UP RERA releases guideline for utilisation of IFMS fund

New Delhi: The Uttar Pradesh Real Estate Regulatory Authority has directed the developers to collect the Interest Free Maintenance Security (IFMS) amount from buyers and deposit it in a separate designated account opened with a scheduled bank.

For this, UP RERA notified the 12th Amendment to the Uttar Pradesh Real Estate Regulatory Authority (General) Regulations, 2019, introducing a comprehensive framework for the collection, management, transfer and utilisation of Interest Free Maintenance Security (IFMS).

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The amendment, inserted under Regulation 47, will come into force from the date of its publication on the Authority's website.

The collected funds shall be invested in the highest interest-bearing fixed deposit after obtaining quotations from eligible banks, ensuring safety, transparency and optimum returns on the maintenance corpus.

UP RERA has prescribed IFMS rates based on the nature, size and category of projects. For multi-storey group housing projects, the rates range from Rs 20 to Rs 100 per square foot, depending on the category of the unit. In commercial projects, the IFMS amount has been fixed at Rs 40 per square foot for non-central air-conditioned projects and Rs 50 per square foot for central air-conditioned projects. Separate rates have also been prescribed for plotted residential and plotted commercial developments.

The amendment makes it mandatory for promoters to transfer the entire IFMS corpus to the Residents' Welfare Association (RWA) or Association of Allottees at the time of handing over the common areas. Promoters must also provide a detailed transfer statement containing unit-wise IFMS collections, details of expenditure, audit trail and the final balance being transferred.

The regulations clearly stipulate that the IFMS corpus shall be utilised exclusively for the operation, maintenance, repair and replacement of common areas, equipment and services meant for the collective benefit of residents. The funds must be maintained in a separate account, distinct from other maintenance receipts.

Further, the RWA or Association will be required to maintain proper books of accounts reflecting all receipts, payments and utilization of IFMS funds. The utilisation of the corpus must be audited by a Chartered Accountant in accordance with generally accepted accounting principles, and the audit report must be placed before the Annual General Meeting (AGM) or Extraordinary General Body Meeting (EGBM) within three months of its finalisation.

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“The objective of this amendment is to ensure complete transparency, accountability and financial discipline in the management of Interest Free Maintenance Security (IFMS) funds. Homebuyers contribute these funds for the long-term upkeep of common facilities, and it is essential that the corpus remains secure and is utilised only for its intended purpose. The new provisions will safeguard the interests of allottees by ensuring proper collection, investment, transfer and audited utilisation of IFMS funds,” said UP RERA Chairman Sanjay R. Bhoosreddy.