Builders may have to pay 11% interest on delayed projects
Developers will 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 homebuyers reeling under the impact of delayed projects and mounting loan liabilities.
It also says that projects without a completion certificate will have to register with the Real Estate Regulatory Authority , to be set up in states and UTs within three months of the rules being notified. Developers will have to provide information such as the date of completion, size of apartments and facilities promised to buyers, according to the draft rules published to seek comments from the public by July 8.
The draft rules empower 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 fulfil the promises they had made at the 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 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.
The rules will come as a great relief to buyers as this would be a step towards forcing developers to complete projects as soon as possible.