The interest on delayed payment to builder is charged only if your agreement explicitly includes such a clause and the rate is reasonable and aligned with RERA norms. Otherwise, it may be deemed unfair or unenforceable. I have shared more information about it below.
Can a Builder Charge Interest on Delayed Payment?
Builders can only legally impose interest for delayed payments if the sale or booking agreement clearly states the interest rate and laydown terms. Without that clause, they lack legal grounds to demand it.
Consumer protection authorities have ruled that exorbitant interest rates, such as 18% p.a., constitute unfair trade practices.
The NCDRC has criticized such clauses, and RERA regulations suggest that interest charged by developers should align with the SBI’s highest marginal cost rate + approx. 2%, typically around 10 to 12% p.a.
If your agreement has a high penalty clause, legal recourse is available. Challenge the clause in Consumer Courts or RERA as an unfair trade practice. Seek parity, arguing that developers themselves pay only MCLR+2% interest and should not penalize buyers more harshly. I hope you found this helpful.
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What is the Interest on Delayed Payment to Builder?
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2025-06-19T14:46:59+00:00 2025-06-19T14:47:00+00:00Comment
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