Builders struggle to cut red tape | mumbai | Hindustan Times
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Builders struggle to cut red tape

The real estate sector in the city continues in bad shape, with homebuyers giving up on buying a house because of skyrocketing prices and builders struggling through the bureaucratic tangles involved in getting a project cleared. Naresh Kamath reports

mumbai Updated: Sep 25, 2012 01:08 IST
Naresh Kamath

The real estate sector in the city continues in bad shape, with homebuyers giving up on buying a house because of skyrocketing prices and builders struggling through the bureaucratic tangles involved in getting a project cleared.

Builders want a single-window clearance system. What they have to deal with now is a host of state and Central departments that take their own time clearing a realty project. A project takes at least two years to get cleared by the government authorities concerned, builders say.

“Real estate has been going through a crisis for the last two years and there is absolutely no relief from the government,” said Anand Gupta, secretary, builders association of India. “We have to get 48-53 permissions from different agencies which rarely coordinate between each other,” he said. About 31 of these permissions are taken from the civic body, but the rest have to come through from both the state and the Centre. “We need a one-window system where all permissions are given within a fixed time frame,” he said.

Several new regulations, such as those issued by the housing regulatory authority, the heritage committee will only delay realty projects, builders say.

Some agencies take a lot of time to clear a building proposal, delaying construction by nearly a year. “The environmental committee meets once a month and takes a year to clear a project. It’s the same story with the high-rise and aviation panels, who meet once a month and take at least six months to a year to clear a project,” said Sunil Mantri, chairman, real estate committee (Indian Merchants Chamber).

“The New Housing Regulatory rules are all one-sided and will see most of the builders getting punished even for issues beyond their control,” he said. The high realty prices and interest rates only make it harder to give buyers discounts. “As banks are reluctant to lend us money, we depend on private lenders who charge minimum interest rates of above 24% annually, which increases the cost of our projects substantially,” Mantri said.

However, some experts insist that builders are responsible for the slump in the market. “Over the years, the builders have been manipulating the system and they now have a very poor image among the public,” said Vinod Sampat, an eminent real estate lawyer. “Builders do not pass on any of the incentives they get from the state to the buyer.”

“Prices are unrealistic and builders will be forced to reduce them anyway,” said Pankaj Kapoor, CEO, Liases Foras, a real estate research firm.
The state government is also looking at ways to cut the red tape. “We are now working closely with the builders to solve the problem,” said Sachin Ahir, minister of state for housing. “Even we want to reduce the gap between demand [for housing] and supply and are easing several rules to make this happen.”