CREDAI RERA Extension 2026: Builders Seek Relief

A rapid surge in construction costs has emerged as a major challenge for the Indian real estate sector, threatening to drive up residential property prices in the near future. Continuous price hikes in essential materials like steel, cement, and aluminum, coupled with severe supply chain disruptions and acute labor shortages, are adversely impacting both the costs and timelines of ongoing projects across the country.

As budgets derail and construction activity slows down, industry associations have formally appealed to the Central Government to grant extensions on project deadlines under the Real Estate (Regulation and Development) Act (RERA) to mitigate the mounting financial pressure. The construction industry's challenge centers on a confluence of global and domestic pressures that have tightened margins significantly.

A recent JLL report projects that construction costs across Indian asset classes will rise by 3-5% in 2026. This increase seems smaller than the 11% spike in 2024, but the underlying issue remains the same and is in some ways more structural. The composition of cost pressures has shifted markedly. Material costs showed mixed trend in 2025 as cement, steel and diesel dropped by about 1–2 per cent, 3–4 per cent and 5–6 per cent respectively, while aluminium and copper jumped 8–9 per cent and 9–10 per cent on global demand and supply chain dynamics. Labour costs are experiencing the most consistent upward pressure, increasing by 5-6 per cent across all categories, driven by skilled labour shortages and infrastructure demand.

By enhancing social security benefits and standardising wage frameworks, the codes are projected to increase labour costs by 5-12%. This regulatory shift—driven by New Labour Codes implemented in November 2025—has locked in structural cost increases that developers cannot easily absorb. For projects with fixed-price contracts or those nearing completion deadlines, the timing has proven particularly acute.

The force majeure relief mechanism now under discussion represents a critical lifeline. The Force Majeure clause helps the builders and developers extend the deadline for completion for a maximum of one year. If proven, Force Majeure automatically grants the builder an extension of 6 months and provision for another 3 months if seen fit by the authorities. Given the persistent nature of current pressures—neither temporary nor cyclical—industry bodies argue that material cost inflation combined with labor scarcity justifies invocation of these protections.

Realtors' bodies CREDAI and NAREDCO said the real estate industry has started facing a short supply of some building materials, and said construction costs could rise if tensions continue for a longer period. The two associations, together representing around 20,000 developers, also expressed concern about possible delays in the completion of real estate projects due to likely shortages of construction materials. For homebuyers, the stakes involve both affordability and certainty of delivery—understanding these dynamics informs expectations around pricing and possession timelines in the current market cycle.