Section 18 RERA: How UP Calculates Delay Interest in the Exam

The two paths Section 18 gives the allottee

Section 18 of the RERA Act, 2016 triggers the moment a promoter fails to hand over possession by the date written into the agreement for sale. From that point the allottee gets a choice, and it is a choice that belongs entirely to the buyer, not the builder.

Path one: withdraw from the project. The allottee claims a full refund of everything paid, plus interest on that amount, plus compensation. Path two: stay in the project. The allottee does not exit, and instead receives interest for every month of delay until actual physical possession is handed over.

For the exam, fix the trigger and the two outcomes in your head. The agreed possession date is missed. The allottee then either takes the money and walks, or stays put and collects monthly interest. Section 18(3) separately entitles the allottee to compensation for any other failure by the promoter to meet obligations under the agreement.

A worked example on a realistic UP flat

Take a flat in Greater Noida booked at Rs 50 lakh, with the allottee having paid the full amount. Possession was due 1 April 2025. The builder hands over on 1 April 2026, a delay of 12 months. The allottee has chosen to stay in the project, so Section 18(1) proviso applies: monthly interest for the delay period.

UP RERA's adjudicated practice uses SBI 1-year MCLR plus 1%. With the MCLR around 8.70%, the applicable rate works out to roughly 9.70% per annum, simple interest. On Rs 50 lakh for one year that is about Rs 4.85 lakh in delay interest.

The figure is illustrative. The MCLR moves, so always confirm the current SBI 1-year rate before you compute. You can run your own numbers through the RERA delay interest calculator to check the method on different flat prices and delay periods.

The MCLR rate trap: +2% on paper, +1% in UP practice

This is the single most important nuance for a UP candidate, and it is where careless preparation costs marks. The central RERA Act and the prescribed-interest rule point to SBI's highest marginal cost of lending rate plus 2% per annum. That is the statutory, Act-based answer. If a question asks for the rate 'as prescribed under the Act', MCLR + 2% is what the drafters intend.

But UP RERA tribunals have consistently awarded MCLR + 1% in adjudicated delay cases. So the rate actually applied in Uttar Pradesh practice differs from the bare statutory formula.

Read the stem carefully. If the question cites the central Act or the prescribed rule, answer MCLR + 2%. If it describes a real UP RERA adjudication or asks what rate the Authority has been awarding, MCLR + 1% is the practice-based figure. Knowing both, and knowing which the question is testing, is what separates a prepared candidate from a guesser.

Newtech Promoters: an unconditional and absolute right

The Supreme Court settled the character of Section 18 in Newtech Promoters & Developers Pvt Ltd v State of UP (2021), a case that came out of Uttar Pradesh. The Court held that the allottee's right to withdraw and claim a refund with interest under Section 18 is unconditional and absolute.

What that means in plain terms: the builder cannot bargain it away. It does not depend on the promoter's consent, on a clause buried in the builder's agreement, or on the project's financial health. Once possession is delayed past the agreed date, the entitlement crystallises.

Expect this as a direct recall question, often phrased 'The Supreme Court in Newtech held the right under Section 18 to be ___'. The answer is 'unconditional and absolute'. It also helps you answer scenario questions where a builder argues the buyer waived the right in the booking form, that argument fails.

The force majeure trap

Builders routinely plead force majeure, COVID, GST transition, NGT construction bans, to explain late possession. The exam loves this because the correct answer is counter-intuitive.

Force majeure may excuse the delay, meaning the promoter is not treated as having wilfully defaulted. But it does not extinguish the allottee's Section 18 interest entitlement. The interest is compensatory, not a penalty. It compensates the buyer for money locked up in a flat they cannot use, and that loss exists whether or not the builder was at fault.

So when a scenario says 'the delay was caused by a government-imposed construction ban, is the allottee still entitled to delay interest?', the answer is yes. Separate the two ideas: excusing the cause of delay is not the same as cancelling the compensation for it. A candidate who conflates them walks straight into the trap the paper is designed to catch.

How Section 18 shows up in the exam

The UP RERA question paper rates Section 18 as a medium-to-hard topic, and it appears in three recognisable shapes. First, scenario calculations: a flat price, a paid amount, a delay in months, and a rate, asked to compute the interest. Drill the arithmetic until it is automatic. Second, 'which path' questions: given a fact pattern, identify whether the allottee is refunding-and-withdrawing or staying-and-claiming-monthly-interest. Third, the rate and principle questions covering MCLR, Newtech, and force majeure.

The neighbouring topic, Section 19 allottee rights and obligations, often appears in the same cluster, so study them together. Running full timed sets through the UP RERA mock test is the fastest way to get the calculation steps down to muscle memory before you sit the real paper.

Sample MCQs in the UP RERA format

Q1. Under Section 18, the delay interest rate prescribed by the central Act is: (A) SBI MCLR + 1% (B) SBI MCLR + 2% (C) Fixed 9% p.a. (D) RBI repo rate + 2% Answer: B. Note: UP RERA adjudications have in practice awarded MCLR + 1%.

Q2. A buyer paid Rs 40 lakh in full. Possession was delayed by 6 months and she chose to continue in the project. At an effective rate of 9.70% p.a. simple interest, the delay interest is approximately: (A) Rs 1.94 lakh (B) Rs 3.88 lakh (C) Rs 97,000 (D) Rs 2.40 lakh Answer: A (40,00,000 x 9.70% x 6/12).

Q3. In Newtech Promoters v State of UP (2021), the Supreme Court described the Section 18 refund-with-interest right as: (A) discretionary (B) subject to builder consent (C) unconditional and absolute (D) available only after conveyance Answer: C.

Q4. A project was delayed by a valid force majeure event. The allottee's Section 18 interest entitlement is: (A) cancelled entirely (B) reduced by half (C) unaffected (D) deferred until completion Answer: C.

What to do before you sit the paper

Lock down three things and Section 18 becomes a reliable scoring topic rather than a risk. Know the two paths cold: withdraw-and-refund versus stay-and-claim-monthly-interest. Know both rates and when each applies, MCLR + 2% as the central Act figure, MCLR + 1% as UP RERA's adjudicated practice. And hold the two principles ready, Newtech making the right absolute and force majeure not cancelling the interest.

Then practise the arithmetic until the steps are automatic: principal, rate, months over twelve. The numbers in the exam will differ from any example here, but the method never changes, so rehearse the method.

Work through solved examples on the UP RERA question paper page and time yourself on full sets. For the actual exam format, question count and pass mark, check up-rera.in, since UP RERA has not published those figures publicly.