Decoding the Real Estate Approval Process in India - SILA
Being a diverse country, the list of approvals required for a real estate development project in India may vary slightly in different states and cities within each state. The various real-estate approvals necessary can be summarized into three broad categories: Pre-Construction, Construction and Post-Construction approvals. However, the residential & commercial real estate industry in India has gone through a comprehensive overhaul with the establishment of the Real Estate Regulatory Authority (RERA) and the subsequent RERA Act passed in 2016. Let us delve deeper into these approval processes, the latest initiatives taken by the Government and future trends that are re-defining the sector at large
Pre-Construction approval processes for a Real Estate project
Every real estate project needs a slew of mandatory approvals for the commencement of any work without which the project will be deemed illegal. A developer must firstly obtain a Non-agricultural order (NA Order) that ascertains that the land is intended for commercial use and must include key identifiers such as survey numbers, land area and boundaries of the project. This is then followed with a detailed survey map of the land being developed and contains a clear demarcation of various survey numbers. These survey maps are maintained by the local authorities and has huge importance since it is attached to a vast majority of the legal documents pertaining to the project.
Following the above processes, the architect then prepares a Master Plan or Layout Approval of the real estate project in accordance with the development rules and regulations unique to the project's location which is then submitted by the developer to the development authority for approval. Post-approval, the developer proceeds to create detailed Building plans that details the structures to be built on the site and is further shared for regulatory approvals. Finally, a commencement certificate (CC) is issued to the developer permitting the start of construction work once other relevant approvals such as the Consent to Establish from Pollution Control Board and various NOCs from the water,fire, sewage and electricity departments are in place.
Construction & post-construction approvals
Construction stage approvals are mostly related to compliance with approved plans and in some cases may require revisions to the building plans based on consultation with the local governing authority. In the event of any changes, the developer is obliged to make the required alterations and re-submit all plan for further ratification by the authority.
Once a project is completed, authorities conduct a final inspection and issue final certificates that certify the project's completion in accordance with the granted approvals. At this stage, developers usually cross-reference the various NOCs issued during the pre-construction stage and are then granted a Completion certificate which certifies that the project has been executed in accordance with the approved plans. Post this, an Occupancy certificate is issued by the development authority that signals that the project is fit and safe for human occupation.
Initiatives taken to fast track the approval process & the role of digitization in bringing about transparency
The establishment of the various RERA bodies across all states in the country has brought about a transformational change in how business is conducted in the fast-growing real estate sector. By making it compulsory to register every new Real Estate Development project under the RERA unit in the state, development authorities have greater visibility of the project details and can monitor progress against the approved building plans. Developers on their part must conform to a list of well-defined guidelines laid down by the Real Estate Act, 2016 and are experiencing faster turnaround time for the various approvals. Other tangible benefits arising out of the implementation of RERA include developers informing buyers of any minor alteration to the building plan, sharing information regarding the project plan, timely completion of the project as per committed timeline and an increase in construction quality due to a defect liability period of five years from project completion. Due to the availability of the project's details on the RERA website, buyers are benefiting from increased transparency and can arrive at more informed decisions regarding the developer and project to invest in. This digitization push has in turn promoted developers to embrace Best practices and increase the efficiency & quality of construction to appeal to more prospective buyers.
Increasing consumer awareness and its impact on sales
The provisions of the RERA Act have also made real estate purchase simpler for the buyer due to the implicit transparency and has provided a unified legal regime across the country. Developers who have maintained a good track record in terms of project delivery are benefitting from greater buyer confidence ultimately leading to improved sales. In case of any issues faced by the buyer, he/she may file a complaint with the RERA unit in the state seeking relief from any violation or contravention of provisions of the Real Estate act or the rules or regulations framed under RERA and this has strengthened the entire ecosystem due to the increased buyer protection. Sales trends in key metro cities have been encouraging despite the COVID-19 led disruption and is slated to grow exponentially on the back of key reforms laid down in the past years.
Due to the increasing importance of good governance and compliance, many developers are now teaming up with Real Estate services-based firms for professional reviewing and monitoring of the entire approval process. This has given rise to a segment of such specialized entities like Mumbai-based Real Estate Platform and Development firm SILA who are partnering with leading developers today to achieve world-class standards in construction delivery, hitherto unseen in the Indian landscape so far.These firms are leveraging their expertise in conducting internal due diligence so that the developer gains from their insights which in turn are leveraged to extract greater operational efficiencies and faster project completion times which bodes well for developers and consumers alike.
