Affordable housing project rating system: Ashoka Innovators for the Public aims to put this in place in 9-12 months
Moneylife Digital Team 20 October 2011

Affordable housing is crucial, considering the abnormally-high prices of real estate across the country. Ashoka: Innovators for the Public is looking to provide customers with quality for their money and will help them from being hoodwinked by huge property players via this proposed rating system

An association of social entrepreneurs (Ashoka: Innovators for the Public) and a global provider of technical, safety & certification services (TUV Rheinland) are collaborating to launch a rating system for affordable housing projects across India. While they have signed an MoU (Memorandum of Understanding) to that effect, the rating system is expected to come into force in nine to 12 months.

“We are only at the nascent stage; and (we are) drafting the entire process,” the director of Ashoka Housing For All, Vishnu Swaminathan, told Moneylife, “It is going to be the first attempt in this field.” The affordable housing projects Ashoka is going to focus on are 300-550 sq ft flats; priced at Rs4 lakh-Rs10 lakh—that can house a family of four to six, with a household income of Rs12,000 per month.

Mr Swaminathan said that TUV, the entity’s German partners, will be developing the certification project, and the long-term aim will be to set up a neutral authority (tentatively) titled ‘Affordable Housing Council of India’, that will own the certification. Ashoka is working on affordable housing projects all over India, and the rating system will look at certifying projects by other builders too.

“We are aware that it will take a few years to get the rating recognised, but after that, we are hoping that the builders themselves will try to get a rating because it will boost their image,” he said.

Four components will be taken into account while rating—construction quality, energy & environment management, community integration and financial viability. “We would not only go for a quality check on the materials used and the building techniques and environment management processes, but also try to get the latter certified at an affordable price,” Mr Swaminathan added.

About community integration, he said that for its customers, it is important to live in a place which supports community building and has some facilities nearby—like a garage near a project where a lot of auto-rickshaw drivers live. “We would ask the potential customers to visit the project and judge on the basis of their feedback,” Mr Swaminathan said.

“We will look at rating the project as soon as the approvals come in. But a builder can also get the certification before that—on the basis of the plans, designs and documentation. In the long run, I feel that if the project gets certified; it will help the government dispatch approvals faster,” he said.

However, most developers go ahead with construction only after bookings are going on. Mr Swaminathan said that the NGOs (non-government organisations) they collaborate with will make sure that the customers are not cheated of their money before the certification is awarded. He is also counting on the NGOs to spread awareness of the rating process among the customers. “These NGOs can explain our ratings; and then, it is left to the customer to make a choice between moving in, or opting for a home elsewhere,” said Mr Swaminathan.

He said that customers can learn of the ratings once they approach the agency. “It is like other credit-rating agencies, who give ratings to products on the basis of which customers make an informed choice,” he added.

In most cases, developers lay down only the foundation or have only primary groundwork in place when they call for bookings; and go ahead with the construction only after they get sufficient money from their customers. Mr Swaminathan says that the NGOs will make sure that the customers don’t enter into a ‘lock-in’ deal with the developer and lose their money. “The customers will not deposit their money with the developer. Only after the project is certified, and the documents are in place will the developers get the money,” he said.

However, it may be remembered that in many cases, approvals have been received much after—and instances are known where customers have moved in even before getting occupation certificates. In most cases, irregularities are either ‘regularised’ or the matter remains stagnant.

Ashoka is looking at affordable housing projects in cities like Ahmedabad, Madurai, Coimbatore, Bengaluru and Pune & Satara (in Maharashtra). “We are not looking at places like Delhi or Mumbai, because the land price is too high, and our customer base can’t go for such units. But if projects in those areas are to be rated; they will be priced higher than our target category—we have to set different parameters,” Mr Swaminathan said.

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