Now, real estate developers will pay 11.2 per cent interest to buyers for delay in projects

2nd Jul 2016
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Developers may have to pay 11.2 per cent interest to buyers for any delay in handing over possession of apartments and homes. According to rules unveiled by the government, this will bring relief to homebuyers suffering the impact of delayed projects and mounting loan liabilities, says The Times Of India.

Representational Image, Source - Framepool
Representational Image, Source – Framepool

The rules also say projects without a completion certificate will have to register with the Real Estate Regulatory Authority, to be set up in states/UTs within three months of the rules being notified. Builders will have to give information on a completion date of a project, size of flats and promised facilities.

The Real Estate rules have been formulated by the Housing and Urban Poverty Alleviation Ministry within two months of some sections of the Real Estate (Development and Regulation) Act, 2016, coming into force on May 1. The interest rate compensation has been proposed to 2 percentage points over and above the prime lending rate (PLR) of the State Bank of India. Normally, a home loan from SBI is pegged at 0.20 percentage points to 0.80 percentage points over and above the MCLR (marginal cost of fund-based lending rate) at 9.15 per cent, which is the PLR for a retail loan. That means, rates for compensation would be 11.2 per cent as against the home loan rate of 9.35 per cent to 9.95 per cent.

Any violation such as delay in offering possession, increase in the size of apartments, change in layout and construction of additional towers in a project, without taking consent from 70 per cent of the allottees can lead to the cancellation of registration. In such a situation, the authority can take any decision, including getting the project completed by an external agency with the consent of the buyers’ association.

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