How Model Building Bye-Laws Will Make Housing More Affordable

Imagine being a doctor who needs the approval of various government agencies before doing anything of significance. May be this is the reason why surgical procedures and instruments do not always need the approval of authorities, unlike drugs. However, this does not change the fact that the risks involved with drug usage apply in the case of surgical procedures and instruments, too. It is true that such regulatory barriers will save many lives. But, it is also true that a generation of patients may die before the government approves certain surgical procedures or instruments. The point is not that such regulations are necessarily harmful; such regulations do not always pass the cost-benefit test. This is why regulators, intellectuals, politicians, activists and ordinary people are quite inconsistent in applying such highly scrupulous standards to every service that is performed in the market.

Indian real estate developers face similar barriers. Developers point out that regulations delay the delivery of houses by at least three years. Unlike in doctors' case, the barriers developers face are not seen as life-and-death matters by the general public. However, this does not change the facts.

The right tool

The model building bye-laws released recently by Union Urban Development Minister M Venkaiah Naidu are intended to make the regulatory approval process faster. The bye-laws, for example, allow urban-local authorities to grant construction permits within a short period of time, complying with the regulatory framework. Authorities will also have the power to monitor solar power generation and rainwater harvesting. As these are important services that local authorities and governments perform, delaying them would harm people as much as a delayed drug or surgical procedure would. In fact, generations of people have lived and perished in congested spaces in large Indian cities, without good water supply and sanitation. This is why such reforms are important.

• If the model bye-laws are implemented, developers will not need separate environmental clearances. Even though environmental regulations may make sense in certain contexts, such regulations are more stringent in Indian cities when compared with cities of developed countries. More importantly, many such regulations do not seem to serve any legitimate purpose. For example, according to former World Bank researcher Alain Bertaud, coastal zone regulations imposed in Mumbai would have prevented cities like New York, Hong Kong, Singapore, San Francisco and Rio de Janeiro from being built.

• If the new model building bye-laws are implemented, there will be different environmental laws for buildings which are 5,000 to 20,000 square metre (sq m), 20,000 to 50,000 sq m and 50,000 to 1,50,000 sq m. Small buildings will receive approvals faster than larger ones because lower risks apply to them. As most developments in India are small in nature, this may make housing affordable for many buyers. This will also lower uncertainty in the real estate markets which is a major reason why demand for under-construction projects is low. As developers need to approach at least 35 agencies before undertaking any project, legislation to set developers free are long overdue.