PROPERTY PLUS

Make them easier, legally

The New Year should hopefully see an elimination of bottlenecks and hurdles for legal construction. A look by Jaithirth (Jerry) Rao

The single most important item that confers dignity on an individual or family is living in a ‘decent’ home. India’s central planning process of earlier years attached importance to the gigantism associated with steel plants and large dams. Housing was too often seen as an item of less relevance. This has now changed. We now make sense of ‘Housing For All’ and are planning to move into the realms of this slogan as a national imperative.

What do we need in order to make this happen? Ironically, what we need most is not a set of positive incentives or subsidies, but an elimination of the bottlenecks and hurdles for legal construction. We have over the years created a situation where it is very easy to build illegally, but extremely difficult to build legally. Is it any surprise that the so-called ‘unauthorised’ dwellings have come up all over the country, even as we struggle to build and make available legitimate homes for people?

Here are some matters that need immediate attention; most of them are in the operating realm of State and local governments, not the Central government:

Change of Land Use is an extremely cumbersome and long drawn out process. Astonishingly we find that even when areas are part of an Urban Master Plan or are close to major highways, it’s a long drawn-out process to get these lands classified as residential or for multi-purpose use. One is not talking about industrial or polluting uses. One is talking about the ability to build a few apartments on land adjacent to a highway or in a peri-urban area. At one stroke, if we were to say that all such land may be “automatically” used for residential purposes, we will see a positive supply of immense proportions.

An obsession

Our urban planners have become obsessed with FSI/FAR. This has led to the development of a large scale “loophole detection” industry which serves no purpose except to confuse, delay and hamper housing growth. Andhra Pradesh has for some years abandoned FSI/FAR. All they have is a regulation regarding the ratio of building heights to road widths and building setback rules.

Why cannot all States adopt this best practice? Again, the impact on urban and peri-urban supply will be immediate and emphatic.

Government agencies are severely capacity-constrained. We just do not have enough qualified Surveyors, Fire Inspectors, Building Assessors and so on. Why cannot every State create a panel of these service-providers after going through an open, transparent, web-based process that can be subject to an audit? These service-providers will provide the certificates just like a Chartered Accountant provides apropos of corporate accounts. As long as the panels are appointed by a process subject to RTI, the service-providers are definitely likely to improve the situation and not worsen it.

We need to establish a progressive tax system, unlike the current regressive one. A stamp duty rate which is the same for a 600 sq. ft apartment and a 10,000 sq. ft luxury bungalow is a blatantly anti-poor, pro-rich tax. We need to reduce the tax burden on smaller homes that are used by the poor and the aspiring middle class.

We can and should use Information Technology (which we claim to be good at) in order to make it easier to build homes. The city of Indore has an excellent web-based transparent building approval process. Why cannot all cities in India adopt this best practice?

Make rental path get easier

And finally, many who cannot afford the skyrocketing EMIs to buy a home should have an affordable rental housing as an alternative. Again, we have positive disincentives for renting, resulting in home-owners keeping their properties empty, while at once being a waste of national resources. When you rent your flat the Municipal Corporation classifies your property as ‘commercial’ and raises the taxes. Power tariffs are also raised. To register the lease, not only do I have to pay high stamp duty, but my tenant and I have to waste a whole day at the registrar’s office. No wonder we have so many empty homes, even if there are millions of willing tenants who would like to live there. Can we not make renting-out easier? Again there is no need for subsidies, let’s just get rid of hurdles.

As a country, we run a very serious risk of widespread social revolt unless the desperate needs of housing of our people are better addressed. Just like the government is focussed on improving India’s position in the Ease of Doing Business rankings, the States and cities should be encouraged to compete in an Ease of Housing ranking. This may help provide the much-needed roof with acceptable procedures to follow.

(The author holds a Master’s from IIM-Ahmedabad and is a Karnataka State Rajyothsava awardee. He is an entrepreneur-in-residence at the Harvard Business School and a lecturer at IIT, Bombay).

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