Tamil Nadu Real Estate Authority Mandates Higher Deposits for Project Extension Approvals

The Tamil Nadu Real Estate Regulatory Authority has announced stricter financial requirements for developers seeking project registration extensions beyond the standard one-year period. Under the new regulations, builders must now deposit an additional 20% of funds collected from homebuyers into designated escrow accounts, officials confirmed.

Enhanced Escrow Requirements Push Total Deposits to 90%

The regulatory body stated that this additional deposit requirement would be implemented alongside the existing mandate of maintaining 70% of homebuyer collections in escrow accounts. Industry sources indicated that the combined requirement now brings the total escrow commitment to 90% of collected amounts from property buyers.

Authority Aims to Strengthen Homebuyer Protection

TNRERA officials explained that the enhanced deposit mechanism was designed to protect homebuyer interests by ensuring adequate funds remain available for project completion. The authority emphasized that the measure would prevent the diversion of homebuyer money toward other ventures and strengthen the financial commitment of developers to their registered projects.

Regulatory authorities noted that they had exercised powers granted under the Real Estate Regulation and Development Act of 2016 to implement this additional condition rather than pursuing outright cancellation of project registrations.

Industry Voices Concerns Over Cash Flow Impact

Real estate industry representatives, particularly from small and medium-sized development firms, have expressed apprehensions about the new financial requirements. Developer associations argued that the additional deposit obligations could significantly strain cash flow patterns, especially considering that builders typically make substantial investments during initial construction phases before receiving major inflows from property buyers.

Several industry stakeholders have also requested the authority to consider exemptions for delays caused by natural circumstances such as heavy rainfall, flooding, or other force majeure events. They contended that developers should not face penalties for delays resulting from factors beyond their operational control.

Market Dynamics Expected to Shift in Tamil Nadu

Real estate analysts suggested that the enhanced deposit requirements would likely drive greater accountability among developers while potentially creating challenges for those operating with limited financial reserves. The new regulations are anticipated to influence project timelines and reshape market dynamics across Tamil Nadu's real estate sector.

Industry observers noted that while the measure aims to improve financial discipline, it could also impact the ability of smaller developers to pursue project extensions, potentially affecting the overall supply of housing projects in the state.

For homebuyers seeking clarity on property valuation and guidelines in Tamil Nadu, the authority's enhanced deposit requirements signal stronger regulatory oversight in the state's real estate market.