Buying a home in Noida? UP RERA notifies new IFMS rules — Here's all you need to know

The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) introduced a new framework for the collection, management, investment, transfer and utilisation of Interest Free Maintenance Security (IFMS) funds collected from homebuyers in July, as per a PTI report.

Amended provisions to the UP RERA (General) Regulations, 2019, incorporated under Regulation 47, came into effect the same month.

Why the change in rules?

“The amendment aims to ensure transparency, accountability and financial discipline in the collection, investment, transfer and utilisation of IFMS funds. Homebuyers deposit this amount for the long-term maintenance of common facilities. Therefore, it is essential that the fund remains fully secure and is utilised only for its intended purpose,” UP RERA Chairman Sanjay R Bhoosreddy said.

He added that the new provisions would safeguard the interests of allottees through proper collection, secure investment, timely transfer and mandatory audit of the IFMS corpus while strengthening the role of RWAs in the management of real estate projects.

Here's what homebuyers looking to purchase houses in Noida and Lucknow need to know:

UP RERA new IMFS rules: Homebuyers need to know…

• Under the revised rules, promoters are mandated to collect the IFMS amount from allottees at the time of registration of sale, lease or sub-lease deeds and deposit the entire amount in a separate designated bank account with a scheduled bank.
• The regulations also mandate that collected funds be invested in fixed deposit (FD) scheme offering the highest rate of interest among eligible banks after obtaining quotations, with the objective of ensuring the safety of the corpus, transparency in its management and maximum returns.

• UP RERA has prescribed project-wise IFMS rates based on the nature and category of developments.
• For group housing projects, the IFMS has been fixed between ₹20-100 per square foot depending on the category of residential units.
• Commercial projects will attract IFMS of ₹40 per square foot for non-central air-conditioned developments and ₹50 per square foot for centrally air-conditioned projects.
• Separate rates have also been specified for plotted residential and commercial projects.
• UP RERA has mandated that promoters transfer the entire IFMS corpus to the Residents' Welfare Association (RWA) or the Association of Allottees at the time of handing over the project's common areas.

• Promoter will also have to provide a detailed transfer statement containing unit-wise IFMS collections, expenditure incurred, audit trail and the final balance being transferred.
• The amendments state that the IFMS fund can be used only for the operation, maintenance, repair and replacement of common areas, equipment and shared services.
• The fund must be maintained separately from other maintenance charges in a dedicated bank account.
• The RWA or Association of Allottees will be required to maintain proper accounts of all receipts, payments and utilisation of the fund.
• The accounts will have to be audited by a chartered accountant in accordance with generally accepted accounting principles, and the audit report must be placed before the Annual General Meeting or Extraordinary General Body Meeting within three months of its completion.

(With inputs from PTI)