Clarify in UP RERA Rules the penalty rate of interest for delayed handover
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Over the years, we the home buyers have been subjected to loot and harassment by the unscrupulous builders. One of the key issues we have been facing today is the inordinate delays in possession, which in some cases, runs up to 5 to 6 years from the promised delivery date. All such builders take almost 80 to 90% of the cost during basic construction stage and probably divert the funds to their other projects, causing end-less delays. All of us have been losing lakhs of Rupees towards interest on our deposits and interest that we pay towards the bank loan. Still we are helpless and couldn’t do much about it as we are forced to sign one-sided agreement, intentionally designed to favor the builder, wherein the buyer pays 18 – 24% interest for any delayed payment, and the builder pays only INR 5/- per sq. ft per month for the delayed delivery. Isn’t it quite unfair?
To protect the interest of homebuyers, the newly enacted Real Estate (Regulation and Development) Act, 2016 (RERA) has proposed heavy penalties on builders for delayed delivery of flats. The RERA Act Chapter 1, section 2(za)-ii says the rate of interest should be equal for both buyers and builder. Further the Central Government has recommended a standard rate of interest as SBI’s prime lending rate (PLR) + 2%, which comes to around 10%, through the draft rule, for the states to adopt. Most of the states, such as Maharashtra, Madhya Pradesh, Haryana, Punjab, Bihar, Bengal, Odisha have adopted the central government recommendation and have stated SBI PLR / MCLR + 2% as rate of interest as delayed penalty. All of us, with a sigh of relief, hoped such provisions of RERA will help us address the issue.
However, to our dismay, the UP RERA Rules, Chapter V Clause 15, with a header “Rate of Interest Payable by the promoter and the allottee”, describes data back-up procedure, and conveniently omitted the penalty rate of interest clause. This has happened even though UP is the largest affected state with lakhs of home buyers being cheated by unscrupulous builders. There are thousands of complaints made to UP RERA authority to clarify penalty to be paid by the builder for the delay. Taking advantage of this omission in the UP RERA Rule, the state RERA authority is giving arbitrary judgements in favor of the builders.
Can we allow this to continue?
If the government is really concerned about the home buyer’s apathy and sincere about protecting our hard-earned money being usurped by the builders, then immediate action should be taken to amend the UP RERA Rules to include the rate of interest as recommended by the central government. Also, the government should investigate why the central government recommended rate of interest, which has been adopted by most of the states, have not been adopted by UP so far?
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