MahaRERA has decided to suspend its proposed grading system for real estate projects in Maharashtra due to a lack of authority under the Real Estate Regulatory Act, 2016. Initially aimed at helping homebuyers make informed decisions, the grading system was based on four criteria related to developers' technical, financial, and legal information. Following inquiries from the Bombay High Court regarding project classification, MahaRERA had outlined a grading matrix to be updated biannually. However, senior officials have confirmed that the initiative is now on hold.
The Maharashtra Real Estate Regulatory Authority (MahaRERA), which had previously proposed the grading of real estate projects in Maharashtra, has decided to halt this initiative as the Real Estate Regulatory Act, 2016, does not empower regulators to assign grades to projects.
Earlier this week, MahaRERA had announced its intention to implement a grading system to assist homebuyers in making informed decisions. The regulatory authority had identified four criteria based on information provided by developers, which included technical, financial, and legal details, as well as a project overview.
While reviewing a case concerning the stalled Mumbai real estate market earlier this year, the Bombay High Court inquired whether MahaRERA could rate or classify developers to aid buyers in their decision-making. In response to this query from the Bombay High Court, MahaRERA had proposed the grading matrix approximately four months later.
MahaRERA indicated that the grading matrix would be updated every six months within a financial year. It mentioned that the initial period would run from October 1, 2023, to March 31, 2024, and stated that the grading matrix would commence once the deadline for uploading the last quarterly progress report (QPR) had passed on April 20, 2024.
Section 32 (f) refers to measures aimed at promoting the grading of projects based on various development parameters, including the grading of promoters. In June 2023, MahaRERA had emphasised that one of the primary functions of Section 32 (f) is to facilitate the grading of projects according to various development parameters, including those concerning promoters (developers). Consequently, it released a consultation paper outlining the framework for grading real estate projects and invited public suggestions and objections. Senior officials from MahaRERA confirmed that the plan to grade real estate projects in Maharashtra has now been placed on hold.
The decision by MahaRERA to halt the grading of real estate projects underscores the regulatory challenges faced within the framework of the Real Estate Regulatory Act, 2016. While the initiative aimed to enhance transparency and assist homebuyers in making informed choices, the lack of legal authority has impeded its implementation. As the real estate sector continues to evolve, stakeholders will need to explore alternative measures to foster buyer confidence and ensure the integrity of project information. The future of such grading systems remains uncertain, pending further legal clarity and regulatory guidance.
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