Builders & Homebuyers interest rate to be identical in case of any delay – says NCDRC.

By Abhay Shah, Realty Quarter

The Apex consumer commission has held that an unfair trade practice cannot be implemented. Currently, homebuyers must pay interest for delayed payments by 18% per annum, while the builders pay a mishap of 1.5%-2% for project delays.

R K Agrawal President of the National Consumer Disputes Redressal Commission (NCDRC) and a member M Shreesha, noted in a building-buyer agreement that such provisions are unfair and unreasonable and a real estate company cannot bind homebuyers to unilateral contractual arrangements that protect the company’s interests at the cost of buyers of the property.

It said that the interest rate that builders and homebuyers pay should be parity for non-compliance with the contract terms and proposed that builders should pay the same interest rate in respect of project delays as they ask for purchasers in the event of a payment delay.

NCDRC passed the order at the request of a home buyer who had booked a flat from Umang Realtech Pvt Ltd for “Winter Hills 77” project in Gurgaon in 2012. By December 2015, the purchaser was pledged to possess the flat and paid Rs.83 lakh in instalments.

The builder could not produce the project four years after the promised date, and so the customer requested reimbursement of the cash at 18% annual interest, the rate at which he paid the builder penalty for payment delays on his part.

However, it said that compensation for the delay under the agreement could be paid at the price of Rs.5 per square feet. Rejecting his claims, the NCDRC said, “It is also an acknowledged reality, that the other party (the firm) charged interest to 18% pa of any late payment by buyers and there is no clarification in the offer of a meagre Rs.5 per sq.ft, that is about 1.4% pa which is only a small proportion of what it charged for any delayed payments by the buyer.”

“A clause of this kind in any situation is wrong to trade because it provides the seller with an unfair benefit,” the Commission said. The firm was guided to repay the cash with 12% interest on the basis of banks interest-rate which has gone down in the last few years. The firm was also instructed to offer customer compensation for Rs.1 lakh.