The move aims to improve transparency, safeguard homebuyers’ maintenance deposits and ensure the money is used only for maintaining common areas and facilities.
The changes have been notified through the 12th Amendment to the Uttar Pradesh Real Estate Regulatory Authority (General) Regulations, 2019, issued under Section 85 of the Real Estate (Regulation and Development) Act, 2016.
The amendment inserts a new provision covering the collection, management, transfer and utilisation of IFMS deposits. The rules will come into force from the date they are published on the UP-RERA website.
What is IFMS?
Interest Free Maintenance Security (IFMS) is a one-time refundable amount that developers collect from homebuyers at the time of possession or execution of the sale deed.
The fund is intended to meet the cost of maintaining common areas, amenities and essential services in a housing or commercial project until the Residents’ Welfare Association (RWA) or Association of Allottees takes over maintenance.
What has changed?
Under the amended regulations, promoters must collect IFMS in a separate designated bank account opened with a scheduled bank. The funds cannot be mixed with the developer’s other accounts.
UP-RERA has also directed that the money be invested in the highest interest-bearing fixed deposit, selected after obtaining quotations from scheduled banks. This is aimed at preserving and growing the maintenance corpus until it is handed over to residents.
IFMS rates prescribed
The regulations also prescribe indicative IFMS rates for different categories of projects.
For multi-storey group housing projects, the rates range from ₹20-30 per sq ft for EWS housing to ₹90-100 per sq ft for ultra-luxury homes. Separate rates have also been specified for plotted housing projects, commercial developments and plotted commercial projects.
Rules for transferring the maintenance corpus
The amendment lays down a detailed framework for transferring the IFMS corpus to the RWA or Association of Allottees.
At the time common areas are handed over, the promoter must transfer the entire IFMS corpus by transferring the operating rights of the IFMS bank account. The developer must also provide a transfer statement containing unit-wise details of IFMS collected, any deductions or adjustments made, supporting audit records for expenditure incurred and the total amount transferred.
How can the money be used?
The regulations specify that the IFMS corpus can be used only for the operation, maintenance, repair and replacement of common areas, equipment and services meant for the collective benefit of residents.
The RWA must continue to maintain the corpus in a separate account distinct from other maintenance receipts. It is also required to maintain proper books of account and have the utilisation of IFMS funds audited by a Chartered Accountant. The audit report must be placed before the Annual General Meeting or Extraordinary General Body Meeting within three months of its finalisation.
Why does this matter?
The amendment creates a uniform framework for handling maintenance security deposits, an area that has often led to disputes between developers and resident associations.
By requiring separate bank accounts, fixed deposit investments, detailed transfer records and mandatory audits, UP-RERA seeks to improve accountability in the management of maintenance funds and ensure that money collected from homebuyers is preserved and transferred transparently to resident bodies after project handover.
First Published: Jul 16, 2026 1:59 PM IST
