When you think of buying a house, realty ratings may not be one of the first thing that comes to your mind although the ratings of builders and projects are free of cost.
But it sure is a handy tool since it's quite a report card on the builder and his project.
Crisil and Icra, which do the ratings, take into consideration a host of factors including the track record of the developer in effective transfer of title in past/completed projects, extent of legal compliance and documentation, past project track record, adherence to the specified time line, risk of insolvency of the developer to efficiency of parking space and the approach road of the property to the nearest main road among many other critical factors, when assessing projects.
The two raters carry out this exercise in partnership with the National Real Estate Development Council, the apex national body of real estate developers.
The fees for the rating is paid by the developer and not by the buyer of the property. For a developer the rating fee works out to 0.03 per cent of his turnover.
In the case of a developer, ratings are valid for a year and are subject to quarterly review. In case of projects the grading is valid for the life of the project.
"The need for ratings arises when the builder is an unknown one. Only when people make informed decisions will they seek ratings," said Akash Deep Jyoti head, infrastructure sector ratings, Crisil.
However real estate ratings in India has far from taken off. Since there is no compulsion for developers/projects to get themselves rated only a score of developers/projects have carried out the exercise in the country thereby making the bowl of information rather inadequate for an investor.
"Many developers lack a proper corporate set up. Often it is the lack of corporatisation that keeps developers from getting rated. When there are no proper systems, processes and clean balance sheets in place developers shy away from being rated," said Deep Jyoti.
