User groups in real estate forced to evolve norms when policymakers fail

After crowded roads, insufficient power and water and overload of social infrastructure have led to protests from existing consumers. (Representative image)

In the underregulated, yet overregulated world of real estate, rules are often made in bureaucratic corridors with little thought given to actual monitoring and implementation. So, when the Graded Response Action Plan was created to tackle pollution in the Delhi NCR, one of the key components was to shut down the construction activities that throw up dust and add to the already critical levels of pollution. However, for years the construction industry has been saying that everything within its umbrella is not dust generating. Both statement and counterstatement have been based on approximations.

Recently, affordable property developer Signature Global India Ltd announced a tie-up with Council of Energy, Environment and Water (CEEW) to install air quality monitors at the construction sites. The data from these sensors would be able to provide hard data on which of the 15 construction activities contribute to air pollution and to what extent. Supported by the United States Agency for International Development (USAID), this network of nine air quality monitors and one automatic weather station will evolve into a dashboard on pollution concentrations due to different construction activities.

No-Construction Losses

The trigger for this study is the fact that with increasing air pollution across the National Capital Region (NCR), at least 2.5 months per year are no-construction days. One such long shut-down results in at least another month and a half of wait time till the labour returns and all activities are conducive to restarting construction. According to the International Energy Agency, in 2021 buildings accounted for 30 percent of energy consumption and 27 percent of energy sector emissions (8 percent direct and 19 percent indirect, from electricity and heat used in buildings). In India, it is assumed that construction is a primary contributor to air pollution and hence has to be shut down.

For the Agarwal brothers who are promoters of Signature Global, this data-gathering exercise will prove which of the 15 construction activities generate dust. Those that do not can then be allowed to continue, resulting in a less-than-total loss during these months. Under the Cleaner Air and Better Health (CABH) project, the effort is to use thorough research and on ground interventions to gather data that can push for preventive measures.

Missing Lender NOCs

This is not the only industry which struggles to meet policy aims because computable benchmark data or norms are not available. Take the stuck projects in the real estate industry. Many of the projects have been financed between 2010 and 2012 by formal finance offered to developers by lenders. However, the lenders have, in many cases, issued more money to developers than work that took place on the ground. Bankers were on the boards of the developers for those projects they lent to. However, when the Special Window for Affordable and Middle-Income Housing (SWAMIH) funds propose the last-in-first-out model, existing lenders do not give the no-objection certificate (NOC). As original lenders, was their role not to ensure that the on-ground progress of the project was to be monitored? And if they defaulted, do they still have the moral right to object to completion funds by taking their share out first, once the project is completed?

Today SWAMIH has helped complete over 20,000 housing units. However, the number to be completed in the northern region is over 4.5 lakh units. The fund expresses its capability to take on more priority debt funding to stressed or brownfield projects. But a precondition of NOC from existing lenders stops them from taking on many projects. Should this process not have been defined when the fund was set up? Or at least drafted when the SWAMIH fund is showing its capability to complete projects efficiently? Should lenders not have their wings clipped or at least their returns pared for past misdemeanours? Currently, consumers are fighting it out in courts to prove that lenders have been responsible. In the subvention scheme, the Delhi High Court ruled that the money needs to be returned by the developers who took the funds but did not construct. Many consumers are currently battling the lenders to get the NOCs to get SWAMIH funding.

Noida Authority Dues

A similar objection has been raised by development authorities. Take the Noida and Greater Noida authorities, which the Comptroller and Auditor General (CAG) has called out for violating every rule in the record book to collude with developers. They had taken a 10 per cent payment on land and allowed a moratorium during the building period to builders to construct and hand over the project. So far so good. Then came the collection period. By then the new land acquisition policy was implemented as also the National Green Tribunal’s order that no construction could take place within 10 km of the Okhla Bird Sanctuary.

Over 70,000 home buyers were stuck after paying initial instalments for their houses. Builders discontinued payments and the authorities never moved a finger to find a resolution. Today when the projects are completed after up to 12 years, the authorities have stepped up to take their share, without which the consumers cannot get Occupation certificates. So, whose moral right is bigger? Who is to define that? Clearly, the courts whom the harassed consumers are now approaching. But in the rightness of things, this definition of what the authority can or cannot claim and the timelines for that should have been defined by the law. Where the law is silent, consumers are knocking at the gates of the courts for a favourable interpretation.

Arbitrary FAR Increase

When the Haryana government allowed additional Floor Area Ratio (FAR) to build a fourth floor on single plots, there was very little data to prove that any study had been done on how existing infrastructure could cope with the additional load. After crowded roads, insufficient power and water and overload of social infrastructure have led to protests from existing consumers, the authorities have temporarily halted the sanctions and asked for data. Should they not have first gathered data and got experts to analyse the impact of the fourth floor on the urban form? What’s done cannot be undone in the urban planning or unplanning process. The first objection came from consumers in plotted layouts in Corbusier’s Chandigarh. That quickly spread to Panchkula and now all of Haryana is being reviewed.

Policy making cannot be ad hoc and half-hearted if it has to have its impact. It needs a well-defined base and norms, which can be adhered to. The norms can be challenged later if an authority or a lender objects to them. But not defining the data norms is an even bigger blunder. And when authorities do not do it, the user groups search for answers in courts and developer groups do their own private studies to fill the gaps.

E Jayashree Kurup is a writer-researcher in real estate and Director Real Estate & Cities, Wordmeister Editorial Services. Views are personal, and do not represent the stand of this publication.