Single Window Clearance

In-depth analysis on Single Window Clearance 

To end this byzantine procedure that stalls the growth of the Real Estate industry, the government is working on the much needed 'Single Window Clearance' system for layout approvals and building permissions that is expected to bring transparency to the Real Estate industry. Single Window Clearance is a major component of 'Ease of Doing Business' that will bring business friendly environment to the business community. It is expected that by bringing 'Single Window Clearance' it will help streamlining the time consuming processes also would bring down the prices of the projects to some extent. In addition it would help the home buyers to meet financial obligations by early loan payments. Also, the country's massive housing shortages will also come to an end which will boost the government's aim of 'Housing for All'. To achieve the target of 'Housing for All' recently the Maharashtra State Government and National Real Estate Development Council (NAREDCO) signed a Memorandum of Understanding (MoU) during the 'Magnetic Maharashtra: Convergence 2018', which will provide 3 lakh affordable houses in the Mumbai Metropolitan Region (MMR). The proposed investment has been valued at Rs 90,000 crore on behalf of NAREDCO to create 3 lakh affordable houses under Pradhan Mantri Awas Yojana (Urban).

The State Government of Maharashtra will facilitate the members of NAREDCO to obtain necessary permissions, registrations, approvals, clearances, fiscal incentives etc, from the concerned departments of the state as per the existing policies, rules and regulations of the Government of Maharashtra. The MoU will have the state government working towards a process for speedier permissions and clearances for these affordable homes.

Elongated 'Single Window Clearance'
Briefing on the current progress of single window clearance and it implementation Raman Sapru, President, EPC, Omkar Realtors and Developers Pvt Ltd says, “The present government in the state and the center are in the sink to promote single window clearance and have formed policies to bring down the number of approvals from the existing to almost 50 per cent now for speedier completion of the project which used to get delayed owing to the long list of the approvals process. Government should further bring down the number of approvals to a bare minimum and set the approvals faster ensuring assured and timely delivery of projects to consumers. Government is gradually moving approvals on to a web-based platform which will mean application, tracking, and issuance of approvals will all be all on a single website.”

“Providing single window clearance has been a long-pending demand of the Indian real estate sector, which has been pushing for it for many years. Even in the recent Union Budget 2018-19 did not address it,” states Anuj Puri, Chairman, ANAROCK Property Consultants. He adds, “With stringent norms under the RERA regime that necessitate accountability, transparency and timely execution of projects, it is imperative that project clearance timelines are reduced to the maximum possible. Only then will developers will be able to execute projects as planned and will not load 'buffer periods' into the committed delivery schedules. Considering the huge thrust towards affordable housing, a single clearance window becomes even more important because even a slight delay in getting approvals can push forward the construction timeline of projects, often making the projects altogether unviable.”

Single window clearance has been a long-pending demand of the Indian real estate sector. However, red tapism and bureaucracy have been the biggest setbacks to achieving this. Unlike RERA, which brings transparency in the sector, there is no such policy or reform that brings similar transparency and speed in the approval systems. With single window clearance, the developers will be able to expedite projects faster, believes J.C. Sharma, Vice Chairman and Managing Director, Sobha Ltd.

He adds, “We are hoping that the government will soon look into the demand for single window clearance, as it has done in the past by implementing several progressive reforms for the sector.”

The time taken for approvals and clearance of a real estate project may sometimes impact the project time cycle. The implementation of 'Single Window Clearance' will play an important role in helping developers crunch the time cycle for completion. With a focus on timely delivery of projects (post RERA), the need for 'Single Window Clearance' is increasingly becoming the need of the hour. “The Single Window Clearance system for real estate projects has been a longstanding request from developers. At this juncture there is not much certainty as to when this will come into the picture. But the fraternity is, and we are hopeful that the concerned authorities would take appropriate measures to implement the system very soon,” states Ashish R Puravankara, Managing Director, Puravankara Ltd.

Sachin Bhandari, CEO, VTP Realty points out believes the approval of single window clearance has elongated for quite a long time now and is one of the major concerns as it deals with delayed projects and inflated prices. Ideally, it should have been implemented after RERA came into the picture. When Budget 2018 was announced, developers had thought that it would include something about single window clearance but delay in implementing it is decreasing the positive hope it had created.

Single window clearance can significantly eliminate unnecessary delay of projects for no fault of developers. It can significantly eliminate unnecessary running around of developers from pillar to post at different places at different time periods to get the clearances for the same project, states Parveen Jain, CMD, Tulip Infratech Pvt. Ltd.

