RERA Compensation for Delayed Possession: Your Interest and Refund Rights
Contents
You booked a flat for a date written in your agreement, and that date has passed. Under the Real Estate (Regulation and Development) Act, 2016 (RERA), you have two clear options. You can leave the project and take your money back with interest. Or you can stay and receive interest for each month of delay. This is the core of RERA delay compensation interest, and the numbers differ between Noida and Gurugram.
This guide covers both options, how the rate is fixed in Uttar Pradesh and Haryana, worked examples, and what changes if you have already taken the keys. It is general information, not legal advice. Rates and court positions change, so check them before you file.
The two choices under Section 18
Section 18 applies when a promoter fails to complete or hand over the flat by the date in the agreement. If you do not want to withdraw, the promoter must pay interest for every month of delay until possession is handed over, at the prescribed rate. If you withdraw, the promoter must return everything you paid, with interest from the date of each payment.
| Point | Option A: Withdraw (refund) | Option B: Stay (delay interest) |
|---|---|---|
| What you get | Amount paid back, plus interest | Monthly interest until possession, and the flat |
| Interest runs from | The date of each instalment you paid | The possession date stated in your agreement |
| Interest runs until | Actual date of refund | Actual handover of possession |
| You keep the flat? | No | Yes |
| Best suited to | Buyers who have lost trust in the project or need the money | Buyers who still want the home and can wait |
The refund route is strong. In Newtech Promoters v. State of U.P. (2021), the Supreme Court held that the Section 18 refund right is unconditional. It does not depend on the stage of construction or the builder’s excuses. Interest and compensation are also separate things. The Regulatory Authority decides refund and delay interest, while the Adjudicating Officer decides compensation.
Which rules apply to your city
RERA is a central law, but each state sets the interest rate in its own rules. Your project’s registration decides which applies.
- Noida, Greater Noida and Greater Noida West: UP RERA and the Uttar Pradesh rules.
- Gurugram: Haryana RERA (HRERA) and the Haryana rules.
If you are still comparing localities, our guides to Greater Noida West and Gurugram show which parts of each city have more under-construction supply.
How the interest rate is fixed
Haryana (Gurugram)
The rule is simple. The rate is the State Bank of India’s highest marginal cost of lending rate (MCLR) plus two percent. If SBI stops using MCLR, it is replaced by whatever benchmark SBI fixes for general lending. HRERA has applied this to refunds as well. In one Gurugram order, the Authority directed a refund with interest from the date of each payment until the actual refund date.
Uttar Pradesh (Noida, Greater Noida, Greater Noida West)
UP works differently. The standard UP agreement for sale ties the rate to SBI’s MCLR on home loans plus 1%, and says delay interest is payable within 45 days of becoming due. The UP Real Estate Appellate Tribunal has also held that refund interest must follow the rate in the Act and Rules, MCLR plus 1%, and not an arbitrary contractual rate such as 24%.
What we could not confirm: We could not open the text of the UP rules themselves, so we cannot say which MCLR tenor they name. Online calculators typically use the one-year MCLR plus 1%. Check the tenor used in the order or in your agreement.
Can your agreement lower the rate?
Generally no. Commentary on Section 18 notes that a contractual cap below the prescribed rate is void as contrary to the Act. A clause offering a few rupees per square foot per month does not replace the statutory rate.
What the rate looks like today
SBI changed its rates very recently. SBI raised MCLR by 15 basis points on five tenors from 15 October 2026. The one-year rate moved from 8.70% to 8.85%, and the three-year rate from 8.80% to 8.95%. The three-year rate is SBI’s highest tenor in the reports we found, so we use it as the “highest MCLR”. That gives the snapshot below.
| State / city | Formula | Illustrative rate (Oct 2026) |
|---|---|---|
| Haryana (Gurugram) | Highest SBI MCLR + 2% | 8.95% + 2% = 10.95% |
| Uttar Pradesh (Noida, Greater Noida, Greater Noida West) | SBI MCLR + 1% (tenor to be checked) | 8.85% + 1% = 9.85% (assuming one-year MCLR) |
Treat these as snapshots, not promises. The rate can change, and authorities may use different dates. One commentary says the MCLR on the date of the order is used, not the date of payment or default. Orders may differ on this, so read yours carefully.
