UP-RERA Cracks Down on Incomplete Flat Handover: Developers Face Up to 5% Penalty for Violations

Lucknow, India – In a decisive move to protect homebuyers, the Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has issued a stern warning to developers: stop handing over incomplete or bare shell flats immediately or face penalties of up to 5% of the total project cost.

The directive, issued on May 8, 2025, comes in response to a wave of complaints from buyers who were being pressured into accepting “canvas flats” units without flooring, electrical fittings, plumbing, or promised amenities. Under Section 37 of the RERA Act, 2016, UP-RERA clarified that such practices are not only illegal but also directly violate the rights of allottees.

“Any such act by the promoters defeats the very objective of the RERA Act. Strict compliance is now non-negotiable,” said Mahendra Verma, Secretary of UP-RERA.

What the Order Mandates

The new directive emphasizes that physical possession of an apartment can only be offered when:

• The unit is fully completed with all internal finishes (plumbing, wiring, doors, windows, flooring).
  
• All amenities promised in the brochure or sanctioned plan are in place.
  
• The developer has obtained the Occupancy Certificate (OC) from the competent authority.
  
• A registered Agreement for Sale or Lease has been executed.
  

According to Rule 1.8(3) of the UP Agreement for Sale Rules, 2018, a “ready-to-move-in” unit must meet all advertised specifications, and the quoted price must include land cost, construction, amenities, and development fees. Any deviation is considered a default.

Penalties and Legal Consequences

Developers violating these norms may be penalized under Sections 38 and 61 of the RERA Act, with fines up to 5% of the project’s total cost. They are also prohibited from modifying the standard builder-buyer agreement format laid down by UP-RERA.

UP building bylaws further stipulate that developers must secure multiple no-objection certificates (fire safety, utilities, lift operations, common area readiness, etc.) before applying for an OC. Delivering units without this clearance is strictly illegal.

“It’s not just a matter of delivery timelines, but one of safety, transparency, and trust,” noted Dinesh Gupta, Secretary of CREDAI.

Mixed Reactions from Industry and Buyers

The decision has been widely welcomed by homebuyers, many of whom have been left stranded in semi-finished apartments or forced to spend extra on completing essential fixtures.

However, some developers expressed concern about the tightening compliance framework, especially in situations where external utility connections or municipal clearances delay final approvals.

Still, UP-RERA remains firm on its stance that buyer protection outweighs all else.

“The developers must deliver what was promised, nothing less,” Verma added. “We will not allow shortcuts or exploitation in the name of progress.”

As the real estate sector in Uttar Pradesh continues to mature, the regulator’s latest directive is seen as a bold step toward increasing accountability and restoring buyer confidence in one of India’s most dynamic property markets.