Builders close ranks against state’s move to grade them

While the Act itself came into force early this year, the state Housing department issued the rules in September 2014, just ahead of the Assembly elections. By mid-November, the department received an overwhelming number of suggestions (1300) and objections from not only builders but also consumer bodies, housing societies and estate agents’ associations. The state government, however, is yet to take  any decision to appoint a Housing Regulatory Authority (HRA) as well as an Appellate Authority  to enforce the legislation.

Housing department officials said that while estate agents were largely happy about the clause that mandates them to register with the state government thus according some recognition to the highly unorganized sector, developers have vehemently opposed some of the clauses.

Industry bodies such as the Maharashtra Chamber of Housing Industry (MCHI-CREDAI) and National Real Estate Development Council (NAREDCO) have made their displeasure known in detailed letters to the government.

“Developers will be graded based on various factors such as quality of construction, facilities provided in their projects, consumers satisfaction and timely completion. This also means that as complaints stack up with the HRA against a particular developer, his ranking will go lower,” said an official from the state’s housing department.

One of the major objections raised by builders is against a clause that allows buyers to take over the project in case builders fail to complete it and hand it over in time. Moreover, as a safeguard against such delays which are endemic in most residential projects in the Mumbai Metropolitan Region, rules mandate that 10 per cent of the total flats in a project have to be kept unsold as “retained flats” until an occupation certification is procured.

In its letter, NAREDCO has objected to the very idea of the state government grading developers. The body has also asked that the per cent of “retained flats” be reduced to from 10 to five. “We are fine with professional private bodies such as CRISIL (Credit Rating Information Service of India) or ICRA (Information Credit Rating Agency) rating us but it is impractical to let the state government grade builders. Also, it is highly objectionable that while developers come under the ambit of the legislation, various project-sanctioning government agencies are left out,” NAREDCO president Sunil Mantri said. He added that the state had no right to demand information about financial arrangements between builders and investors.

Maharashtra was the country’s first state to have in place a law to regulate the real estate industry and provide a grievance mechanism for consumers of new residential, commercial and retail real estate projects. However, because of the delay on part of the state government to set the ball rolling, the safeguards have remained only on paper so far. “The new government has just taken over. We will study the matter soon and decide on a course of action,” said Swadheen Kshatriya, Maharashtra’s chief secretary.

shalini.nair@expressindia.com