Worked examples
These use the snapshot rates above and simple interest. Simple interest is the usual method used by RERA bodies. Real orders can differ on rate dates, amounts counted and the start date.
Example 1: Stay in a Greater Noida West project
You have paid ₹40 lakh. Possession was due on the agreed date and arrived 18 months late. You did not withdraw.
- Annual interest: ₹40,00,000 × 9.85% = ₹3,94,000
- For 18 months: ₹3,94,000 × 1.5 = ₹5,91,000 (about ₹32,800 a month)
This assumes the full ₹40 lakh was already paid when the delay began. If you paid in stages during the delay, interest is lower for the early months.
Example 2: Stay in a Gurugram project
You have paid ₹60 lakh and possession is 24 months late.
- Annual interest: ₹60,00,000 × 10.95% = ₹6,57,000
- For 24 months: ₹13,14,000 (₹54,750 a month)
Example 3: Refund, same payments in both states
You paid ₹20 lakh three years ago, ₹20 lakh two years ago and ₹10 lakh one year ago, a total of ₹50 lakh. You withdraw and the refund is calculated to today, with interest on each payment from its own date.
| Payment | Years held | Interest in UP (9.85%) | Interest in Haryana (10.95%) |
|---|---|---|---|
| ₹20,00,000 | 3 | ₹5,91,000 | ₹6,57,000 |
| ₹20,00,000 | 2 | ₹3,94,000 | ₹4,38,000 |
| ₹10,00,000 | 1 | ₹98,500 | ₹1,09,500 |
| Total interest | ₹10,83,500 | ₹12,04,500 | |
| Refund incl. principal | ₹60,83,500 | ₹62,04,500 |
The one-point difference in spread adds up to about ₹1.2 lakh on these figures. Interest on a refund is counted from each payment date, which is why early payments earn more. Authorities typically calculate it instalment by instalment.
Refund or stay: questions to ask yourself
- Is there visible progress? Check the stage of work and the project’s registered completion date on the RERA website.
- Can you afford to wait? Delay interest is paid on what you have already paid. Many buyers are also paying rent and EMIs.
- What is the flat worth now? If the refund plus interest would not buy a comparable home, staying may suit you better.
- Can the builder pay? An order does not put money in your account. Ask a lawyer how recovery works for that builder.
- Are you claiming extra losses? Rent or other proved losses count as compensation, which is a separate claim from interest. Compensation may need its own factual and adjudicatory assessment.
Opting to stay does not shut the refund door forever, but the facts change with time, so decide with a lawyer and your documents in hand.
If you have already taken possession
Many buyers assume that signing the possession letter ends any claim. Recent decisions suggest it usually does not, though each case turns on its own papers.
- Allahabad High Court (23 September 2026): The court held that an allottee who stays in the project can claim interest for every month of delay, and that RERA sets no limitation period for it. The case involved a Noida Sector 78 project.
- UP Appellate Tribunal: It ruled that accepting possession without protest does not waive the right to delay interest.
- Supreme Court: A claim for compensation for delay survives the later delivery of possession. This came in a consumer-law matter. In the DLF Southern Homes case, the Court allowed a buyer to claim for delay even after taking keys and executing the conveyance deed.
There are limits. A law firm partner cautioned that the outcome depends on your documents, the relevant dates and any settlement with the developer. If you signed a settlement, a waiver or a “full and final” undertaking, get it reviewed before you file.
