Developers may have to pay as much as 11.2% interest to buyers for delay in handing over apartments and homes, according to the draft rules unveiled by the government, a step seen as bringing relief to home buyers reeling under the impact of delayed projects and mounting loan liabilities.
It also says 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 completion date of a project, size of flats and promised facilities, state the draft rules, published to seek public comments till July 8. The draft rules empower home buyers to ask for compensation, which includes getting their money back with interest or only the interest amount for the period of delay, if the developers are do not fulfill the promises they had made at time of launching the project. The draft 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 this year.
The interest rate compensation has been proposed to be 2 percentage points over and above the prime lending rate (PLR) of 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%, which is the PLR for a retail loan. That means, rates for compensation would be 11.2% as against the home loan rate of 9.35% to 9.95%.
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% of the allottees can lead to cancellation of registration.
In such situation, the authority can take any decision including getting the project completed by an external agency with the consent of the buyers' association.
TOI had reported on June 25 that the draft rules provided a “compounding“ fine which builders can pay to escape imprisonment if they violate a ruling by the regulator. By paying 10% of the estimated project cost, builders can avoid going jail. Similarly , property dealers can also escape a jail term by paying 10% of the plot or apartment cost if they mis-sell any project.
Developers said if the rules are applied on ongoing projects the sector will be hit severely and there could be further delay.
