While buying a ready-to-move-in house property, one of the things most of us do is to get feedback from the existing residents of society. The feedback received in the real estate market from end-users shows the quality of construction has been below-par across most builders. This not only impacts the buyer’s confidence but also raises questions about the construction standards in the industry. Nimish Gupta, MD, RICS South Asia, in an email interview with FE Online, talks about the prevalent standards in the country and the safeguards a resident can take after getting possession of his home from the developer.
A buyer is a novice and will not understand quality measures being adopted by the builder. What are the safeguards for the consumer? Are there regulations around construction quality?
Today, the world over building codes and regulations are considered to be guidelines for the minimum acceptable level of safety for construction activity being undertaken. However, codes, standards and specifications are developed and enforced in manners that vary across countries leading to varying implementation and quality benchmarks. This emphasises that producing a building code is just one step, the true challenge is getting people and businesses to understand and comply with these much-needed benchmarks.
In India, the National Building Code (2005) is considered to be the 'holy book' for the construction industry, which encompasses a multi-disciplinary approach in laying down the guidelines and philosophy from project conception to planning, designing, construction and operation and maintenance. The NBC is increasingly being used as the threshold to set principles for establishing standards and building codes relating to structural safety.
While NBC is considered second to none in their technical content, these are only a model code with no legal status of its own. Each municipality and urban development authority has its own building code, which is mandatory for all construction within their jurisdiction and therefore all local codes emerge as variants of the NBC.
The problem in India is not a lack of regulatory standards, just indifference to them. With the establishment of RERA, this has been further reinforced, specifically keeping consumer safeguards in mind. According to a provision stated in the Act, the developer must rectify any structural defect or any other defect for a period of 5 years from the date of handing over of possession to the buyer. No further charges can be levied for these and the rectification must be carried out within 30 days or appropriate compensation is to be paid.
There is enough and more information available out there for consumers to educate themselves and be aware of what to look for. Builder buyer agreements, in particular, should annex all amenities that are being provided on specific units of a project. This should cover not just construction materials but also fitments being provided by the developer – along with their specifications. This will aide, to a large extent, developers upholding their promise to use and extend quality construction and materials.
Buyers also have the option of undertaking third party certifications or audits on the quality of construction being done. This does have cost implications, but then a buyer can definitely ascertain information on quality parameters. At the end of the day, there is also recourse available in the form of RTI and Consumer Protection Forums that can aide in safeguarding Consumer rights and interests.
Similar to BIS (in consumer goods) or Hallmarking (in gold) or other government standards, are there are any such standards in the real estate industry to assure buyers of the construction quality?
As mentioned above, the National Building Code is the de-facto standard when it comes to construction quality and safeguards. However, rampant violation of building codes has made buildings more susceptible to structural and safety malfunctions, as we have seen with several examples in the recent past which have impacted human, natural and built environment life.
Whichever building codes a country adopts, the one common string that should resound across regulations and standards is the fundamental reorientation in the way enforcement officials ensure the adoption and implementation of given standards. For this practice to be enforced there is also a need to provide adequate training and create awareness among engineers, architects, masons and common citizens about building regulations and its usefulness. Additionally, existing regulations need to be revised and reviewed periodically to ensure safety and performance parameters.
After possession, what are the RERA rules that can ask the builder to undertake maintenance of the property in case of bad construction?
RERA has helped create some necessary checks and balances in the system with respect to construction quality. Section 14 (3) of the Act states that the promoter is deemed to rectify any defect without further charges – in case of improper or poor construction quality has been proven. The rectification of defects needs to take place within 30 days of the issue being reported by the buyer. If the promoter/developer fails to rectify the defects within the prescribed time, the buyer stands to receive adequate compensation under the Act.
Apart from timely possession of flat, do you think the quality of construction is an important parameter that will help build trust in the industry for the builders?
Indeed, the quality of construction is an essential consideration that will help real estate developers build trust. Construction operates on an ‘Iron Triangle’, consisting of time, cost and quality – representing the critical relationship between these key performance criteria. It has been observed that most developers end up compromising on, at least one of these parameters, while pushing to complete a project.
The cost pressure, given the lack of funds (this is more prevalent in the current market scenario) creates a further challenge with inferior material choices being made. Despite various provisions by RERA to discourage developers from doing so, this continues to be an issue. As mentioned above, stringent construction regulations are required to be enforced.
Additionally, we are also looking at accrediting professionals to ensure that people who are working in the RERA bodies are working to the highest standards and an ethical code of conduct while giving reasoned and transparent advice.
Any other important point that you wish to share for the real estate buyer to consider while buying a new home.
There are certain aspects to be kept in mind which can help buyers minimise risk while investing in real estate –
Developer Credibility: The inherent financial and professional strength of a developer should be a primary factor in decision-making. A thorough assessment of a developer's market credentials, financial strength, past delivery track record, capacity to manage multiple projects, unsold inventories and pending cases is necessary.
Project Features and Attributes: A comprehensive check of the key attributes of a real estate project before investing is of paramount importance. Dynamics like location of the project, supporting urban infrastructure, including connectivity, future potential of habitation, education and health & entertainment facilities in the vicinity should tick all the boxes.
Financing plan for the project: No uncertainty or delay in asking for a detailed and transparent financing plan for the project. It helps in identifying any alarming gaps in the developer's cash, inflow and outflow.
Project fundamentals: The objective of RERA is to protect buyer interest. It is imperative that the project chosen for investing, should be registered under RERA. This indicates that the developer has the professional ability to manage the delivery of the project to its committed time, costs and quality targets as per their RERA registration.
Role & Credibility of Real Estate Transaction agents: Please ensure to deal with transaction specialists who are trained and suitably accredited. These agents are instrumental in building client and market trust, aiding confidence and assurance and working to the highest standards and an ethical code of conduct through their reasoned and transparent advice.
Developers association with Banks, NBFCs and HFCs: This denotes all aspects of a project have been evaluated and it is a sound investment. It is obligatory for any bank or financial institution to ensure that all documentation is in place of a project before giving loans.