‘A big no to self-grading proposal for real estate projects’

An underconstruction project in the city. File pic/Atul Kamble

The Forum for Peoples Collective Effort has expressed serious reservations regarding the proposed self-grading system by MahaRERA (Maharashtra Real Estate Regulatory Authority). MahaRERA recently invited public opinion on the Consultation Paper on Framework for Grading of Real Estate Projects in Maharashtra, which was announced on June 16. The forum, however, believes that MahaRERA should focus on addressing existing issues faced by homebuyers under RERA before taking on the responsibility of grading projects. The forum suggests involving experienced third-party agencies in the grading process to avoid potential conflicts of interest within the regulatory body.

Abhay Upadhyay, President of the Forum For People's Collective Efforts and a Member of the Central Advisory Council for RERA raised concerns about MahaRERA's interpretation of the act. He stated, "I think MahaRERA is going into an area, which normally they should have gone, only after ensuring that all other malpractices followed by the developers, which were prevailing before RERA came into existence, is fixed, and the existing pendency of cases resolved, giving justice to the hundreds and thousands of litigants, who are still awaiting justice."

Abhay Upadhyay, President of the Forum For People's Collective Efforts

The original act changed

Regarding the change of wording in MahaRERA's circular, Upadhyay pointed out, "MahaRERA, in its circular, has replaced the word from the original act ‘encourage' to ‘facilitate'. How can words be changed or interpreted differently from the act, which is a central act? Who has given MahaRERA the power to change the meaning of the statute enacted by the parliament and allow itself to take the onus of grading/rating on itself?"
He further emphasised the need for specialised agencies, stating, "SEBI for Companies, RBI for banks, IRDA for insurances, TRAI for telecom are all regulatory bodies for their respective sectors, who have hired the services of top-class rating agencies specialized in their work. None of these regulatory bodies are involved in the rating themselves, then if MahaRERA is a regulatory body for the real estate industry in Maharashtra, then how can MahaRERA itself do the grading/rating of the properties?"

Solution

Upadhyay proposed that MahaRERA should collaborate with professional rating agencies to develop a robust rating process for real estate projects. Initially, the rating system should be optional for developers, and after its success is ensured, it can be made mandatory.

He expressed concerns about MahaRERA rating highly-rated projects and the potential conflicts of interest that could arise if complaints are filed against them. Upadhyay, also questioned the very circular nature of MahaRERA, wherein they themselves have sighted the example of Dubai. Interestingly, Dubai RERA too are not rating themselves and the work is done by Dubai Land Department (DLD). Also, they have trained inspectors for site inspections, and have to adhere to certain conditions of inspections, which MahaRERA is yet to put into practice.

What experts say

Ramesh Prabhu, founder chairman of MahaSEWA, shared his perspective, stating, "Normally grading has to be done by independent agencies approved or registered with the regulator. The rating cannot be based on the basis of the information uploaded on the website (MahaREA) and its compliance. The present rating paper proposed by MahaRERA is not normal and is misleading the consumers/allottees. "

Vinod Sampat, founder chairman of a flat buyers residents association, supported MahaRERA's initiative, saying, "In my opinion, it is a good move. There is no need for MahaRERA to appoint an external agency for fixing audit parameters. MahaRERA already has data pertaining to developers, and whether it appoints an external third-party agency or does the audit by itself will hardly make any difference. On the contrary, the flow of information will be faster if MahaRERA does it."