The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has introduced new regulations governing the collection, management, investment, and transfer of Interest Free Maintenance Security (IFMS) funds. The amendments, notified under the 12th Amendment to the Uttar Pradesh Real Estate Regulatory Authority (General) Regulations, 2019, came into effect on July 15, 2026.
The revised framework aims to improve transparency, accountability, and financial discipline in the management of maintenance funds collected from homebuyers while ensuring that these funds are transferred to the Residents’ Welfare Association (RWA) or the Association of Allottees when a project is handed over.
Separate Account for IFMS Funds
Under the amended regulations, promoters are required to collect the IFMS amount from buyers at the time of registration of the sale, lease, or sub-lease deed. The collected amount must be deposited into a separate designated account with a scheduled bank, distinct from other project-related accounts.
To safeguard the corpus and maximise returns, developers must invest the funds in the fixed deposit offering the highest interest rate among eligible banks after obtaining quotations. This provision is intended to ensure both the security of the funds and better financial returns for future maintenance requirements.
Mandatory Transfer to RWAs
A significant feature of the amendment is the mandatory transfer of the entire IFMS corpus, along with all accrued interest, to the RWA or Association of Allottees at the time of handing over the project’s common areas.
In addition to transferring the funds, developers must submit a detailed transfer statement containing unit-wise IFMS collections, expenditure incurred, audit records, and the final balance transferred. The measure is expected to reduce disputes between developers and resident associations regarding maintenance funds.
Restricted Use of IFMS
The regulations specify that the IFMS corpus can only be utilised for the operation, maintenance, repair, and replacement of common areas, shared facilities, equipment, and common services within the project. The fund must remain separate from regular monthly maintenance collections.
Resident associations are required to maintain proper accounts of receipts, payments, and fund utilisation. These accounts must be audited by a chartered accountant, and the audit report must be presented before the Annual General Meeting or Extraordinary General Body Meeting within three months of completion.
Prescribed IFMS Rates
The regulations prescribe project-specific IFMS rates based on the nature of development. For group housing projects, the rates range from ₹20 to ₹100 per sq. ft., depending on the category of residential units. Commercial developments are required to collect ₹40 per sq. ft. for non-central air-conditioned buildings and ₹50 per sq. ft. for centrally air-conditioned projects. Separate rates have also been specified for plotted residential and commercial developments.
Addressing Long-Standing Concerns
Interest Free Maintenance Security is a one-time deposit collected from homebuyers, generally at the time of possession, to create a long-term maintenance reserve for the project after it is handed over to residents.
Over the years, delays in transferring the corpus, lack of transparency, and disagreements over the amount payable have led to frequent disputes between developers and resident associations. The revised UP RERA framework seeks to address these concerns by establishing clear procedures for collection, investment, transfer, auditing, and utilisation of IFMS funds.
According to UP RERA, the new provisions are expected to strengthen the financial management of residential projects, improve accountability in maintenance fund handling, and support the long-term upkeep of common infrastructure across housing developments in Uttar Pradesh.
