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

The amended provisions, incorporated under Regulation 47, came into effect immediately upon publication on the authority’s website, UP RERA said in a statement on Wednesday. The authority has notified the 12th amendment to the Uttar Pradesh Real Estate Regulatory Authority (General) Regulations, 2019, PTI reported.

Under the revised rules, promoters will be required 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 further mandate that the funds be invested in the fixed deposit 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 also prescribed project-wise IFMS rates based on the nature and category of developments. For group housing projects, the IFMS has been fixed between Rs 20 and Rs 100 per square foot depending on the category of residential units. Commercial projects will attract IFMS of Rs 40 per square foot for non-central air-conditioned developments and Rs 50 per square foot for centrally air-conditioned projects. Separate rates have also been specified for plotted residential and commercial projects.

In a key amendment, the authority has made it mandatory for promoters to 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.

The 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 amended regulations stipulate 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.

UP RERA Chairman Sanjay R. Bhoosreddy said 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,” he said.

Bhoosreddy said 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.