Homebuying Decision-Making Process Made Easier by MahaRERA’s Grading System

Author: Riddhi Gadhiya
MahaRERA's Grading System

The Maharashtra Real Estate Regulatory Authority (MahaRERA) was established in 2017 under the Real Estate (Regulation and Development) Act to bring accountability, transparency, and efficiency to the real estate sector. For years, homebuyers struggled with delayed possessions, poor construction quality, and asymmetric information when evaluating projects.

To protect consumer interests, especially the first-time home buying, RERA mandated that all projects be registered with the regulator. MahaRERA went a step further by implementing a grading system for registered projects to enable better decision-making. Over time, MahaRERA has emerged as a pivotal force in disciplining developers and earning homebuyers’ trust.

In this blog, BeyondWalls being a leading real estate marketing agency, explores MahaRERA’s grading system, its mechanism, and its far-reaching impact on homebuyers as well as developers. The grading system has undergone a structural shift towards increased transparency by standardizing how projects are evaluated based on parameters like financial health, construction progress, promoter track record, and legal compliance. Let’s analyze the grading framework in detail.

How Does the MahaRERA’s Grading System Work?

The system involves a team of independent experts conducting site visits, reviewing project documentation, and interviewing the promoters and project contractors.

  • Phase I – Information Disclosure

    The developer must provide comprehensive project details to MahaRERA, including the project’s budget, legal adherence, and construction status, all of which will be made accessible to the public via MahaRERA’s website.

    1. Project Details: This includes the name of the project, its location, the developer, and other relevant information.

    2. Technical Details: This consists of the approval status, including the commencement certificate, adherence to promoters’ quarterly and annual requirements, booking rates, and more.

    3. Financial Health: This includes the project’s financial viability, the promoter’s track record, and the project’s funding.

    4. Legal Compliance: It includes the project’s compliance with all applicable laws and regulations.

    5. Construction Progress: This involves the project’s progress on construction, the quality of construction, and the adherence to timelines.

    6. Amenities: This consists of the quality and availability of amenities in the project, such as parking, security, and common areas.

    7. Promoter’s Track Record: This includes the details regarding the promoter’s history of completing projects on time and within budget.

  • Phase II – Project Grading

    In this phase, MahaRERA evaluates the project by considering the information provided by the promoter. The evaluation is done using a scoring system where specific factors are assigned varying levels of importance. Once the evaluation process is complete, the project is assigned a grade.

MahaRERA Grading System Benefits for Homebuyers

MahaRERA grading system offers multifaceted benefits for homebuyers in terms of simplified decision-making, increased transparency, benchmarking projects, deterring risks, and building trust.

  1. Simplified Decision Making

    The most significant benefit is the simplicity of a single grade encapsulating multiple aspects instead of having to analyse complex quantitative and qualitative factors. Homebuyers can use the grade as the primary filter before evaluating other specifics.

  2. Increased Transparency

    The transparency into the metrics and methodology behind grade calculations allows homebuyers to trust the grading. Since these grades are third-party assessments by an independent regulator, homebuyers can rely on them as unbiased indicators of project execution capability and quality.

  3. Benchmarking

    MahaRERA project grading enables standardized benchmarking for comparing projects. Homebuyers can compare competing projects based on the MahaRERA grade to gauge relative standing.

  4. Deterring Risks

    The lower grades for projects with higher risks again simplify decision-making for buyers when evaluating downside risks. Rather than assessing risks themselves, buyers can directly use the grade as a risk proxy.

  5. Building Trust

    By providing a regulator-backed, standardized framework for consumers to evaluate opportunities, the grading system helps build overall trust and confidence in the whole home buying process.

MahaRERA Grading System Impact on Developers

MahaRERA grading system has had a marked impact on developer practices as well. High grades can improve real estate sales velocity and collections for projects as buyers perceive lower risks. On the other hand, low grades can act as red flags. This builds tremendous focus across the industry on parameters like execution capability, construction quality, timely delivery, and regulatory compliance, which determine the scores.

  1. Improving Construction Quality

    To score well on the quality of construction and craftsmanship, developers are prioritizing external audits, best practices, and customer feedback in the development process.

  2. Meeting Delivery Timelines

    The grading considers past track record of adherence to timeline commitments. This builds tremendous focus on project planning, work sequencing, and resource allocation to avoid delays.

  3. Financial Planning

    Developers are shoring up project funding buffers and improving contingency planning to prevent cost overruns that could reflect poorly in the financial soundness parameter.

  4. Increasing Regulatory Compliance

    To score well on legal compliance during evaluations, developers are proactively adhering to regulatory needs around disclosures, occupancy certificates, and periodic progress reporting.

  5. Differentiation

    The grading provides better-managed developers the ability to differentiate themselves and accrue benefits linked to higher sales velocity and customer confidence. This catalyses a virtuous cycle.

    In summary, grading nurtures structural improvements across project planning, financial, legal, and execution parameters to uplift industry standards.

Challenges and Adaptations

Despite the regulations, some industry participants have also aired concerns that the grading methodology does not adequately factor in prevailing market conditions, liquidity scenarios, and changes in macro policies – all of which have impacted projects significantly over the last few years.

There are also calls to review the relative weightage given to different parameters in the grade calculation formula. As the grading ecosystem evolves, these aspects are being examined to ensure fairness as well as the effectiveness of the system. But despite limitations in this first version, the regulatory intent and direction are clearly oriented towards consumer interest.

In Conclusion

MahaRERA’s grading system has been a pivotal structural shift towards empowering buyers, instituting better information symmetry through standardization, and enabling data-driven decision-making. The real impact will only be evident over the next few years as more projects get completed and rated across market cycles.

But for now, buyers finally have access to a formal framework they can trust – one that provides a reliable, regulator-backed benchmark for risk evaluation. The pioneering grading approach is thus a stepping stone towards a more efficient, transparent, and accountable real estate market.


Riddhi Gadhiya

Riddhi Gadhiya is a dynamic and accomplished Brand Architect specialised in Performance Marketing, currently contributing her expertise in the field of PropTech at BeyondWalls. With over 7 years of experience, Riddhi has established herself as a solution-focused and result-oriented digital marketing professional, garnering praise for her exceptional performance and track record of proven results.

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