Late Instalment or Late Handover? Bengaluru Buyers and Builders Pay the Same RERA Interest Rate

Picture two emails landing in the same Bengaluru inbox a few months apart. The first, from the builder's accounts team, says a construction linked instalment was paid eleven days late and interest has been added to the next demand. The second, months later, is the buyer's own note to the builder asking why the possession date in the agreement has passed with no handover and no mention of interest. The buyer wonders whether the two delays are treated the same way. Under the RERA Act, on the question of the interest rate, they are.

The short answer. The Ministry of Housing and Urban Affairs' FAQs on the RERA Act say that, under the Explanation to Section 2(za), the rate of interest payable by the promoter or the allottee in case of default must be the same, with the rate itself specified by the appropriate government in its rules. Section 19 makes interest for delayed payment one of the buyer's duties, and Section 18 entitles the buyer to interest for every month of delay in possession if they stay in the project. The trade-off: parity protects you when the builder is late, but it also means your own late payments can cost you at the same rate, so the rule only works in your favour if you keep your side of the schedule.

What does RERA say about interest when either side defaults?

That the rate must match. The Ministry of Housing and Urban Affairs' FAQs on the RERA Act, dated July 2025, answer the question directly: as per the Explanation to Section 2(za), the rate of interest payable by either the promoter or the allottee shall be the same.

The point of the rule is symmetry. Without such a rule, an agreement could set one rate for a buyer's late instalment and a different one for a builder's late handover. The Act takes the rate out of that negotiation. Whatever rate applies to a buyer's default is the rate that applies to the promoter's.

Parity covers the rate. It does not mean the two sides owe the same amount, because the amount depends on how much money is involved and for how long the default runs. A buyer who is late by a few days on one instalment and a builder who is late by many months on possession are both charged at the same rate, but the totals can be very different.

Who sets the actual rate for Bengaluru buyers?

The state government, through its rules. The FAQs say the rate of interest is required to be specified by the appropriate government in the rules. For a project in Bengaluru, that means the rules made under the Act for Karnataka, not a figure chosen by the builder.

The FAQs also say that under Section 13(2) the appropriate government is required to specify, through its rules, the agreement for sale to be entered into between the promoter and the allottee. The FAQs describe this agreement as binding on the parties, with room for other provisions to be agreed between them, but say its terms cannot be contrary to the provisions of the Act and the rules.

In practice, this gives a buyer two documents to check. Read the interest clause in your draft agreement, then compare it with the rate prescribed in the state rules. If the agreement sets one rate for you and a different or lower rate for the builder, ask the builder to explain it in writing before you sign, and consider getting independent legal advice. PropNewz could not verify the current Karnataka rate from an official source during this update, so we have not quoted a figure here.

What do you owe if you pay an instalment late?

Interest, at the parity rate. The FAQs say Section 19 sets out the duties of allottees, including payment regarding the apartment or plot, liability towards interest for delay in payment, the responsibility to take possession, and participation in forming the association and registering the conveyance deed.

So a late instalment is not just a matter of goodwill with the builder. It is a duty under the Act, and the interest on it is charged at the same rate the builder would pay you. We covered the other duties in Section 19 in our guide to a buyer's duties under RERA on payments and possession.

The practical lesson for buyers using a home loan is timing. If an instalment depends on a disbursement from your lender, a delay between the builder's demand and the bank's release may still count as a late payment by you, so check what your agreement says about it. Ask your lender how long a disbursement usually takes after a demand letter, and plan for it.

What does the builder owe if possession is late?

A choice, and interest either way. The FAQs say Section 18 covers situations in which the promoter fails to hand over possession of the booked unit. In that case the allottee has the right to withdraw from the project and claim a full refund along with interest and compensation.

Alternatively, the FAQs say, if the allottee chooses to stay with the project, they are entitled to interest for every month of delay until possession is handed over, and to compensation in certain circumstances set out in the section. The FAQs on Section 19 repeat the same choice from the buyer's side: withdraw and claim a full refund with interest and compensation, or continue and receive monthly interest for the period of delay.

Which option suits you depends on your own position, including how far the project has progressed, whether you are paying rent alongside an EMI, and how much you have already paid. The Act gives you the choice. It does not make it for you.

How do the two sides compare?

The table below sets the buyer's and the builder's positions side by side, using the MoHUA FAQs:

The last row is a reminder that the Act places obligations on buyers too. The FAQs say that under Section 68, a buyer who fails to comply with orders of the Appellate Tribunal faces a daily penalty that can add up to 10 percent of the cost of the plot or apartment, or imprisonment of up to one year, or both.

Who decides disputes over interest and compensation?

The Adjudicating Officer, for the disputes the Act assigns to it. The FAQs describe the Adjudicating Officer as a quasi judicial person mandated to adjudicate disputes arising under Sections 12, 14, 18 and 19, and say the officer is or has been a District Judge.

In deciding those disputes, the FAQs say, the officer must have regard to the amount of disproportionate gain or unfair advantage, the amount of loss, the repetitive nature of the default, and other factors the officer considers necessary in furtherance of justice. The FAQs say Section 31 allows an aggrieved person to file a complaint with the Regulatory Authority or the Adjudicating Officer, as the case may be, in the form and manner set by the state's rules.

We explained how this forum sits alongside consumer commissions and civil courts in our guide to the Adjudicating Officer, consumer forums and civil courts. Whichever route you take, a clear record of what you paid and when, and of the promised possession date, is the starting point.

The same paperwork habits apply whether you are buying in a large township or a single project such as Concorde Sienna on Hennur Main Road: keep the agreement, every demand letter and every receipt together.

What should you do to keep your side of the schedule clean?

Use this list from the day you sign:

1. Read the interest clause in the draft agreement before you sign it.
2. Check that the same rate applies to your defaults and to the builder's.
3. Compare that rate with the one prescribed in the Karnataka rules.
4. Note the possession date in the agreement and keep a copy where you can find it.
5. Ask your lender how long a disbursement takes after a demand letter.
6. Pay each demand on time and keep the receipt with the demand letter.
7. If possession is late, decide in writing whether you will stay or withdraw.

None of these steps takes long, and together they keep the parity rule working for you rather than against you.

Frequently asked questions

Is the interest rate the same if the buyer or the builder defaults?

Yes. MoHUA's FAQs on the RERA Act say that, under the Explanation to Section 2(za), the rate of interest payable by the promoter or the allottee in case of default must be the same. The FAQs add that the appropriate government specifies the rate itself in its rules.

Do I owe interest if I pay a builder instalment late?

You can. MoHUA's FAQs list the allottee's duties under Section 19, including payment for the apartment or plot and liability towards interest for delay in payment. Because of the parity rule in Section 2(za), that interest is charged at the same rate the promoter would owe you.

What can I claim if my Bengaluru flat is handed over late?

Under Section 18, as MoHUA's FAQs explain, you can withdraw and claim a full refund with interest and compensation, or stay in the project and receive interest for every month of delay until possession is handed over, plus compensation in certain circumstances set out in the section.

Who decides disputes about interest and compensation under RERA?

MoHUA's FAQs say the Adjudicating Officer, who is or has been a District Judge, adjudicates disputes under Sections 12, 14, 18 and 19. In deciding them, the officer considers disproportionate gain or unfair advantage, the amount of loss, the repetitive nature of the default and other relevant factors.

Last updated 2026-10-20. PropNewz Team.