Uttar Pradesh Real Estate Regulatory Authority (UPRERA) has come up with a grading system for real estate developers and projects to protect the interests of homebuyers and has invited public comments before finalising the framework.
“We have invited public comments on the framework until May 13 and would be finalising it based on the feedback we receive within the next 15 days. It may take us about a month to finalise the framework and we would then implement it in due course,” Rajive Kumar, Chairman, UPRERA told Moneycontrol.
“The grading system would be upgraded based on suggestions of the stakeholders and would be implemented in due course in consultation with the state government,” he said.
Kumar said that the purpose of grading both buyers and projects is that over a period, it creates a track record for builders and signals to the public that the promoter and the project have a higher rating.
Projects would be rated for their construction quality, legal quality, financial quality and compliances with UPRERA. A project’s assigned grading will serve as a benchmark against other graded projects in the state. The grading will be applicable for all UPRERA registered projects, sources said.
The proposed grading framework can be accessed on the UPRERA portal (https://www.up-rera.in/index). Feedback from stakeholders would be received until May 13.
UPRERA, after receiving inputs from development authorities, industrial development authorities, homebuyers associations, promoters associations and other stakeholders, in consultation with the consultant CRISIL has designed the grading framework for projects registered under RERA, sources said.
The grading evaluation for projects will essentially involve assessing the developer’s track record in executing projects as per a stipulated schedule along with adherence to timelines and analysing the organisational, legal and financial risks associated with it.
Real estate developers would be graded on a scale of 1 to 5. One Star would mean low likelihood of project being delivered as per agreed specifications and within the stipulated time schedule; two Star would indicate below average likelihood of project being delivered; 3 star would indicate average likelihood of project being delivered; 4 star would indicate a strong likelihood of project being delivered and 5 star would mean excellent likelihood of the project being delivered.
The project construction quality parameter would provide an independent assessment of aspects such as structural quality, construction quality and the likelihood of time and cost overruns. This parameter will be used to determine if the structures are designed as per the specified quality norms, seismic zone requirements and IS codes compliances, sources said.
Project sponsor quality would focus on the developer’s construction and legal track record, and will evaluate its financial strength and ability to complete projects as per timelines. It also evaluates promoter’s organisation strength, years of experience in real estate business and ISO or green building certifications for the organisation.
The project legal quality parameter would examine the project’s land title and encumbrances and customer agreement. A clear legal document will indicate that the builder is genuine and the actual owner of the property, and there are no disputes or litigation.
The financial quality indicator would assess the viability of the project as well as the financial flexibility of the developer. A developer’s financial risks would be assessed to ascertain its ability to complete projects on time.
Compliance adherence parameter would evaluate the developer’s compliance with the requirements of UPRERA and the customer feedback parameter would measure the developer’s ability to cope with customer complaints.
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