Developers are now looking for single-window clearances, a subset of ease of doing business, for timely completion and delivery of their projects, an obligation that the Real Estate Regulatory Act (RERA) now expects from them. The developers feel that the time taken to get the clearances, both at the state and municipal levels, has been the biggest drag on the timely completion of many residential projects. According to a report by the Confederation of Real Estate Developer’s Association, it takes up to three years to start a project after the land is acquired. By this time, the cost of land rises by 24-30% due to hefty interest payments as bank loans are not available for procuring important raw material in this sector. This cost ultimately gets passed on to the customer. And therefore, a simpler and uniform process of getting the mandatory approvals will help bring home prices down by 20-30%.
The RERA paves the way for setting up a regulator for the sector that has largely remained unorganised. The expectations from the regulator are huge. So, without ensuring that the approval process is not delayed by civic agencies’ inaction, “the regulator may inadvertently add another layer to the longer processes already delaying projects,” says Anuj Puri, chairman and country head, Jones Lang LaSalle. The act also empowers the buyers by subjecting errant developers to adhere to standardised practices and be more transparent in their dealing with home buyers. Unfortunately, the unorganised segment has so far represented the largest share of India’s real estate market, and “it is in this segment that the consumers have been held hostage to by unscrupulous practices of ruthless developers,” says Anil Pharande, chairman, Pharande Spaces, a Pune based real estate developer.
Puri appreciates the steps being undertaken by the Central government to remove red tape from the government departments. The sector expects that similar enthusiasm be imbibed by the various states along with its civic agencies. The Ministry of Environment, Forest & Climate Change has come out with much simplified norms for providing clearances which would soon be notified. Similarly, the Ministry of Culture aims to reduce the time taken for getting its approval from 90 days to just 72 hours by energising a mobile based app that would facilitate online approvals for construction in the vicinity of historical monuments.