Kerala RERA Awards 16.65% Interest to Homebuyers Over Delayed Flat Handover

 

Thiruvananthapuram: In a significant order aimed at protecting homebuyers from prolonged construction delays, the Kerala Real Estate Regulatory Authority (K-RERA) has directed a developer to pay 16.65% annual simple interest to two buyers over the delayed handover of their apartment in the Sparrow Paradise project at Kudappanakunnu, Thiruvananthapuram.

The buyers, Dr. Ullas Raghavan and Shakuntala Prabhakaran, had invested around ₹1.02 crore in a 1,765 sq ft apartment. The project was originally scheduled for completion by November 30, 2018, but remained unfinished well beyond the promised date.

K-RERA ordered that the 16.65% simple interest be calculated from December 1, 2018, the day after the promised completion date. The calculation will cover the ₹54.41 lakh advance paid by the buyers as well as subsequent payments, with interest calculated from the respective payment dates until possession.

The authority directed Sparrow Construction Management & Consultancy and its partner Jahad A Majeed to settle the interest within 60 days of the July 20, 2026 order.

Apart from the interest payment, K-RERA has directed the developer to complete the apartment and common amenities within six months, obtain the required occupancy certificate and execute the sale deed before handing over the property.

The developer had cited circumstances including demonetisation, the 2018 and 2019 floods, the COVID-19 pandemic and labour shortages as reasons for the delay. K-RERA, however, did not accept these explanations as sufficient to justify the prolonged delay extending over several years.

Under Section 18 of the RERA Act, an allottee who continues with a delayed project is entitled to interest for the period of delay until possession. Kerala's Rule 18 provides that the applicable annual interest rate is linked to the State Bank of India's Benchmark Prime Lending Rate plus two percentage points, calculated as simple interest.

The K-RERA order therefore highlights the financial consequences developers can face when possession is not delivered within the agreed timeline. It also underlines the importance for homebuyers of checking the possession date in the sale agreement, project registration details and their rights under RERA.

The order is likely to be closely watched by Kerala's real-estate sector, particularly by homebuyers facing prolonged delays in project completion and possession.