1 Streamlining Approval Procedures for Real Estate Projects Dhanendra Kumar Chairman, Committee on...
-
Upload
angelina-itkin -
Category
Documents
-
view
221 -
download
0
Transcript of 1 Streamlining Approval Procedures for Real Estate Projects Dhanendra Kumar Chairman, Committee on...
1
Streamlining Approval Procedures for Real Estate Projects
Dhanendra KumarChairman, 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, Mumbai
2
Overview
Importance of real estate and construction sector and key challenges1
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
2
3
4
5
3
Importance of real estate and construction sector and key challenges
4
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
0%
20%
40%
60%
80%
100%
GDP 242 1,346 2,080
Real Estate Services 30 128 197
Construction 28 107 164
2001 2011 2016
Contribution of Real estate and Construction to India’s GDP (USD Bn)
17.5%17.5%
5
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 standards
6
Introduction to the Committee set up by MoHUPA on ‘Streamlining Approval Procedures for Real Estate Projects (SAPREP)’
7
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.
8
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
SAPREP Committee
9
Key findings of SAPREP Committee- Magnitude of the problem - Legal framework and other challenges- Developer’s issues due to existing process- Consumer issues
10
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 consumers
11
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
12
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
1
3a
Building Permit / Development License
Completion Certificate
4
5
6
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
3
Conversion of Land OR Land Use required?
Yes
Department of Town Planning (State Level)
2
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…resulting in a lengthy and cumbersome process where developer needs to approach multiple authorities
12
13
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
14
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?
1
2
3
4
5
6
7
8
9
Consumer issues
15
16
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 practices
17
Recommendations and next steps
18
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
4Share best practices
and incentivize
States
5
Key recommendations
Capacity building in
private and public
sector
6
19
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 processesClarity of sequential and parallel processes
Shift from paperwork and chaotic processes
While Central Government can facilitate these, States will be responsible for implementation
20
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.
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
Review of systems and proceduresRemove redundancies, simplify process, automate or delegate powers
2
22
Single Window or ‘One-Stop Shop’ enabled by IT
3
Nat
iona
l Ser
vice
s D
eliv
ery
Gat
eway
(N
SD
G)
• Application Routing• Processing (Scrutiny, Approval)• Communication• MIS Reporting
Department Portal
Approval authorities /
Department Users
IT Portalacting 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 applicant
23
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 practices3 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 permit
24
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 practices3 Contd.
25
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 specification
26
Share best practices and incentivize StatesRecognize 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 Awards
27
Capacity building in private and public sectorTraining 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 institutions
28
Streamlining building
approvals
Leverage technology to connect departments information flow
Examine approval processes that can be removed, simplified or delegated
Expedite decision making and clearance of long pending applications
Introduce fast track channels for projects that meet ‘affordable housing’ criteria
Build capacity in local bodies
Clear processes and timelines for greater clarity and predictability
Consolidate and streamline building laws at national and state level
1
2
3
4
5
6
7
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
Summary
29
Next steps
• National workshop of all states to discuss implementation – end November
• Pilot implementation of the recommendations in one or two states
30
Your feedback and suggestions….
31
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
32
Thank you!
Dhanendra Kumar, ChairmanCommittee on Streamlining Approval Procedures for Real Estate Projects (SAPREP)
and Former Chairman, Competition Commission of India (CCI)
Email - [email protected]