Homebuyers who face delays in the delivery of their flats often wonder what compensation they are legally entitled to. Tamil Nadu RERA provides clear monetary relief in such cases—primarily through interest payments. In certain circumstances, buyers may also be eligible for additional compensation.
This post explains in simple terms how interest works under RERA, how much compensation can be expected, and what factors influence these amounts. Drawing from real orders of Tamil Nadu RERA and key court rulings, this blog post helps homebuyers understand their rights and what they can claim.
Interest as Compensation: The Primary Relief
RERA treats interest as the default monetary remedy when builders delay possession. The logic is that the buyer either pays EMIs or rent due to the delay, and interest helps cover this burden.
- Prescribed Rate: In Tamil Nadu, the rate is set as the State Bank of India’s highest marginal cost of lending rate + 2%, typically about 9–10% per annum (simple interest).
- Equal Rate for Both Parties: The rate is symmetrical—buyers owe the same interest if they default, ensuring fairness.
- How It Works: Interest is calculated from the committed possession date (plus any grace period) up to the actual date of possession or refund.
Example: If a buyer paid ₹50 lakhs and possession is delayed by 2 years, interest at 10% would amount to ₹10 lakhs—₹5 lakhs for each year.
Monthly Relief: TNRERA often directs that interest be paid monthly or in intervals to ensure continuous compensation.
Additional Compensation for Mental Agony and Loss
RERA also allows for additional compensation beyond interest. These are decided by the Adjudicating Officer under Section 71, especially when there’s clear evidence of harassment, prolonged delay, or emotional distress.
- Types of Losses Covered:
- Mental agony
- Inconvenience
- Financial stress (such as dual burden of rent and EMI)
- Out-of-pocket expenses like relocation, brokerage, or medical costs due to stress-related health issues
- Typical Awards: Tamil Nadu RERA has awarded amounts like:
- ₹2,00,000 for mental agony (Poomalai Housing case, 2024)
- ₹1,00,000 in a 2021 case with a 4–5 year delay
These sums are not fixed by statute but are determined case-by-case by the adjudicator.
Factors That Influence Compensation and Interest
Several elements impact the amount awarded:
For Interest:
- Extent of Delay: Longer delays increase the interest amount.
- Offer Timing: If the developer offers genuine possession/refund during proceedings, interest may only be payable up to that date.
- Non-compliance: If the builder ignores orders or drags proceedings, interest continues to accrue.
For Additional Compensation:
- Living Situation: Whether the buyer had to rent a house longer or move frequently.
- Financial Strain: Dual burden of EMIs and rent.
- Builder’s Conduct: Willful negligence vs unavoidable delay.
- Proof of Loss: If the buyer provides bills or statements for extra costs, the adjudicator may allow reimbursement.
What the Courts Have Said
- The Supreme Court in Experion Developers Pvt. Ltd. v. Sushma Ashok Shiroor (2022) upheld ~9% interest as restitution, not penalty.
- The National Consumer Disputes Redressal Commission (NCDRC) often awards 6–10% interest for delay, varying by facts.
- If possession is delivered, the interest rate is usually on the lower side (6–9%).
- If refund is given, interest is typically higher (9–10%).
Key Point: Interest aims to put the buyer in a position they would have been in if the builder had honored the original timeline.
Tamil Nadu Example: In Melvin Victor De Poures v. Poomalai Housing Pvt. Ltd., the TNRERA not only granted interest for delay but also ₹2 lakhs for mental agony, demonstrating the state authority’s willingness to provide full relief.
Limits and Precautions
- No Double Compensation: Buyers must choose one forum (RERA or Consumer Court). They cannot claim interest for the same delay in both.
- Waiver Risk: If a buyer accepts a small compensation (e.g., ₹10/sq.ft.) without reservation, future claims may be restricted.
- Under Protest Clause: If a lesser amount is accepted under protest, it does not waive the buyer’s rights under RERA.
Legal Principle: Contractual clauses capping compensation do not limit RERA’s authority to award fair relief. Statutory protections override one-sided agreements.
Conclusion: Making Buyers Whole
Compensation under Tamil Nadu RERA is designed to make buyers financially whole—that is, putting them back in the position they would have been in if the delay had not occurred. While interest is the primary remedy, buyers facing mental distress or specific financial loss can also seek additional compensation.
To claim these remedies effectively, buyers must:
- Know their rights
- Keep detailed records
- File timely complaints
- Be prepared with evidence of hardship
For delay beyond the promised date, RERA ensures that justice isn’t just about possession—it’s about accountability and fairness.
Disclaimer: This blog post is for general awareness only and does not constitute legal advice. Buyers should consult a qualified RERA or real estate lawyer for specific guidance.
