Telangana Government Proposes Major Reforms to Ease Real Estate Compliance
In a significant move aimed at streamlining operations and reducing financial burdens in the real estate sector, the Telangana government is actively considering a series of amendments to building regulations. These proposed changes address critical areas such as mortgaging built-up space, payment of building fees, issuance of no-objection certificates (NOCs), project timelines, and floor heights.
Reducing Mortgage Requirements to Lower Costs
The state has agreed, in principle, to reduce the mandatory mortgaging of built-up space from 10% to 5%, following persistent requests from builders' and developers' associations. The remaining 5% will be covered through a combination of a 2.5% city-level infrastructure impact fee and 2.5% security under the Non-Agricultural Lands Assessment Act, maintaining the overall requirement at 10%.
Currently, builders are required to mortgage 10% of their built-up area with civic bodies when seeking permission for buildings above ground plus two floors. This provision, introduced nearly two decades ago, was designed to ensure compliance with building norms. The mortgaged portion is released only after submission of an occupancy certificate (OC), and if deviations are found leading to OC denial, the area is not released.
Representatives from the Confederation of Real Estate Developers' Associations of India (CREDAI) have argued that this clause is unique to Hyderabad and imposes an unnecessary financial strain on developers, ultimately escalating housing costs. They contend that with the Real Estate Regulatory Authority (RERA) in Telangana enforcing stringent financial safeguards—including mandatory retention of 70% of project funds in an escrow account until construction completion—the mortgage requirement has become redundant.
Streamlining NOCs and TDR Processes
On the issue of NOCs for buildings and layouts near water bodies, the government has declined to delegate powers to irrigation assistant engineers. However, it clarified that where the full tank level of water bodies has been officially notified by the irrigation and revenue departments, a separate NOC from the irrigation department will not be necessary for approvals.
Regarding transferable development rights (TDR), the government decided that builders will only need to submit TDR details after the civic body generates the fee letter. This follows a recent decision mandating 10% TDR for buildings above 10 floors. Builders had objected to the practice of the Greater Hyderabad Municipal Corporation (GHMC) and Hyderabad Metropolitan Development Authority (HMDA) insisting on TDR certificates at the plan approval stage, seeking permission to apply for building plans with TDR floors without producing certificates upfront.
Revised Project Timelines and Payment Flexibility
Project timelines were a major concern, with large projects often exceeding existing deadlines. In response, the government agreed to revise completion periods:
- Individual residential buildings must be completed within three years.
- Non-high-rise residential and commercial projects, along with villa developments of up to 100 units, must be completed within five years.
- All high-rise apartments, gated communities, and villa projects exceeding 100 units must be completed within six years from the date of approval.
Additionally, auto revalidation for two years after validity is already being implemented upon payment of building permit fees.
On building fee payments, while developer associations sought restoration of installment-based payments, the state government said it would consider this request for the GHMC area, subject to interest being levied on delayed payments.
Increased Floor Heights and Design Adjustments
The government also agreed to increase floor height by 10% per floor. Developers had requested a maximum height of 3.3 metres per floor for residential buildings to accommodate heating, ventilation, and air conditioning ducts and false ceilings, and up to 4 metres for villas and gated communities to enhance design flexibility.
For commercial and residential projects, officials indicated that setbacks could be rationalised, and balcony projections within setback areas may be removed, as there is no provision for covered balconies.
Background and Stakeholder Engagement
These proposed tweaks follow sustained representations from builders and developers, who argue that existing rules have become outdated and burdensome. The changes were discussed at a meeting convened by the municipal administration department with representatives of CREDAI, NREDCO, TDA, and other real estate bodies, as the state prepares to notify new unified building rules.
Key officials in attendance included Municipal Administration Special Chief Secretary Jayesh Ranjan, HMDA Metropolitan Commissioner Sarfaraz Ahmad, and other senior figures, all of whom agreed to examine several demands put forth by the industry.
