MUMBAI: The Maharashtra government's efforts towards reducing the number of approvals needed for a realty project is expected to make private housing relatively affordable. The move is also expected to ease developers' cash flow issues as approvals for their projects will be faster, said JLL India in a report.
The Maharashtra government has asked municipal corporations in the state to work on cutting the number of approvals needed for a realty project.
"For years now, the developer community has been complaining about delays in getting approvals for their projects and red-tapism in government departments, which led to cash-flow issues. That is about to change with the state's new housing policy," said Ramesh Nair, COO - Business & International Director, JLL India.
Toeing the central government's 'ease of doing business' policy, the state government aims to make all permissions/ clearances required from local bodies and the revenue, urban land ceiling departments available online. In a bid to increase transparency, land records may also be put up online.
"If developers pass on the benefits of quicker approvals to home buyers, private housing will become affordable, especially at a time when 69% of Mumbai's unsold housing stock is priced above Rs 1 crore," he said.
An approval cycle consists of key permits like intimation of disapproval (IOD), commencement certificate (CC), occupancy certificate (OC), building completion certificate (BCC), among others. About 40 IOD conditions are to be met by the builder to be eligible for applying for CC. The final authorization to begin construction, which is issued upon submission of all required NOCs and compliance to IOD conditions, is the CC. It is given in two stages: CC up to plinth level, CC beyond plinth level.
OC allows the building company to occupy the building but is not considered a final document because the building company still requires the certificate of completion. The company's architect must submit a formal letter stating that construction has been completed, according to the standards set forth in the IOD and CC. BCC is considered to be the ultimate document that the building company requires to fully occupy the building and connect it to utilities.
According to JLL, an analysis of the number of proposals received and clearances granted by Municipal Corporation of Greater Mumbai (MCGM) for projects in Greater Mumbai over the last decade shows an alarming trend. There has been a massive gap between new building proposals that have come to the MCGM for approval and the number of proposals that were issued for the final clearance, i.e. the BCC.
"An average 1,500 projects entered the system for approval each year, while only 730 OCs and 118 BCCs were granted by MCGM. This suggests that there has been a mounting backlog of projects, which are yet to receive one or more approvals," said Nair. "There could be several other projects, which despite having received an IOD and/or CC, may not have received the OC and/ or BCC and will likely have to wait for a long time if they are to get the final approval at all."
Shocking as it may seem, the building proposals that received OC have averaged just about 46% of the number of new proposals that entered the process for approval over the last decade. The proposals that received the ultimate approval - the BCC averaged a mere 4% in 2013-14. The reformed workflow mechanism would have to process not just new building proposals, but also cope with the massive volume of proposals that are pending further approvals.
Under the new policy, Municipal Corporation of Greater Mumbai will become IT-enabled. Applications for any approval/ NOC will get registered online and the appropriate time limit will start from that online registered date. The IT systems will be so devised that an incomplete application will not be accepted by the system. Any permission applied for will be decided by the Planning Authority within 30 days. The intermittent timelines will be specifically laid down for each level in the process of approval.