The complicated and lengthy process of seeking a construction permit is one of the major deterrents for developers in India. The numerous approvals required from different divisions makes the process time consuming, resulting in a delay in timely project completion. The process has been criticized by experts, who recommend a shorter, technology-driven single window clearance.
The need for housing and proper infrastructure has been ever-growing In India. The real estate sector is playing a catalytic role in fulfilling the need and demand for housing for various classes. However, while undertaking the construction projects such as residential, commercial or industrial project, it has been noted that obtaining a permit for the building projects has become cumbersome and lengthy.
To understand what has been causing these delays, let us first begin by defining what is ‘construction permit’
A construction permit, also known as a building permit is a licence which needs to be sought from authorities for any new construction or adding on top of pre-existing structures and in some cases for major facelifts. In general, the authorities always ensure that new construction is meeting the state and local building codes by conducting inspections during construction and completion phases. However, if any developer fails to procure the permit or meet the requirements, the construction will be deemed illegal and significant fines and penalties will be imposed which can further lead to demolition.
Pratik K. Mehta, Managing Director, Unishire shares that the absolute cost of seeking the construction permit might not be significantly high but the delays add to incremental costs which impact the overall project. Interest costs, re-design costs, opportunity costs, construction cost, etc. all inadvertently impact the overall development cost of the project.
How to seek a permit
The process of approvals are sequential in nature, says Mehta. “We have to initially procure the ‘No Objection Certificate (NOC)’ from various departments,” he added. Subsequently, approvals from the planning authorities are required. The list of NOCs that need to be procured are:
- Airport Authority in case the construction is taking place near airport zone
- Telecom board
- Electricity Board
- Water supply & sewage board
- State pollution control board
- Environmental clearance for projects beyond 20,000 sq.m. of built-up area
- Fire department, in case, the height of the building is beyond 5 floors or 15 meters
- State development authority for development beyond 5 acres of land or in authority zones and for the master plan and layout sanction plan
- Mahanagar Palika for seeking final building plan approvals
- If a property is being constructed near railway Line, nala (drainage), etc - NOC’s from the appropriate department are required
How much time does it take?
Earlier, we could secure all construction permits within six to eight months from the time we acquire the land, adds Mehta. But today, it is an unending process which spans anywhere from 12 to 24 months. In addition, the revenue department and its issues also delay the entire process of planning and approvals.
Challenges faced while seeking the permit
The first and foremost challenge is the lack of coordination between all departments that delays the approval process beyond expected timelines.
Further, sudden changes in planning bye-laws add to the chaos. It has been observed that if there have been amendments in the bye-laws post procuring the NOC, developers have to again make changes in the planning and re-apply for the NOC from the scratch. This not only delays the project commencement but in many cases alters the entire project plan mid-way as well.
Single window clearance is the answer
In order to ensure smooth flow of the process, real estate developers are seeking the introduction of single window clearance as part of the Real Estate Bill as the system is systematic and time-bound.
Experts’ share that most of the cities in the world follow a simple system for construction permits and the guidelines are clearly spelt out. This ensures there is no dependence on the department and the architect designing the development is solely responsible for ensuring its correctness and conformity to guidelines.
In addition, Mehta shares that accountability is another important parameter. But, the recent Real Estate Regulatory Bill lacks the accountability clause that sanctioning authorities should be subjected to in case of delays in granting NOCs or sanctions within a stipulated period of time. At present, the wrath of delay in the project is faced solely by developers.
With the real estate sector contributing significantly towards country’s GDP and overall economic health, hence, strong measures and initiatives are the call of the day. Experts are hopeful that in the upcoming Budget session, they will get to hear some sector conducive announcements.