New Launch - India Real Estate Report 2026.
To reduce disputes over maintenance funds, the Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has introduced a new framework for the collection, management, and transfer of Interest Free Maintenance Security (IFMS) funds. Under the revised rules, developers must deposit the IFMS amount collected from homebuyers into a separate bank account and transfer the entire corpus, along with accrued interest, to the Residents' Welfare Association (RWA) or Association of Allottees at the time of project handover.
How the Funds Must Be Collected and Managed
Under the amended regulations, promoters must collect the IFMS amount from allottees at the time of registration of the sale, lease, or sub-lease deed and deposit it in a separate designated account with a scheduled bank. The funds must then be invested in the fixed deposit offering the highest interest rate among eligible banks, after obtaining quotations, to ensure the corpus's safety, transparency, and optimal returns.
What the Funds Can Be Used For
The IFMS corpus can be used only for the operation, maintenance, repair, and replacement of common areas, equipment, and shared services, and must be kept in a separate bank account independent of regular monthly maintenance charges. The RWA or Association of Allottees must maintain proper accounts of all receipts, payments, and utilisation, audited by a chartered accountant, with the report placed before the Annual General Meeting or Extraordinary General Body Meeting within three months of completion.
- Group housing projects: ₹20-₹100 per sq ft, depending on unit category
- Commercial projects: ₹40 per sq ft (non-centrally air-conditioned) and ₹50 per sq ft (centrally air-conditioned)
- Separate rates notified for plotted residential and commercial developments
- Changes notified under the 12th Amendment to the UP RERA (General) Regulations, 2019
- Effective immediately from July 15, 2026
Also Read: Uttar Pradesh RERA Overhaul: Simpler Real Estate Rules
What Happens at Handover
At the time of handing over a project's common areas, promoters must transfer the entire IFMS corpus, along with accrued interest, to the RWA or Association of Allottees. They must also provide a detailed transfer statement covering unit-wise IFMS collections, expenditure incurred, the audit trail, and the final balance transferred to the residents' body.
Why UP RERA Introduced the Change
IFMS is a one-time, interest-free deposit paid by homebuyers to developers, typically at the time of taking possession, serving as a long-term maintenance reserve after handover to the RWA. The fund has often been a source of disputes, with RWAs alleging delays in transfer, lack of transparency, and disagreements over amounts due.
UP RERA Chairman Sanjay R. Bhoosreddy said the amendment is aimed at ensuring transparency, accountability, and financial discipline in how IFMS funds are collected, invested, transferred, and utilised. He added that safeguarding the corpus and ensuring it is used only for its intended purpose will strengthen the role of RWAs and promote better, more sustainable management of real estate projects across Uttar Pradesh.
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