Discover how to calculate RERA compensation for project delays and deficiencies. Understand the formula, key factors, and your rights as a homebuyer.
Introduction
The Real Estate (Regulation and Development) Act, commonly known as RERA, has brought significant changes to the real estate sector in India. One crucial aspect of RERA is compensation for homebuyers in case of delays or other issues. In this blog post, we will reveal how RERA compensation is calculated in an easy-to-understand manner. Know more about Decoding RERA Compensation Calculation.
Understanding RERA Compensation
RERA was enacted to protect the rights of homebuyers and to promote transparency and accountability in the real estate industry. Under RERA, developers are required to compensate homebuyers for any delays or deficiencies in their projects. This compensation is calculated based on specific parameters laid out in the RERA guidelines.
Key Factors in RERA Compensation Calculation
To calculate RERA compensation, you need to consider the following factors:
Delay Period: This refers to the duration of the delay in the possession of the property. RERA stipulates a specific timeframe for delivering the project, and any delay beyond this timeframe can trigger compensation.
Interest Rate: RERA mandates an interest rate that is used to calculate compensation. This rate is typically higher than the prevailing bank lending rates.
Amount Paid by Homebuyer: The compensation is calculated based on the total amount paid by the homebuyer to the developer.
RERA Compensation Formula
The formula to calculate RERA compensation is as follows:
Compensation = (Amount Paid by Homebuyer × RERA Interest Rate × Delay Period) / 365
Let’s break down this formula with an example:
Suppose you purchased a flat for ₹50 lakh, and the developer promised possession within 3 years. However, due to delays, you received possession after 4 years. Also assume that the RERA interest rate is set at 10%.
- Amount Paid by Homebuyer = ₹50,00,000
- RERA Interest Rate = 10%
- Delay Period = 1 year (4 years – 3 years)
Now, plug these values into the formula:
- Compensation = (₹50,00,000 × 0.10 × 1) / 365
- Compensation = ₹13,698.63
In this example, the RERA compensation you are entitled to is approximately ₹13,698.63.
| MahaRERA Updtae – The rate of interest is prescribed under rules, which is 2% above State Bank of India’s marginal cost of lending rate, which is currently 8.05% as of September 2023. |
RERA Compensation Across Different States in India
The RERA compensation interest rates in different states in India vary, but most states have set the rate at the State Bank of India’s highest Marginal Cost of Lending Rate (MCLR) plus 2%. This means that the interest rate will change as the MCLR changes.
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Conclusion
Understanding how RERA compensation is calculated is vital for every homebuyer. It empowers you to know your rights and ensures that developers are held accountable for any delays or deficiencies in the project. If you find yourself in a situation where you are entitled to RERA compensation, make sure to consult with a legal expert from Vakilsearch or reach out to your state’s RERA authority for guidance.
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