Two more points. Delay interest after possession covers only the late period, from the agreed date to the actual handover. And builders often argue that “zero period” relief or force majeure reduces the delay. A report on the Allahabad ruling says a zero period cannot erase an earlier default. Whether your claim is cut down depends on the facts. We could not verify how the Punjab and Haryana High Court treats post-possession claims for Gurugram, so check that locally.
Documents to collect before you file
- Builder-buyer agreement with the possession clause and date
- All payment receipts and bank statements, with dates
- Demand letters and any revised-date communications from the builder
- The possession offer letter and the actual handover date, if any
- Any undertaking or settlement you signed
- The project’s RERA registration number and extension details
Complaints for refund and delay interest generally go to the state Authority, while compensation goes to the Adjudicating Officer. Confirm the correct forum on the UP RERA or HRERA website, as procedures and fees vary.
Spotting delay risk before you buy
The simplest protection is checking before you pay. Compare the promised date with the registered date, and look at the builder’s earlier handovers. You can filter by city and builder on the ADiHomes projects page, or browse new projects in Noida. Always verify the RERA registration yourself on the official portal before paying.
Delay interest compensates you for waiting. It does not make a late project safe, so weigh the whole picture, including your own finances, before choosing to stay or leave.
Frequently asked questions
Can I get my money back if my builder delays possession?
Yes. Under Section 18 of RERA you can withdraw and claim a refund of everything paid, with interest. The Supreme Court in Newtech Promoters (2021) held this refund right to be unconditional.
What interest rate applies in Noida and Greater Noida West?
UP uses SBI's MCLR plus 1%. The UP Appellate Tribunal has held that refund interest must follow this statutory rate, not an arbitrary contractual one. The exact MCLR tenor should be checked in your order or agreement.
What interest rate applies in Gurugram?
Haryana's rules set the rate at SBI's highest MCLR plus two percent. After SBI's 15 October 2026 revision, the highest tenor reported was 8.95%, which would give about 10.95%, but the rate can change.
From which date is delay interest counted?
If you stay in the project, interest is counted from the possession date in your agreement. If you take a refund, it runs from the date of each instalment you paid.
Can I claim delay interest after taking possession?
Often yes. A law firm partner said accepting possession after a delay does not by itself waive the right to claim interest. The result still depends on your documents, dates and any settlement you signed.
Is there a time limit to claim delay interest?
The Allahabad High Court noted that Section 18(1) sets no limitation period for delay interest where the allottee continues with the project. That ruling covers UP; file promptly anyway and take legal advice for your case.
Does my agreement's per-square-foot penalty limit what I can claim?
Not under RERA. A contractual cap below the prescribed rate is void as contrary to the Act. The Supreme Court has also said a one-sided agreement clause cannot cap what a buyer is owed for delay.
Sources
- Section 18 RERA Act: Refund, Interest and Delayed Possession (Chambers of AK)
- RERA Section 18 — Refund and Interest for Delayed Possession (Daava)
- Options under Section 18 of RERA Act 2016 (Real Estate Law Journal)
- Haryana Real Estate (Regulation and Development) Rules, 2017 (HRERA)
- Haryana RERA asks International Land Developers to refund with interest (Moneylife)
- UP RERA proforma agreement for sale (plot/apartment)
- Return of Money order only at MCLR+1% (UP REAT summary, Prashant Kanha)
- UP RERA Penalty Calculator (BuilderDelay)
- SBI MCLR rates hiked from October 15 (Upstox)
- SBI MCLR page (State Bank of India)
- RERA Section 18: Delay Refund, Interest, Compensation Guide (LexiReview)
- Delayed flat possession: Accepting keys won't end interest claim, says HC (Business Standard)
- No Limitation To Claim Delay Interest Where Allottee Continues With Project: Allahabad High Court (LiveLaw)
- Possession Without Protest Is No Waiver: UP REAT (IndiaLaw)
- Subsequent possession doesn't extinguish right to seek compensation for delay: Supreme Court (Verdictum)
Updated 20 October 2026. This article is general information, not legal or financial advice; check current rules and project details before you decide.