He adds, “If any of the clearances gets delayed, all other clearances also get delayed resulting in a chain reaction and the delay of the whole project. In a single window clearance, as all the clearances shall get
done at the single window as the name suggests and the developers can focus on their core business of project execution benefitting the end-users who shall get the timely delivery of their homes. The central government is pushing forward the matter of single window clearance and it is for the state governments to decide when to go
for the same.”

Delays on-boarding of single window clearance
Complexity in implementing
Informing about the delay in fulfilling the demand for single window clearance Ashish R Puravankara, Managing Director, Puravankara Limited says,” The regulatory authorities are working towards bringing in uniformity into the realty industry system. However, the delay in the on-boarding of the 'Single Window Clearance' system is owing to the complexity of its implementation.” Establishing such a system might not be an easy task in a market like India, considering the diversities that occur from region to region. Also, the process involves simplification of all legal clearances and approvals on one common platform which is not something that can be achieved over night.

Agreeing upon Puravankara's views Bhandari also believes that single window clearance is complicated to implement. He says, “It is not very clear as to why the mechanism has not been implemented even after it being the need of the hour and also since our government has set a goal of Housing for All by 2022.Its obvious that implementation of single window clearance is quite complicated as it involves various legal/ Technical/ Environment specialist department involvement. So implementation of single window clearance might involve complete raying of their entire individual department.”

Land is primarily a state subject
Land is primarily a state subject, and the process of providing clearance to any real estate project involves sign-offs from various authorities and central and state government bodies, believes Puri. Single window clearance is not just about getting all these authorities under the same umbrella, but also on ensuring that the various systems and processes at play are linked in a manner that makes the flow of approvals smoother. Massive support infrastructure has to be developed so that real estate developers can submit all documents at one place from where they are then systematically distributed to various departments. There needs to be a sequential flow of approvals. Digitisation of all approvals and records is also an important precursor to ensure a smooth single window clearance mechanism and environment.

While sharing his views whether the government is delaying in fulfilling the demand for single window clearance Sapru says “No, not really. The governments over the years understanding the need for faster timely delivery of projects safeguarding consumer and developer interest have brought down the number of the process as demanded by the industry from time to time. Due to the involvement of multiple agencies which used to operate independently and at an arm's length the process of bringing all under a single umbrella is a tedious and time-consuming process. The present governments in the state and center have introduced RERA, GST to ensure buyers get what promised and to aid this, the state government has ensured speedier approvals from local municipal body BMC and the environment and aviation ministry at the center by way of single window clearance. So we are definitely making progress towards the final goal.”

With the involvement of multiple agencies in process of clearing applications to sanction due approvals for any of the real estate projects at state, local and central government level is a time consuming system, believes Dr. Niranjan Hiranandani, Founder and CMD, Hiranandani Group. Also he says, “These system are driven with 'human interface' which now the government has realised the dearth to replace it with digital programming method. Now, with the shift in focus inclined towards the digitisation of approvals will reduce the discrepancies, time lag and expedite the process flow. The need for single window clearance with integration module is crucial for the industry's performance. Although, we are moving into the right direction, with online approvals and responses granted under RERA Act, there is need to fasten up the process.”

Positivity in the 'Real Estate'
The government has very keenly implemented reforms such as GST, RERA which has transformed the real estate industry. This transformation can be both positive and negative and with this reform the industry can also get a good push or can see a downturn.

On being positive about the real estate industry Puravankara says, “The outgoing year has been a turnaround year for the real estate industry. It has been a year of transformation which made the entire realty industry transcend from an existing old system to a better and stronger ecosystem. In the process, this also revived the hopes and aspirations of all stakeholders involved.”

He adds, “The year 2017 is a stepping stone for the real estate industry to take a leap into a brighter future. It was among the few industries which not only witnessed multiple reforms (in 2017) but was also the ground zero of all structural reforms. With the introduction of policy reforms which consisted of RERA and GST, this ensured greater transparency and accountability in the overall industry. Though the first half of the year witnessed a temporary market slow down, post this the real estate market picked up with renewed consumer confidence which lead to an increase in new property bookings for the remaining part of the year. Taking after this positive buyer sentiment, the future looks more than promising for the real estate sector.”

Well Indian real estate is seeing a transformation in terms of introduction of compact housing for the migratory populace from villages to cities in search of job. Most developers understanding the need of rising need for smaller ticket size housing have introduced compact 1, 2 and 3 BHK measuring from 320 sq. ft. to 700 sq. ft. respectively, observes Raman Sapru, President, EPC, Omkar Realtors & Developers Pvt Ltd.

