and tracking of application
• Successfully implemented at Indore for last 2 yrs
• Will be replicated to all Municipal corporations of MP by June 2013
• Future plans: integration with approval processes for Change of Land Use at State Govt. and for NOCs from Central Govt. agencies
The Committee is of the view that ABPAS’ scope can be expanded with customization for replicating across states
By Municipal Corporation • Total project cost is 2 crores • No upfront cost to Mun. Corp. • The project is on transactional
basis (2 crores sf area in 2 yrs) at a cost Re1 psf
By Vendor • Upfront finance cost • Application software -
AutoDCR customizations, + 2yr maintenance
• 5 persons operational team
FUN
DIN
G
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Transparency, Predictability and Accountability to protect consumer interest - Specific Recommendations
1. Easy access to building approval information and status updates to avoid pre-sales of projects without requisite approvals
2. Strengthening regulatory mechanisms to enforce building standards; ensure quality
• Uploading a list of all approved projects on websites of local authority
• Advertisements to contain accurate information about the approvals recd by developer
• 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
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Special dispensation for affordable housing Specific Recommendations
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1. Adopt clear ‘definition of affordable housing’ projects, as defined by AH Taskforce Report
2. Increase supply of housing through special provision in building codes
3. Streamline approval procedures to encourage private development of affordable housing
• Review densification or built-up area norms with specific provisions for ‘affordable housing’ as part of Part III, Annex C of National Building Code, which lays out the norms for low cost housing.
• Standardize building plans and specifications to encourage ‘manufacture’ of houses rather than ‘constructing’
• Fast track process/ green channel with 60 day clearance window
• Nodal agency to act as ‘Single window’ & coordinate approvals from different authorities
• MoEF may consider special dispensation for affordable housing projects
• by relaxing the threshold for environment clearances from 20,000 sqm to 50,000 sqm
• automatic environment clearance of affordable housing projects which have obtained green certification (under LEED OR GRIHA Environment Rating Systems)
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Capacity building in private and public sector Training in-house staff; outsourcing and empowering private sector
1. Urgent need to build capacity of urban planners at local level, who are competent in town planning laws to be able to award planning permissions, hence reducing the time delays
2. MoHUPA to take the lead in building capacity of civil or structural engineers and surveyors who need to be trained in building codes & regulations, to expedite building approvals in local authorities. State Governments are also encouraged to conduct such training programs.
1. Build capacity in local bodies by training ULB staff in ‘planning & development’
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Capacity building in private and public sector (Contd.)
a) MoHUPA may issue guidelines for empanelling and licensing ‘competent professionals/surveyors’ along with minimum competency criteria
– Architects – to review and verify building plans & zonal/layout plans for building projects
– Civil / structural engineers – to review building plans, construction; structural design requirements
– Surveyors (referred to as ‘licensed surveyors’ in State & Local laws) – to review adherence to stipulated building codes and bye laws, including site inspection (for commencement & completion certificate)
– Lawyers and law firms – to verify legal documents including ownership and non-encumbrance certificate
b) States to strengthen the concept of ‘licensed professionals/surveyors’ & empower them to perform certain activities in approval process; e.g. certify building approvals for smaller projects (G+4)
c) Members of credible professional bodies for architects/ engineers/ planners/ surveyors may be considered for empanelment as ‘competent professionals’
2. Empower or empanel ‘competent professionals’ at state/local level to support ULB staff
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Key built environment professions include • Architects • Civil & structural engineers • Town planners • Transport, environmental planner/engineers • Quantity surveyors • Land surveyors • Building engineers /surveyors • Construction project managers • Facilities managers
Prominent professional bodies in India include • Council of Architecture (COA) • The Indian Institute of Architects (IIA) • Institute of Chartered Accountants of India (ICAI) • Royal Institution of Chartered Surveyors (RICS) • Institute of Town Planners, India • The Institution of Engineers (India) • Institution of Surveyors – (IoI)
In developed countries or industries, all organized professions are represented by professional bodies. In India, since various real estate & construction professions are still at a nascent stage, the role of professional bodies is limited
d) MoHUPA may support such professional bodies to take on a much stronger role to lead the development of their respective professions, including assessment of the professional competence of members and regular trainings. This will lead to higher confidence and accountability when members of such bodies are empowered to approve projects
2. Empower or empanel ‘competent professionals’ at state/local level to support ULB staff
Capacity building in private and public sector (Contd.)
e) MoHUPA may also consider constitution of a professional body for construction (civil/structural) engineers and building surveyors, along the lines of Council of Architecture / Bar Council of India
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Next steps
1. Recommendations of the Committee may be approved in principle, after in-house discussion, inter-Ministerial consultation and with any changes as may be needed.
2. A High Level Committee may be constituted for implementation of key action points.
3. National workshop of all State Governments may be organized by MoHUPA to deliberate on the recommendations and identify solutions that need to be adopted across States
4. Immediate intervention for affordable housing - all States to consider setting up a nodal agency (within 3 months) to provide for fast track approvals on affordable housing projects
5. MoHUPA may constitute a Committee to evaluate how building plans and specifications may be standardized in order to encourage pre-fabricated offsite construction of mass housing in India
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Next steps (Contd).
5. All States may initiate the process of moving towards a Single Window Approval System (SWAS) enabled by IT.
− While States have flexibility in determining IT systems that best suit their environment, e-Biz project by DIPP or ABPAS by MP Government suggested could be considered.
− Recommended timeline - States may work towards completing the tendering & selection process and achieving a baseline automated system as soon as possible.
− Recommending funding model - States may consider either funding from Exchequer, or a PPP model, as followed by MP Government in case of ABPAS, under which, competitive bidding may be undertaken in order to have a reputed IT company develop such IT system on a transactional basis (i.e. fee per sq ft approved using the system) without any upfront cost to the State.
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Next steps (Contd).
6. States may consider setting up an Empowered Committee headed by Chief Secretary of the respective State, to meet every 3-6 months, in order to monitor progress in streamlining building approvals
− including implementation of single window mechanism
− setting up of nodal agency and fast track mechanism for affordable housing projects
7. A National Level Empowered Committee headed by Honorable Minister, HUPA may be set up to monitor Single Window Mechanism
− An Annual National Conference with Chief Ministers of States may be convened
− Constitute Best State/Municipal Award to be declared at a national award ceremony
8. For mass housing, move to standardization, and concept of “manufacture” in place of construction, and review norms of FAR, and rigors of clearances to make them simpler.
9. Encourage research on usage of cheaper and locally available materials.
10. Undertake massive program of Capacity Building and Skill-Upgradation in various sectors.
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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
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