Empowering Home Buyers: MahaRERA Introduces Grading for Real Estate Projects

When homebuyers invest a significant portion of their savings in purchasing a home, it becomes crucial for them to understand the potential risks involved. Real estate projects can vary greatly in terms of quality, location, and amenities. Implementing a grading system allows homebuyers to gain insights into which projects align best with their needs and budgetary considerations.

By taking into account the various factors considered in the grading process, homebuyers can make informed decisions about whether a specific project is worth investing in. The grading system helps highlight potential risks associated with real estate investments, including

1. Financial Risks
2. Legal Risk
3. Technical Risks
4. Timely completion risks

It’s important to note that the grading of a real estate project does not guarantee a problem-free experience. However, a higher grading provides homebuyers with a sense of reassurance and confidence in their investment decision. By being aware of the risks and using the grading system as a tool, homebuyers can navigate the real estate market more effectively and make choices that align with their goals and expectations.

Steps of Grading:

The introduction of a grading system in the real estate sector in India is proposed to be implemented in a phased manner. As the sector undergoes a transformation from an unorganized to an organized industry, it is essential to ensure a certain level of maturity before assigning grades to projects. The grading system will be based on several factors, including the promoters’ track record on compliance, legal litigations, quality of project financing, and more. Developing these factors may require time, and therefore, it is crucial to allow the real estate sector sufficient time to mature before introducing grades.

MahaRERA, recognizing the importance of a robust grading system, proposes a graded and staggered approach to its implementation. This approach ensures that the necessary groundwork is laid, and the system is well-established to effectively assess and grade real estate projects in the future. By taking this measured approach, the grading system can be developed and implemented in a manner that aligns with the evolving needs of the industry and provides homebuyers with reliable information for making informed decisions.

Information Disclosure Phase

During the Information Disclosure Phase, the focus would be on objectively listing all project information to facilitate the grading process. This phase aims to provide transparency and clarity to homebuyers by including the following details:

1. Project’s details: This includes vital information such as the project’s location, developer’s background, amenities offered, and any other relevant details that would help homebuyers make an informed decision.
2. Technical Details: The grading system would assess the project’s technical aspects, including the status of various approvals, such as the Commencement Certificate. This evaluation ensures that the project meets the necessary regulatory requirements and has obtained the essential permissions to commence construction.
3. Promoters Quarterly & Annual Compliances, Booking Percentage, Status of Formation of Society, etc.: The grading process would consider the promoter’s compliance with quarterly and annual obligations, booking percentage, and the progress in forming a society. These factors provide insights into the promoter’s commitment to transparency and adherence to regulatory norms.
4. Financial Details: The financial aspects of the project would be evaluated, including any financial encumbrances, progress in financial terms, and the submission of an annual audit certificate. This assessment ensures that the project maintains financial stability and meets the necessary financial standards.
5. Legal Details: The grading system would consider any litigations, complaints, warrants issued, and legal encumbrances related to the project. This evaluation aims to provide homebuyers with information about any legal challenges associated with the project.

By including these details, the Information Disclosure Phase aims to provide comprehensive and objective information to support the grading process and enable homebuyers to make well-informed decisions regarding their real estate investments.

Eligiblity Criteria for Grading the Real Estate Project

Projects registered after January 2023 will be eligible for project grading.

Frequency

The grading process will be conducted bi-yearly, with the first period starting from October 2023 to March 2024. The grading process will begin once the due date for the last quarter’s QPR uploading is completed, which is April 20, 2024.

Parameters for Grading

1. Project Overview
2. Technical Overview
3. Financial Overview
4. Legal Overview

Tools for Grading

The grading will be automatically generated through MahaRERA’s IT solution, MahacRITI, based on the information submitted by the promoter.

Incorporating inputs from industry associations, preliminary discussions were conducted on the aforementioned framework. Public comments are now invited on the proposed ideas, and feedback can be submitted by the latest deadline of July 15, 2023 to suggestions.maharera@gmail.com