The Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) organised a webinar on Monday afternoon on “QPR & AAR Compliance: Strengthening Project Transparency & Accountability”, with the objective of sensitising promoters across Uttar Pradesh about statutory compliance, accurate project reporting, financial discipline and greater transparency in real estate projects. Almost all promoters from across the state participated in the webinar.

The webinar was organised under the chairmanship of Hon’ble Chairman, UP-RERA, Shri Sanjay Bhoosreddy. Secretary, UP-RERA, Shri Mahendra Verma, delivered the welcome address and formally commenced the session.

During the webinar, the Regulatory Consultant made a detailed presentation through a PowerPoint presentation covering the complete statutory compliance cycle of a registered real estate project, from registration and setting of physical and financial targets to quarterly reporting and annual audit compliance. The presentation explained how QPRs, REG-1, REG-2, REG-3 and REG-5 collectively strengthen project monitoring and financial accountability.

QPR Compliance: Physical and Financial Progress to be Reported Every Quarter

The promoters were informed that the Quarterly Progress Report (QPR) is to be filed after the end of every quarter until completion of the project. The QPR captures physical achievements against the targets fixed at the time of registration, financial achievements based on actual expenditure incurred, and the relevant certificates from the Architect, Engineer and Chartered Accountant.

The presentation emphasized that every targeted activity must be reported and, where no work has been undertaken during a quarter, the achievement should be reported as zero rather than leaving the activity blank. Promoters were also advised to report actual expenditure instead of simply reproducing financial targets. Any changes in project inventory automatically reset physical and financial targets, which must then be re-set before filing the QPR.

The webinar further highlighted that QPRs are required to be filed within 15 days of the end of each quarter. A late fee of ₹15,000 is imposed for delayed filing, while continuous default for two quarters may lead to the issuance of show-cause notices.

REG-1, REG-2 and REG-3: Three Independent Sources of Verification

• The Architect’s REG-1 is based on physical site verification and records the percentage of completion and activity start and end dates for individual towers and the project as a whole.
• The Engineer’s REG-2 independently assesses the cost of work actually completed on site and cross-checks it against the amount spent.
• The Chartered Accountant’s REG-3 is based on the promoter’s books of account and covers total project cost, percentage completion on a cost basis and eligible withdrawal from the project’s Separate Account.

The presentation underlined that no single certificate can independently justify withdrawal of funds. Physical progress certified by the Architect, cost valuation by the Engineer and financial records certified by the CA are required to work together as a three-way verification mechanism.

Architect’s Certificate: Fixed Baseline and Quarterly Progress

The promoters were also briefed on the structure of REG-1. At the time of registration, the baseline percentage of completion for each activity is recorded and the activity start and end dates are fixed. In subsequent quarters, only the percentage of completion is updated according to the progress achieved, while the originally fixed start and end dates remain unchanged.

For plotted development projects where there are no towers or blocks, the presentation clarified that the relevant project-level table is used rather than tower-wise reporting. The Architect is expected to certify progress on the basis of what is physically observed at the site and not merely on figures supplied by the promoter.

Engineer’s Certificate and the “Lower of Two” Safeguard

The presentation gave particular emphasis to the “Lower of” principle in REG-2. The admissible expenditure is determined as the lower of the value of work physically verified at site and the amount actually incurred.

For example, if the books show expenditure of ₹120 lakh but the site valuation is ₹90 lakh, the admissible amount would be ₹90 lakh. Conversely, if the site valuation is ₹110 lakh while the books show expenditure of ₹85 lakh, the admissible amount would be ₹85 lakh.

According to the presentation, this safeguard prevents withdrawal against inflated billing, advance payments not reflected in actual construction or expenditure that is not supported by recorded project spending.

REG-3: Financial Discipline and Eligible Withdrawal

The promoters were also explained the financial framework under REG-3. The presentation covers land cost, project clearance fees and construction and development costs, with different principles applicable for project-cost estimation and withdrawal purposes.

The eligible withdrawal calculation takes into account the project’s total cost on the withdrawal basis, percentage of completion, cumulative eligible withdrawal, amounts already withdrawn and other permissible adjustments. The presentation also highlighted the requirement that the computed balance in the certificate must reconcile with the actual bank balance. Any mismatch may indicate an anomaly and requires scrutiny.

The presentation further clarified that repayment of loan principal from the Separate Account is permitted only after the entire project has received its Completion/Occupancy Certificate, subject to verification by the CA.

REG-5: Annual Statutory Audit Report

The webinar also focused extensively on REG-5, the Annual Statutory Audit Report, which serves as the annual counterpart to the quarterly compliance mechanism. The four quarterly QPR filings along with REG-1, REG-2 and REG-3 form the basis for the annual compliance process.

REG-5 is to be issued by the same statutory auditor who audits the promoter’s overall balance sheet. It covers the full financial year and must be filed within six months of the end of the financial year, i.e. by 30 September. A late fee of ₹25,000 applies for delayed filing, while delay beyond one month may lead to show-cause proceedings.

The presentation explained that REG-5 certifies the project’s financial position, including percentage of completion, funds collected, funds withdrawn and funds spent. It also covers utilisation and withdrawal compliance, assured returns, filing and dues status, registration validity, sold and unsold inventory, post-allotment mortgage disclosure and land-dispute related information.

Promoters were specifically advised to upload only the prescribed REG-5 along with the audited financial statements, use the latest format available on the UP-RERA portal and ensure that the figures relating to completion and project cost reconcile with the final QPR/REG-3 of the relevant financial year.

Digital Transformation through UP-RERA 2.0

The webinar also provided an overview of the proposed UP-RERA 2.0 web portal, which is aimed at moving the compliance ecosystem from scanned documents towards structured and data-driven digital reporting.

The proposed system includes digital filing of REG-1, REG-2, REG-3 and REG-5, linking physical and financial targets with certificate data, continuous monitoring of certificate information and system-driven identification of deviations and project delays.

Extension Beyond 12 Months

Another important aspect covered during the presentation was the regulatory framework for seeking extension of registration beyond 12 months. The presentation outlined four factors for consideration by the Authority—legal viability, economic viability, operational viability and oversight by the Association of Allottees (AoA).

For such applications, promoters are required to provide updated QPR and REG-5 status along with documents such as the sanctioned plan, current development status, detailed explanation for delay, affidavit and physical and financial completion plan.

For extension beyond 12 months, the presentation also highlighted the need to demonstrate availability of funds for completion, wherever applicable, and additional requirements including an affidavit regarding new bookings, consent of more than 50% of individual allottees, and formation of the Association of Allottees.

Focus on Transparency and Protection of Allottees

The webinar emphasised that the QPR and certificate-based compliance mechanism is not merely a statutory filing requirement but an important tool for continuous, verified monitoring of real estate projects. The three-way cross-check between physical progress, cost valuation and financial books enables risk-based regulatory supervision and helps identify inconsistencies in project data.

The presentation also highlighted the importance of publicly available project compliance information in helping prospective buyers assess actual project progress, reducing information asymmetry between promoters and allottees and supporting informed investment and purchase decisions.

From UP-RERA, Principal Advisor Shri Abrar Ahmad, Financial Advisor Shri Sudhanshu Tripathi, Revenue Recovery Officer Smt. Meenakshi, AD System Shri Amrish Kumar, System Analyst Shri Ganesh Mishra, Legal Advisor Shri Umang Chaudhary and Media Advisor Shri Pranjal Dixit, along with other officers and employees, were present during the webinar.