Omkar Realtors and Developers project Omkar Signet offers 1 and 2 BHK measuring 320 sq. ft. up to 480 sq. ft. respectively under Rs 1 crore. While other project Omkar Lawns and Beyond at Andheri East both on Western Express Highway offered 1,2 and 3 BHK measuring 347 sq. ft. to 700 sq. ft. approximatley were priced between Rs 83 lakhs to Rs 1.6 crore. The major highlight of both these project most of the inventory was sold in first 3 days of the launch. “So, the real estate in Mumbai is on the upswing reason being the complete sell out of the projects,” states Sapru.

“If we compare the performance of real estate from the past 3-4 years, it has been a little slow in terms of growth in prices and sales,” notes Bhandari. He adds, “But after the announcement of reforms such as RERA, GST and Demonetisation by the government, the picture of 2018 is surely looking better. Real estate market at this point in time is going through a transitional phase. These reforms are helping in shaping up the industry to a more consumer friendly market. The confidence of the buyers is already on rise and sales are likely to pick up in 2018. Affordable Housing will surely give a push to the sector after receiving the much needed infrastructure status from the government.”

Despite the implementation of forward-looking reforms by the government, the sector continues to brace challenging times. This is because the noticeable benefits of these policy initiatives are yet to reflect, resulting in fewer launches and slower sales, notices Sharma. However he adds, “As we move forward, the sector is expected to consolidate by weeding out non-serious players reluctant to transform themselves and is helping in creating a level-playing field for organised players. We are confident that the sector will see significant growth on a sustainable basis in this new liberalised post reform era, with Sobha playing an important role.”

As per Puri, amidst massive structural changes and policy reforms including demonetisation, RERA and GST, the ways and means of doing real estate business have changed for good. Developers are re-orienting themselves to the changing market conditions and trying to shed obsolete practices based on how things worked in the past few decades. Although this is a positive change and will surely benefit the sector in the long-term, home buyers are quite puzzled with the current situation and are not falling over themselves with making purchase decisions. However, the right project at the right locations, developed by reputed builders; still do see sales traction even under the current market conditions.

How 'Single Window Clearance' to help project execution
Single window clearance remains one of the long-awaited demands of the real estate sector in India. The tedious approval process for a project can take up to 18 months to 36 months before beginning the construction. Similarly, a project requires 50 No Objection Certificates (NOCs), with each NOC taking approximately 4 to 6 months. This delays the delivery of project and increases the cost by 10 to 30 per cent. “Single window clearance will not only speed up the approval process but also simplify it, enabling developers to bring down the cost of the project and assure timely delivery by bringing down the timelines by at least 3 years. Buyers, in return, will be able to see price correction in their markets,” informs Sharma.

Informing on how 'Single Window Clearance' can significantly help developers to focus on their core business of project execution Puri says, With single window clearance, developers will not have to run from pillar to post seeking various necessary approvals. Once a single approval window is in place, they will be in a better position to plan their projects. Developers will be able to submit all documents at a particular location, either in digital or physical format, after which the approval process will be totally managed by the governing authorities. This will enable developers to focus completely on their core capabilities of project execution without worrying about clearances being in place. This will not only reduce the overall project execution cycle time but also weed out any malpractices and make the end-products more affordable to buyers, as well.”

Sapru believes, if all the necessary approvals for the construction of the project is through a single window the developer can complete the process of projection execution faster, which usually gets delayed awaiting clearance from various authorities namely aviation, environment, CRZ and state and BMC level approvals. With all the clearances through a single window, the developer can give complete focus on completion of the project rather than chasing the approvals. The current time of 12 to 30 months required for the approvals can be brought down to a few months through a single window system.

As per Bhandari, Single Window Clearance can significantly help developers as it considerably reduces the overall projects cycle time. For achieving the target of Housing for All by 2022, the government needs to focus on speedy approvals. Developers should get clearances for affordable-housing projects on priority basis as well as plans should be pre-approved. Getting approvals later is time taking and sometimes takes up to a year. If developers can get all the approvals from one place or a single body, a lot of time can be saved. This will certainly help them in achieving the target of all the reforms as well as provide their properties to the buyers on time. There are several approvals required because of which it leads to uncertainty, more time consuming, which leads to increase in cost which is ultimately passed to customer. Ultimately it affects the industry progress.

Single Window Clearance will facilitate the obtaining of permissions in a simplified, timely and rationalised manner. Such a system would further usher accountability and transparency into the post RERA market which inadvertently would further amplify the consumer sentiment and demand. With the single window clearance system in place, the approval time would come down significantly and this would help developers expedite and concentrate on core construction areas (designing and construction) at their projects, avers Puravankara.

