Building A Better Future for Homebuyers: Maharera’s Proposal for A Robust Quality Assurance System

Introduction

In recent years, India’s real estate industry has grown significantly, becoming a key player in the country’s economy. The demand for residential and commercial properties has driven this growth, and the industry is predicted to reach $1 trillion by 2030. People see real estate as a secure investment, especially in challenging times. The current geopolitical situation and increasing environmental awareness also contribute to the industry’s expansion. However, a major challenge it faces is the issue of quality construction and craftsmanship. To ensure the long-term success of the real estate sector, it is crucial to prioritize high-quality projects. The lack of regulations has led to the use of substandard materials and poor craftsmanship, eroding consumer trust and impacting sales. Focusing on delivering quality projects is essential for the industry’s sustainability and the satisfaction of property buyers.

In 2016, The Real Estate (Regulation and Development) Act (RERA) introduced by the Government of India aims to regulate and promote the real estate sector, emphasizing transparency, accountability, and quality of construction. Section 14(3) of the Act addresses structural and workmanship defects, providing a curative solution for allottees. However, while the law provides a remedy for construction quality issues experienced by allottees, it is essential to emphasize the prevention of such defects in the first place.

Against this backdrop, the MahaRERA recently released a Consultation Paper which proposes to establish an extensive Quality Assurance Framework, committed to delivering defect-free apartments to allottees. This endeavor seeks to empower homebuyers, including those unfamiliar with technical intricacies, to evaluate project quality and make informed choices.

Why Quality Assurance is Essential in Real Estate

Many experts agree that implementing well-designed third-party quality audits across industries leads to demonstrably better products and services. This sustained improvement in quality naturally boosts customer perception of management. The need for a robust Quality Assurance System in particularly in the real estate sector is paramount, considering the significant financial investment homebuyers make when purchasing a property.

With that in mind, RERA places a strong emphasis on quality of construction. As per Section 14(3) of the Act, “In case any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter’s failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under this Act.” This provision offers a valuable remedy for homebuyers facing construction quality issues.

But the real estate sector is a complex puzzle, with numerous players involved in every project. From subcontractors to consultants, each piece needs to fit perfectly to create a quality home. But with so many moving parts, it’s easy for miscommunication and discrepancies to arise. This is where third-party quality monitoring comes in.

Think of it as an independent inspector, ensuring that every aspect of a project meets the highest standards. By involving neutral experts at key stages of construction, we can:

  • Catch problems early: Before finishing touches are applied, issues like leaky pipes or uneven floors can be identified and fixed easily, saving time and money in the long run.
  • Build trust and confidence: For homebuyers, a third-party guarantee of quality provides peace of mind, knowing their investment is protected. This transparency fosters trust and a more positive relationship between developers and buyers.
  • Improve communication and coordination: With a dedicated quality monitor, everyone involved in the construction process is held accountable. This can lead to better communication and coordination, resulting in a smoother project flow and higher quality outcomes.

A look at National and Global Context

Several countries have implemented quality assessment/assurance systems for real estate projects. Singapore’s Building and Construction Authority (BCA) developed the CONQUAS system in 1989 to measure the quality level of completed buildings. CONQUAS has three objectives: to have a standard quality assessment system, to make quality assessment objective, and to enable quality assessment to be carried out systematically within reasonable cost and time. The assessment consists of four components: internal finishes, installation methods verification and functional tests, external finishes, and bonus points. Each component is further divided into different items for assessment. Developers are then categorized into bands based on their average CONQUAS performance of their completed projects in the past 6 years.

Similarly, India’s Pradhan Mantri Awas Yojana (Urban) scheme also has a vital component of Third-Party Quality Monitoring Agencies (TPQMA) to ensure quality of construction under various components of the Mission. Under the scheme guidelines, TPQMA are required to undertake field visits for ascertaining quality of construction at various stages of construction.

