Those who have invested in a best property in India the delivery of which has been delayed will receive a return on the amount invested. The return the buyers will receive due to delay on the part of builders will be at the rate prescribed by the RERA. RERA has prescribed this rate to be 10 percent as opposed to the flat payments of 5 rupees per square foot to 10 rupees per square foot that are contracted on the sales agreement.
Developers May Continue to Advertise Unregistered Projects
Till date developers have not been barred from advertising and marketing their projects and may continue to do so according to regulators of Madhya Pradesh, Punjab, Haryana, and Delhi. Many doubts held by builders were dispelled as they were clearly informed that they may register their project by the last day of July this year. The interim regulatory authority under the RERA stated at a conference organized by FICCI to builders that they need not register their project first before advertising the projects. Projects by builders can continue to be advertised without first being registered as they had been during the pre RERA regime.
Projects for which the application for registration has not been made by July 31 of this year with the regulatory authority cannot be marketed by builders. The joint secretary of the housing ministry has stated that fourteen states and union territories have already implemented the new law and fourteen more states are in the process of notifying the rules and he is hopeful that these fourteen states will notify the rules soon.
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The Late Penalty According to RERA
The Chief Secretary of Madhya Pradesh, Anthony De Sa has stated that the delayed ongoing housing projects will be registered with
RERA only if the builder, in case the project is delayed, has agreed to pay the buyer an interest rate that is the same as the rate prescribed by the RERA authority. The rate prescribed by the authority is 2 percent greater than the SBI’s MCLR (Marginal Cost of Lending Rate) whereas the contractual rates builders had agreed to pay buyers in case of project delays (contractual rates were agreed upon when the sales agreements are signed between buyers and builders) stood between 5 to 10 rupees per square foot. Hence, in the future, properties in India that are built will have attached with them checks and balances to ensure the timely completion of the project.
Understanding the Financials
According to this property site since the SBI’s MCLR stands at 8 percent and in the future builders will be penalized by paying buyers interest at a rate 2 percent greater than the MCLR, hence in case of delay in project delivery, builders will pay interest to buyers at a rate of 10 percent on the amount paid to builders. However both the builders and buyers will have to pay penalties at the same rate of interest I.e. a rate 2 percent greater than the SBI Marginal Cost of Lending Rate. In case builders delay projects they will have to pay buyers at a rate of ten percent of the amount paid by buyers to builders; in case buyers delay payment to builders, they would have to pay a 10 percent penalty on the amount owed to builders.