Can grading real estate projects, developers help homebuyers?4 min read . Updated: 12 May 2020, 02:11 AM IST
- Grading will help bridge trust deficit with customers
- The system will help buyers make informed decisions
Uttar Pradesh Real Estate Regulatory Authority (UP Rera) is expected to start grading projects and developers based on parameters such as financial quality, organizational structure and certifications, track record, compliance adherence and customer feedback. Crisil Ltd has been appointed as a consultant for setting up a system and assigning the grades, according to specific parameters. Based on how a developer performs against the set parameters, grading would be done on a scale of one to five, one being the lowest. Ashwini Kumar Sharma asked experts whether this initiative will help homebuyers.
Grading will help bridge trust deficit with customers
The grading of projects and promoters on various parameters of development will be done under Section 32(f) of the Real Estate (Regulation and Development) Act, 2016.
The grading of promoters will involve checking its track record of executing projects on time. Other key aspects of grading will include financial strength, adherence to compliance-related matters and customer feedback. The UP Rera needs to be commended for initiating this decision.
The real estate industry is reeling under trust deficit from the consumers and this step will help in addressing it to some extent. This will induce transparency and push developers to ensure that the projects are delivered on time with the quality promised to the consumer.
Homebuyers can make informed decisions based on the grading which will reflect developers’ track record and credentials. This decision will help the industry in the long run and instil confidence in the minds of the homebuyers.
This is certainly a step in the positive direction, but the implementation of the process in a timely manner is key to its success.
Shalin Raina, Managing director, residential services, Cushman and Wakefield
Just another gimmick to lure homebuyers to the sector
The top priority for Rera should be to ensure malpractices are eliminated, projects are completed and homebuyers receive their due. Despite three years of Rera’s implementation, we are still grappling with delays. Buyers are constantly being short changed, with missing facilities and unreasonable charges.
There seems no real mechanism to check fund diversion by developers. There’s no check on whether or not they are maintaining separate bank accounts for each project, obtaining certificates from engineers and architects for construction status and so on. On-ground verification is a must.
Multiple complaints from buyers go unheard, and in cases where there are favourable orders, buyers have to run from pillar to post to get them executed. With authorities found wanting on so many parameters, this decision of grading projects, is another trick from the builders’ hat to boost sales. We fail to understand the short-sightedness. Unless trust is reinforced through true and effective implementation of Rera, these gimmicks are not going to bring buyers back to the market.
M.S. Shankar, National secretary, Forum for People’s Collective Efforts
System will help buyers make informed decisions
Any rating system has a positive impact. It helps homebuyers to make an informed choice. For a developer, this enhances transparency and helps define track record, which is the basic aim of Rera.
Whether or not this can become a benchmark and help developers in accessing credit at competitive rates needs to be seen. What other positive aspects a developer can gain as a result of the system apart from buyer confidence will depend on how the system evolves, and where it can dovetail into existing set-ups or systems, regulatory and otherwise.
UP Rera’s proposal, which is expected to be an annual exercise, will assess promoters and projects registered with it, and declare ratings, creating a track record for promoters. It will also help define issues and their causes. For example, delays in possession or any slowdown of a project will reflect on the performance level of developers. The appointment of Crisil as a consultant for setting up the system and assigning grades to developers and projects is a positive step in this direction, and we look forward to this positive move being implemented soon.
Niranjan Hiranandani, National president, Naredco
To reflect the reality, it needs to be updated regularly
Grading of projects and promoters registered with Rera is a good move. What caught my attention is the provision for registration of promoters. If you look at Tamil Nadu Rera, only projects and agents are required to register. The real estate Act mandates that only. Including promoters is a positive step that UP Rera has taken.
Therefore, it is good to grade promoters and projects based on certain fixed parameters, including consumer feedback and the information in the public domain, so that consumers can make informed choices. This will help in increasing the credibility of the promoters and in bringing down complaints, thus being beneficial to homebuyers.
It will also encourage more promoters to register themselves and their projects with Rera. However, it is important that all processes are transparent and do not give room for vindictiveness or corruption.
In addition, the exercise should be repeated periodically and information uploaded promptly, so that it reflects the on-ground reality on a given date. Only then will the grading exercise be really useful for the homebuyers.
S. Saroja, Director, consumer advisory and outreach, Citizen Consumer & Civic Action Group