To safeguard homebuyers and curb project delays, the Tamil Nadu Real Estate Regulatory Authority (TNRERA) has made it mandatory for developers seeking project registration extensions beyond one year to deposit an additional 20% of the amount collected from allottees into the designated project account. The directive is issued under Section 7(3) of the RERA Act, 2016, allowing the TNRERA to impose further terms in the interest of homebuyers rather than cancel project registrations outright. Officials say the step is aimed at ensuring that funds collected from buyers are available for construction and not diverted for other purposes. TNRERA said many project delays were linked to insufficient funds in the project escrow account, where 70% of collections are already mandated to be deposited. Now, if the extension sought for a project exceeds one year, the promoter must park an additional 20% of buyer collections into the account. However, small and mid-sized builders raised concerns. "We invest our own money to build initial units before any bookings take place. Only after seeing physical progress do buyers come forward," said S Ramprabhu, chairman of DTCP committee at Builders Association of India. "Asking for 20% extra deposit when we haven't collected much from buyers could affect our cash flow." G Mohan, former president, Chennai Southern Builders Association, said, "If the delay is due to natural problems like rain or flood, TNRERA should exempt the builder."

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