The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has introduced comprehensive new rules mandating developers to securely manage and transfer Interest Free Maintenance Security (IFMS) funds to Residents' Welfare Associations (RWAs) at the time of project handover. According to reports from PTI, the amendments have been introduced through the 12th amendment to the UP RERA (General) Regulations, 2019 under Regulation 47 and came into force immediately after being published on the authority's website on July 15, 2026. The new framework aims to address one of the most common sources of disputes between homebuyers, developers and RWAs: what happens to the maintenance corpus collected by builders after possession. As reported by Lucknow News, these changes are effective immediately from July 15, 2026, representing a significant shift in how IFMS funds are managed across Uttar Pradesh.
Interest Free Maintenance Security (IFMS) is a one-time, refundable maintenance corpus that builders collect from homebuyers at the time of property registration. As reported by PTI, this corpus is meant exclusively for the long-term maintenance, repair and replacement of common assets such as lifts, clubhouses, water pumps, electrical systems, common lighting, landscaping, security systems, and other shared infrastructure. Unlike monthly maintenance charges, IFMS is intended to create a permanent reserve fund for major future expenses. Maintenance funds have long been a contentious issue in residential projects, with homebuyers complaining that IFMS money was never transferred to RWAs, builders failed to disclose how the corpus was invested, interest earned on the money was not accounted for, and there was little transparency on how the funds were utilised. According to Lucknow News, IFMS is a one-time, interest-free deposit paid by homebuyers to developers, typically at the time of taking possession, serving as a long-term maintenance reserve after handover to the RWA.
Under the new rules, every rupee collected as IFMS must be deposited into a separate designated bank account with a scheduled bank, with builders unable to mix this money with project funds or operating accounts. According to the latest notification, the IFMS amount should be collected based on the cost of maintenance requirements depending on the scale, specifications and target segment of the projects. Builders must obtain quotations from eligible banks and invest the corpus in the fixed deposit offering the highest rate of interest, ensuring both safety and better returns for homebuyers. This means the maintenance fund should grow over time instead of remaining stagnant. The move is aimed at improving transparency even after builders hand over projects, with the corpus remaining separate from routine monthly maintenance collections. The amended regulations stipulate that the IFMS fund can be used only for the operation, maintenance, repair and replacement of common areas, equipment and shared services.
Once the project's common areas are transferred, the builder must transfer the entire IFMS corpus, interest earned, and a detailed statement showing collections, expenditure and audit trail to the Residents' Welfare Association (RWA) or Association of Allottees. According to the latest notification, the promoter shall be required to provide a Transfer Statement, including details of total IFMS amount collected from the allottees with unit-wise break-up of such amounts, any deductions or adjustments made, audit trail supported by documentation for expenditures incurred from the IFMS and total amount being transferred to the Association. At the time of handing over a project's common areas, promoters must transfer the entire IFMS corpus, along with accrued interest, to the RWA or Association of Allottees. The RWA or Association of Allottees must maintain proper accounts of all receipts, payments, and utilisation, get them audited by a Chartered Accountant in accordance with generally accepted accounting principles, and place the audit report before the Annual General Meeting (AGM) or Extraordinary General Meeting (EGM) within three months of completion. The new regulations make it clear that IFMS cannot be diverted for any other purpose, with the annual audit becoming compulsory to ensure proper utilisation of the maintenance corpus.
UP RERA has standardized IFMS charges based on project type instead of leaving them entirely to developers. According to PTI, the prescribed rates include ₹20-₹100 per sq ft for group housing depending on the category of residential unit, ₹40 per sq ft for non-central air-conditioned commercial projects, and ₹50 per sq ft for centrally air-conditioned commercial projects. Lucknow News reports that UPRERA has fixed IFMS rates for different types of residential, commercial and plotted projects. UP RERA Chairman Sanjay R. Bhoosreddy stated that homebuyers contribute this money for the long-term upkeep of common facilities and it is therefore essential that the corpus remains secure and is used only for its intended purpose. The new framework seeks to address these concerns by prescribing rules for collection, investment, transfer and auditing of the maintenance corpus, making it one of the most significant consumer-protection measures in the amendment. As reported by Lucknow News, UP RERA Chairman Sanjay R Bhoosreddy said the new rules will protect homebuyers' money, improve transparency and help ensure better maintenance of housing projects across Uttar Pradesh.