Initiatives to create a conducive business environment for the developers
“Indian, real estate is the second largest employer after agriculture and is slated to grow at 35 percent over the next decade,” states Sapru. The union government and state governments have taken several initiatives to encourage the development in the real estate sector.

• The smart city project, which plans to build 100 smart cities, is an opportunity for real estate companies.
• Brihanmumbai Municipal Corporation (BMC) has introduced a single-window clearance for construction which will cut the time taken for getting approvals for speedier completion of building projects.
• An easier regulation proposed by The Securities and Exchange Board of India (Sebi) for Real Estate Investment Trusts (REITs).
• The Indian government has brought into force the Real Estate (Regulation and Development) RERA Act, 2016 a step towards protecting the interests of consumers and promoting the growth of the real estate sector in India and moving the industry towards a more matured stage and level the playing field for developers.
• India's Prime Minister Narendra Modi mission Housing for All by 2022 mostly for the economically weaker sections and low-income groups to be achieved through public-private-partnership (PPP) and interest subsidy.
• Gradually all the archaic laws are being overhauled to accommodate the changes in how business is done now.
• A tremendous push to a digital environment is bringing in the revolution in how a lot of business activities are conducted.

Dr. Niranjan Hiranandani, Founder & CMD, Hiranandani Group says, “Ease of doing business is among the leading initiatives. The Indian government currently has systematically worked at reducing numbers of permissions and clearances, and the industry hopes they will do the needful within a short span of time.”
The year 2017 was a historic year for the economy at large and the real estate sector in particular. Several historic reforms and policies were rolled out. “The affordable housing segment received a huge impetus in the form of infrastructure status. It not only transformed affordable housing segment into the next big opportunity for Indian developers but also laid the foundation for revival of housing demand in India. This was followed by the implementation of the game-changing policy of Real Estate (Regulation and Development) Act, 2016 (RERA) that promised to protect the homebuyers' interest and enhance credibility of the sector with focus on transparency and accountability. Another progressive reform that made the year stand out was the introduction of the Goods and Services Tax (GST). It replaced the multiple taxation regimes with a uniform and simple tax structure, promoting ease of doing business,” informs Sharma.
Some of the other notable initiatives that have given a fillip to the realty sector include Credit Linked Subsidy Scheme (CLSS) under PMAY; extension of income tax benefits to apartments of carpet area of 60 square metre and amendments in Real Estate Investment Trusts (REITs). These steps have already paved the way for the overall growth of the sector.
Agreering upon Sharma's view Bhandari believes 2017 has been a significant year for the Indian real estate industry, with the residential segment observing purposeful events by the government to bring in transparency and boost consumer confidence. This year with the implementation of regulatory policies like RERA and GST to give a uniform and straightforward tax assessment, the Real Estate industry looks more transparent, credible and attractive. With home ownership always being a priority ambition and investment objective for most Indians, these changes have been exceptionally positive for the homebuyers as well as the real estate sector. While RERA has made the sector more disciplined and transparent, announcement of the reduction of GST to 8 per cent for all houses qualifying under the credit link subsidy scheme in PMAY has itself been a massive step by the government in order to achieve the goal of making housing for all a reality by 2022.
“Affordable housing – Reduction in GST to 8 per cent, funds will be available at low cost. In the recently announced Union Budget, reintroduction of long term capital gains (LTCG) tax was done by our Finance Minister. This would see many investors paying tax on the gains made by selling of equity after holding it for a year. This will make real estate an attractive option for investment for the buyers in 2018,” informs Bhandari.
“It may not be readily apparent, but the government has actually been creating a more conducive business environment for the entire real estate sector,” says Puri. Structural changes and policy reforms such as demonetisation, RERA, GST, granting infrastructure status to affordable housing and logistics, and tweaking the definitions of affordable houses have resulted in a more active participation of developers in the growth of the
entire real estate sector. With the digitisation of records and enabling business environment under the RERA regime, the Indian real estate sector's future looks a lot more promising
today, and is definitely on a positive growth track.
The authorities have been taking several constructive steps in order to create a conducive business environment for all sectors. For the first time ever, India jumped 30 positions to become the top 100th country in terms of ease of doing business ranking this year. This is a great achievement and encourages business owners to aim higher and invest larger sums in growth. The real estate sector is witnessing a paradigm shift and is moving towards an upward trajectory. RERA is a very significant step towards creating a sustainable environment for both buyers and developers. Initiatives like BHOOMI (launched in 2001) and digitisation of stamp duty records are positive steps and accelerate
over-all growth for the sector, concludes Purvankara.

Hits: 54