Dissecting The MAHARera’s Proposed Framework for Quality Assurance in Real Estate Projects

Any Real estate project quality hinges on three key factors: quality materials, skilled workforce, and proper construction processes. Weak links in any of these can compromise the entire project, leaving new homebuyers facing issues like cracked walls, uneven floors, leaky windows, and faulty electrical systems. To avoid these frustrations, MahaRERA proposes a proactive approach: mandatory Third-Party Quality Monitoring. This system aims to guarantee quality from the ground up, preventing defects and their associated costs and distress before they even occur. This forward-thinking approach prioritizes homebuyer satisfaction and protects developers from costly rework.

  • A Three-Stage Inspection Process

The proposed Third-Party Quality Inspection framework for real estate projects suggests a three-stage approach. The first stage, during Advanced Stages of Construction, involves inspecting completed sub-structure and superstructure works, including integral assessments of masonry, plumbing, curing for brickwork, and identification of potential weak areas. The inspection covers issues such as dampness, plaster integrity, efflorescence, and the overall structural and installation aspects. The promoter is required to provide relevant test reports and registers. The second stage, Pre-Handover/Pre-Delivery Inspection, occurs when mechanical, electrical, and plumbing (MEP) systems are ready, focusing on inspecting living spaces, bathrooms, kitchens, and common areas. The inspection encompasses various elements such as ceilings, walls, floors, doors, windows, electrical and plumbing systems, and safety features. The inspection scope includes specifications mapping, installation and finishing assessment, operational functionality, and safety checks. The third stage involves Verification of rectification of issues identified in the previous inspections. Once the project teams or contractors rectify highlighted issues, the third-party agency performs a verification report to ensure the satisfactory resolution of identified problems, aligning with the rectification memo. This comprehensive approach aims to enhance quality assurance in real estate projects, emphasizing prevention and timely resolution of construction-related issues.

  • Deliverables and Implementation:

The proposed framework for Third-Party Quality Inspection Agencies entails a comprehensive set of indicative deliverables, including Advanced Construction and Finishing stage reports, observations categorized by function and vendors/contractors, Common Area inspection reports, and verification reports for rectifications. To enhance transparency and accountability, the final reports generated by these Third-Party Quality Inspection Agencies are intended to be submitted online, providing valuable information to the allottees.

The phased implementation plan involves MahaRERA taking the initiative to establish an approved list of Third-Party Quality Inspection Agencies. This selection process will be carried out through a transparent tendering procedure, with active participation from Promoter Associations and Allottee Associations in shaping the Request for Proposal (RFP). The criteria for empanelment will prioritize the technical strength of the organization, while financial considerations will be subject to prevailing market forces.

In its initial stages, this quality assurance initiative will be advisory and optional for real estate projects. Projects choosing to opt-in will be prominently featured on the MahaRERA website, ensuring that prospective allottees are well-informed during their decision-making process. This approach aligns with the goal of fostering a culture of transparency and quality consciousness within the real estate sector.

As the ecosystem matures, the Third-Party Quality Inspection initiative is expected to evolve into a mandatory requirement for all real estate projects. This transition aims to play a pivotal role during the Defect Liability Period, offering a clearer understanding of whether defects arise from allottee actions or inherent issues with the promoter’s workmanship. The phased approach, starting from an advisory stance and progressing toward mandatory implementation, underscores the commitment to enhancing transparency, accountability, and overall quality assurance standards in the dynamic landscape of the real estate sector.

A Way Forward for MahaRERA: Balancing Quality Assurance with Dispute Resolution

The way forward involves a two-pronged strategy for MahaRERA. Firstly, the proactive step of implementing a Third-Party Quality Monitoring system and a panel of inspection agencies should proceed, but with careful testing and refinement to ensure effectiveness. This initiative will serve as an additional safety net for quality assurance in real estate projects. Secondly, urgent and serious attention must be directed towards fulfilling MahaRERA’s statutory obligation of Dispute Resolution. Complaints about delays in hearings are alarming and need immediate redress. MahaRERA should prioritize streamlining its Dispute Resolution system on a war footing, addressing the backlog of cases and ensuring swift and efficient resolution for complainants. Striking a balance between proactive quality measures and efficient dispute resolution is crucial for upholding the integrity of the real estate regulatory framework.

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Author Shubham Sharma is a student of Chanakya National Law University. He can be reached out at 2636@cnlu.ac.in

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Member Since: 02 Nov 2021 | Total Posts: 3

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