In a first in India, housing projects across Maharashtra will now be graded by the Maharashtra Real Estate Regulatory Authority (MahaRERA). Some analysts believe that while it will help homebuyers filter out unprofessional developers, those with higher grades might cash-in by charging far higher than the prevailing market rates.
First set of grading to happen between October and March
The first set of grading will be undertaken between October 1, 2023 and March 2024. The exercise will be conducted biannually but initially all projects registered from January 2023 onwards will be graded. “As the system stabilises, the authority would seriously consider a matrix to grade promoters as well,” as per a MahaRERA statement. The first grading will be out on April 20 next year.
“Grading shall be automatically generated through MahaRERA’s IT solution MahaCRITI on the basis of the information submitted by the promoter,” reads the consultation paper for review and discussion.
Factors to be considered for grading
Broad factors like project overview, technical snapshot, financial details and legal snapshot would be taken into account. Under these categories, promoters’ track record on compliance, legal litigations, quality of project finance, project amenities, status of various statutory approvals, booking percentage, financial and legal encumbrances, and audit certification, among others would be considered. The majority of this information is either out of bounds for a homebuyer or never sought or rarely provided by the builder even if asked for.
MahaRERA office-bearers are of the view that the system will make it easier for buyers to make a decision to buy a home. The regulator has sought opinion from the public and stakeholders on the framework until July 15.
Top-notch builders, who only have large scale projects, are for the latest move. Those who find the rule lopsided include those who have overleveraged or mismanaged their business, have more than usual legal litigations, or those with mid to small projects.
Corporate style developers to benefit from system
Real estate industry experts are also of the view that the corporate style developers will largely benefit from the system as amenities in a project have a key role to play in the proposed mechanism.
“With the affordability levels for a homebuyer already skewed, large companies will capitalise by charging a premium for higher grades. We already have some big names who include future appreciation of real estate prices and charge exorbitantly. Such players will leave no stone unturned to capitalise on the grading system as well,” said an observer.