NEW DELHI: Developers may have to pay 11.2 per cent interest to buyers for delay in handing over apartments and homes, according to draft rules unveiled by the government, a step seen as bringing relief to homebuyers reeling under the impact of delayed projects and mounting loan liabilities.
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 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 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 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 fundbased 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 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.
TOI had reported on June 25 that the draft rules provided a "compounding" fine that builders can pay to escape imprisonment if they violate a ruling by the regulator. Developers said if the rules are applied on ongoing projects the sector will be hit severely and there could be further delay. President of the Confederation of Real Estate Developers' Associations of India, Getamber Anand, said all unfinished projects, which were launched before 2012, can be termed as defaulters and under the draft rules, if buyers demand their money back, developers will have to return at over 11 per cent rate of interest.
As real estate is a state subject, each state has to frame its own rules on the basis of the regulation approved in their respective assemblies. The state governments will have to frame their own rules within six months of May 1, when the Act was notified. The rules will come as a great relief to home buyers as this would be a step towards forcing developers to complete projects as soon as possible.