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10% interest on delayed possession

10% interest on delayed possession

Buyers of delayed housing projects will get interest on the invested amount for the delay period at the Real Estate Regulatory Authority’s (RERA) prescribed rate as against 5 per sqr feet to 10 per sqr feet contracted in the sales agreement, said the chairman of Madhya Pradesh RERA Anthony de Sa.

RERA’s prescribed rate comes out to be 10% at present.

Developers have not been barred from advertising and marketing existing projects, said regulators and officials of MP, Punjab, Haryana and Delhi. Dispelling builders’ doubts, officials said they need to apply for registration for ongoing projects only by July 31.

Additional chief secretary of housing urban development, Punjab, Vini Mahajan, who has also been appointed as the interim regulatory authority under RERA, while addressing a conference organized by FICCI, clarified that the existing projects need not wait for registration to advertise. They can continue all their activities as usual.

However, those projects for which application for registration is not made even by July 31 to the regulatory authority cannot market their projects. “So far, 14 states and UTs have implemented this law. There are 14 more states which are in process of notifying the rules. We hope that they will do it soon,” said joint secretary of housing ministry Rajiv Ranjan Mishra at the FICCI conference.

Anthony de Sa said that delayed ongoing housing projects will be registered with RERA only if the developer is ready to pay the buyer interest at the authority’s prescribed rate, which is 2 percentage points above SBI’s MCLR (marginal cost of fund based lending rate), and not the contractual rates of 5 per sq ft to 10 per sq ft which builders had accepted to pay when the sales agreement was signed.

At present, as SBI’s MCLR is 8%, developers will have to pay 10% interest on the paid amount to the buyers. At the same time, buyers will also pay the same interest at 10% on delayed payment of their dues and not the penal rates of 12% to 18% as mentioned in the sales agreement.

Member of RERA Haryana committee and chief town planner of Haryana government Dilbag Singh Sihag, who is entrusted with the responsibility of finalising the RERA Rules for the state, said justice demands for the same interest rate to be paid by developers as they are charging buyers on delayed payment of outstanding dues.

Normally, developers charge a high rate of 12% to 18% while they pay only Rs 5 per sqr feet to Rs 10 per sqr feet on a project which costs 4,000 to 5,000 per sqr feet. Sihag said this mismatch can be resolved by asking both parties to pay the RERA prescribed rates. He, however, added that no final view has been taken so far.

 
Mahajan said that existing buyers will get respite under RERA, clarifying that the authority is bound by the act and rules while taking the decision. So, it can only enforce the contract signed between buyers and developers in light of RERA rules, which cannot go beyond the act.
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