By S&S Co. Advocates & Solicitors · Published 28 September 2026 · Informational content, not legal advice: see our disclaimer
Overview
A practical guide for a homebuyer or promoter working out what is actually owed under Section 18 of RERA once possession is delayed, distinct from this site's existing general RERA-complaint-filing and RERA-vs-consumer-forum guides, focused specifically on how the interest rate and computation period are determined.
What You Need to Know
- Section 18 of RERA entitles an allottee, where a promoter fails to complete or hand over possession by the date stated in the agreement, to either withdraw from the project and claim a refund of the amount paid with interest, or to remain in the project and claim interest for every month of delay until possession
- The prescribed interest rate under most states' RERA Rules is pegged to the State Bank of India's Marginal Cost of Funds-based Lending Rate (MCLR) plus an additional two percentage points, applying the MCLR rate as published on the first day of the relevant month rather than a rate fixed once at the start of the delay
- Interest is calculated as simple interest, not compound interest, using the formula: (amount paid x annual rate x number of days of delay) / 365: MahaRERA and other authorities have consistently rejected attempts to claim compound interest under Section 18
- A materially more accurate (and usually higher) computation runs interest separately on each instalment from the date that specific instalment was actually paid, rather than applying a single rate to the cumulative total paid from the agreement date: allottees should ask their RERA authority to compute compensation instalment-wise rather than accepting a lump-sum approximation
- The delay period runs from the promoter's committed possession date under the agreement (not any later, informally extended date the promoter may claim) until the date actual, habitable possession is offered, supported by a valid occupancy certificate, or, for a withdrawing allottee, until the refund is actually paid
- Because the applicable MCLR changes over time, an allottee or promoter should not assume a single interest rate applies for the entire delay period: the computation should apply the rate notified for each relevant month across the full delay window, which is why a month-by-month calculation (or a purpose-built RERA delay-interest calculator) is more reliable than a single blended-rate estimate
Frequently Asked Questions
What interest rate applies to a Section 18 delayed-possession claim?
Most states' RERA Rules peg it to the State Bank of India's MCLR plus two percentage points, applying the rate as published on the first day of the relevant month rather than a single fixed rate for the whole delay.
Is Section 18 interest simple or compound?
Simple interest: MahaRERA and other authorities have consistently rejected attempts to claim compound interest under Section 18.
Why does calculating interest instalment-by-instalment matter?
Because interest runs separately on each instalment from the date it was actually paid, an instalment-wise computation is more accurate, and usually yields a higher recovery, than applying one rate to the cumulative amount from the agreement date.
References & Further Reading
This guide references the following statutes, rules and sources, cross-checked at the time of writing.
- SBI MCLR + 2% as the prescribed Section 18 interest rate under most states' RERA Rules: confirmed via lexireview.in, reraexam.com and multiple 2026 RERA-interest-calculator sources at research time: note this is set by each state's own RERA Rules, so confirm the specific state's notified rate before applying it
- Simple (not compound) interest computation, and MahaRERA's consistent rejection of compound-interest claims: confirmed via reraexam.com at research time
- Instalment-wise computation (interest running from each payment date) producing a higher recovery than a lump-sum blended calculation: confirmed via reraexam.com and khannaandassociates.com at research time: present as the more allottee-favourable approach various RERA authorities have applied, rather than a universally mandated method, since practice can vary by state authority
- See also our Real Estate & RERA Notable Judgments and Legal Updates: Real Estate & RERA archive.