UP Rera Warns Builders of 5% Penalty For Handing Over Incomplete Flats

Noida, May 12, 2025: Cracking down on errant builders, the Uttar Pradesh Real Estate Regulatory Authority (UP Rera) has directed real estate developers to stop handing over incomplete flats to purchasers.

In a May 8 order issued under Section 37 of the Rera Act, 2016, the Authority directed developers to hand over only complete flats with all promised amenities—proper plumbing in bathrooms/kitchen, electrical fittings and flooring—and after the execution of a registered sale or lease deed.

Taking notice of complaints of homebuyers who alleged that builders force them to take possession of incomplete flats, Rera secretary Mahendra Verma said, “It has come to the notice of the regulatory authority that some of the promoters, when executing the agreements for sale, are making the allottees agree to the condition of accepting physical possession of canvas flats and are, in fact, handing over possession to such flats.”

Handing over incomplete flats is a serious breach of the Rera Act, which mandates that only ready-to-move-in apartments can be handed to buyers after obtaining valid occupancy or completion certificates, UP Rera said.

A builder handing over incomplete flats will be liable to a penalty amounting to five per cent of the real estate project’s total cost, according to the UP Rera notice.

Builders said that UP Rera’s notice would ensure more discipline in the industry.

“As per UP Rera’s earlier directives, if a developer applies for four key NOCs—fire safety, structural stability, lifts and electricity—and does not receive a response from the competent authority within a month, it should be treated as a case of deemed occupancy or completion certificate (OC/CC),” Dinesh Gupta, secretary of CREDAI’s western UP unit, said.

“In such cases, developers should be allowed to offer possession. We fully agree that possession should not be offered merely to raise the final demand for payment. It must reflect a genuine intent to hand over a livable home to the buyer.”

Gupta added that “where deemed OC is applicable and all essential services and common amenities are in place, buyers should be allowed to take possession”.

“This approach will protect homebuyers from undue harassment and the long wait for elusive OC/CC approval.”

Umesh Rathore, vice-president for sales and marketing for VVIP Group, termed UP Rera’s directive “timely and welcome”.

“It will significantly boost homebuyer confidence and strengthen the credibility of the real estate sector. The Authority is setting a strong precedent. This move pushes the industry towards much-needed discipline and ensures better protection for genuine homebuyers,” he said.

Bipin Agarwal, Chairman and Managing Director, Nimbus Group, says, “UP RERA’s new directive brings much-needed clarity and relief to homebuyers. For too long, the handover of incomplete or ‘canvas flats’ has kept buyers waiting, stuck with unfinished homes, mounting costs, and endless delays. This move shuts the door on such uncertainty. By mandating possession only after obtaining completion or occupancy certificates, RERA ensures buyers get what they were promised: fully finished, legally approved homes with all amenities in place. It protects genuine buyers, simplifies the homebuying process, and brings long-overdue discipline to the industry. For credible developers, we believe it’s not a roadblock; it’s a chance to lead by example and build lasting trust.”

Salil Kumar, Director (Sales & Marketing), CRC Group, said, We are in complete agreement with the recent directive of the UP RERA mandating real estate developers to hand over the apartment to the buyers not only after it is fully inhabitable, but most importantly, the entire project, including all amenities, should also be complete in every respect. Developers like CRC, who are particularly concerned about their reputation and customers, have been religiously following the above prescription for a positive buyer experience. At the same time, the UP RERA directive imparts clarity and will augur well for the sector.

Neeraj Sharma, Managing Director, Escon Infra Realtors, says, “We see this move as a significant development step towards strengthening the foundation of the real estate sector. We have seen over the years how homebuyers have continuously faced challenges due to increasing costs and delays in flat possession. UP RERA has regulated this move in the interest of homebuyers, and this will bring more investments in the real estate sector in the years to come. In the past 5 years, we have seen massive growth, particularly in Greater Noida has seen the steepest average price appreciation among other NCR cities. In a report by Anarock, the average rates in Greater Noida appreciated 98% from Rs 3340 per sq ft during Q1 2020 to Rs 6600 per sq ft as of Q1 2025-end. This new directive will encourage more homebuyers to invest their hard-earned money in the sector with security and complete transparency.”