Delay in procuring approvals from the authorities is still the biggest challenge for the real estate sector and as many as 53.6 percent of developers want the development authorities to be brought under the purview of the RERA Act to make them accountable.
Around 30 percent of builders want an escalation clause incorporated in the sale agreement, a report titled NCR Real Estate Survey Report 2022 by Credai-NCR said on July 6.
Asked as to what is the single most change you want in the RERA Act, as many as 53.6 percent of respondents said they wanted development authorities brought under the purview of RERA for delays witnessed in procedural work and approvals and to be held accountable for the delay in providing infrastructure, dispute free lands, arbitrary increase in charges.
As many as 30.9 percent want that the escalation clause should be introduced, the survey said.
As many as 35 percent of developers confirmed that approvals are still not regulated and 32 percent of the respondents felt an absence of a regulatory framework to keep a check on the prices of raw materials.
As many as 30% want that the Agreement to Sell should have an inbuilt escalation clause in case the raw material prices increase beyond a certain percentage as has been witnessed in the past. This is necessary to ensure project delivery and viability, the report said.
Addressing a press conference, CREDAI-NCR president Manoj Gaur, said that the “bylaws state that the authorities are expected to give approvals within 90 days. We are dependent on the authorities to provide clearances for our projects. It is the Authority’s responsibility to provide basic infrastructure such as electricity, water on time and give all approvals in a time-bound manner.”
If it takes a developer more than a year to get approvals in place and eventually launch a project, the interest for that period would have to be included in the cost of the product. If the costs for obtaining approvals and compliances are high, the price of the housing product too will be high. It is, therefore, essential that the single window clearance is in place to facilitate ease of business and timely completion of projects, he said.
He was also of the opinion that the majority of projects that have been delayed are those that were launched before the enactment of RERA
Commenting on the escalation clause, Gaurav Gupta, general secretary, CREDAI-NCR, said that “If the Agreement to Sale does not have an escalation clause, there are chances that the project may become unviable. To avoid this we will write to RERA to have an escalation clause incorporated in the agreement. Most infrastructure projects that are to last for more than 36 months have an escalation clause. Similarly, real estate projects should also include this provision,” he said.
The survey also said that 68 percent developers in Delhi-NCR do not see any impact on housing demand from the recent hike in interest rates on home loans.
The survey was conducted between June 21 and June 30 by CREDAI-NCR, over 120 respondents, all owners and directors, participated. The NCR chapter of CREDAI has around 150 member developers.
The survey also said 82.5 percent of developers plan to launch new projects this year. Over 76 percent respondents prefer to launch housing projects. Nearly 50 percent want to bring affordable housing projects in a price range of Rs 3000-5000 per sq ft.
As many as 58 percent developers listed disruption in work due to pollution and other regulatory orders while 56 percent were of the opinion that red-tapism in routine work led to inordinate delay.
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