From sweeping sustainability measures and building safety reforms to infrastructure planning changes, procurement law updates and workforce challenges, the industry is being reshaped by regulatory, economic and technological forces. Here, we explore some of this year’s most significant developments, highlighting what they mean for contractors, developers and investors as the sector prepares for 2026 and beyond.
Sustainability
Sustainability continued to be a defining theme in the market in 2025, moving beyond compliance to reshape contract drafting, risk management and project delivery.
Contracts are increasingly embedding climate-related obligations, and industry bodies continue to produce guidance and model contracts to assist their members in doing so. This included, in February, the publication of a competence framework in the built environment by the Construction Industry Council, in collaboration with Edge.
This trend goes beyond a ‘nice to have’. In a paper produced for the Society of Construction Law (SCL) earlier this year, Anne-Marie Friel of Pinsent Masons suggested that embodied carbon liabilities could become “the defects claims of the future” in the coming years, exposing contractors to similar liabilities as we have seen for fire safety. In the same article, she called for contactors to adopt a systems-thinking approach, treating sustainability as an interconnected process across procurement, design and project delivery, rather than a standalone obligation. Planning authorities are also prioritising retrofit over demolition to reduce construction-phase emissions, with changes to the National Planning Policy Framework (NPPF) in England, and high profile cases such as the Oxford Street Marks and Spencer redevelopment, highlighting embodied carbon as a decisive factor in approval decisions.
Outside of the UK, EU regulation is driving project finance documents and procurement contracts to include sustainability requirements which are then passed down to suppliers in the whole value chain to demonstrate that human rights breaches and environmental risks are minimised and to ensure that evidence of compliance is reported back up the contract chain. Given the impact of the EU on businesses operating in the UK, the influence of this EU regulation is being felt in the UK with evidence of this kind of reporting being increasingly required within contracts.
Regulation is also evolving to integrate safety and decarbonisation. The Building Safety Act continues to impose stringent requirements for higher-risk buildings, but property owners now face dual compliance pressures: maintaining structural safety while meeting increasingly intricate energy efficiency standards.
Looking ahead, government proposals for mandatory net zero transition plans for “economically significant entities” will further embed sustainability into funders’ corporate strategies and reporting obligations.
Building and fire safety
Building and fire safety reforms accelerated in 2025 as the UK and Scottish governments implemented the recommendations of the inquiry following the Grenfell Tower fire. The UK government has committed to all 58 recommendations, including the creation of a single construction regulator to consolidate oversight of building control, construction products and higher-risk building licencing. Initial reforms to the Building Safety Regulator were announced in June, and the government established a ‘single regulator advisory board’, chaired by former LFB commissioner Andy Roe, to advise it on the design of the regulator and a prospectus, published for consultation (55-page / 1.4MB PDF) as the year drew to a close. The consultation will close on 20 March 2026.
Updates to fire safety regulations include stricter duties for ‘responsible persons’, and new requirements for ‘personal emergency evacuation plans’ for disabled and vulnerable occupants from 2026. Scotland is also adopting the Grenfell recommendations, introducing mandatory accreditation for fire risk assessors and professionalising fire engineering standards.
In June, the UK government established the Building Control Independent Panel (BCIP) to address two further questions raised by the Grenfell Tower inquiry: whether building control functions should be carried out by those with a commercial interest; and whether these functions should be centralised under a national authority. The BCIP consists of five independent experts, including inquiry chair Dame Judith Hackitt. The panel is due to present its findings to the government imminently, and a formal government response is expected in early 2026.
The definition of ‘higher risk buildings’ (HRBs) is under review. Currently based on height and storey count – over 18m or seven storeys with two or more residential units, or care homes and hospitals – the criteria may be broadened to consider building use and the presence of vulnerable occupants. These changes, combined with fast-track processes for Gateway approvals and recruitment of over 100 new inspectors, reflect a systemic shift towards centralised oversight and risk-based regulation.
Energy and infrastructure planning
The UK government published its onshore wind strategy in July, setting out plans to accelerate deployment of onshore wind to meet 2030 clear power targets. The strategy includes more than 40 actions aimed at unlocking up to 10GW of additional capacity, repowering existing turbines and doubling sector employment to 45,000 jobs by 2030.
In England, further reform comes with the Infrastructure Planning (Onshore Wind and Solar Generation) Order 2025. The order raises the capacity threshold for solar projects requiring consent under the separate planning regime for ‘nationally significant infrastructure projects’ (NSIPs) to 100MW, streamlining planning for smaller solar projects while ensuring larger schemes remain subject to national scrutiny. It also brings onshore wind back into the NSIP regime for projects of 100MW and above. Planning efficiency is another focus area for the government. It is piloting an AI tool called Extract to automate validation of planning documents, reducing manual checks from hours to minutes. Trials with local authorities have shown promising results, and a national rollout is expected by spring 2026.
At the same time, proposals to streamline judicial reviews for NSIPs have been welcomed by those in the industry, given their potential to cut delays and costs in resolving legal challenges. The changes, prompted by Lord Banner KC’s broader work on tackling delays in the planning system, will be implemented through the Planning and Infrastructure Act, which received Royal Assent on 18 December.
Housing also remains a priority. In England, the launch of a £39 billion Social and Affordable Homes Programme in July is aimed at supporting the government’s commitment to deliver 1.5 million new homes in this parliament, at least 60% of which should be for social rent, alongside commitments to meet the Decent Homes Standard and improve energy efficiency. This programme is undoubtedly ambitious, but comes with the potential for disputes over funding delays, compliance issues and prioritisation of resources – highlighting the complexity of delivering new housing at this scale.
Skills, procurement reform and workforce challenges
The Labour government’s flagship Employment Rights Act, expected to take effect from next year, will have significant implications in a sector which traditionally relies on transient labour, agency workers and self-employed contractors. The act includes measures such as enhanced protection from unfair dismissal, increased rights to flexible working, rights to regular hours for casual workers and measures which will increase the influence of trade unions. Employers will need to reassess resourcing models and contractual arrangements to mitigate risks of non-compliance and increased litigation exposure.
Procurement reform has already reshaped the landscape in 2025 with the Procurement Act 2023 and related regulations, which came into force on 24 February. The act introduces a number of important changes, such as requiring contracting authorities to have regard to new procurement objectives including value for money and maximising public benefit, as well as a requirement to have regard to government priorities such as net zero and social value through the National Procurement Policy Statement. In relation to selection and evaluation, the act re-shapes the regime on exclusion grounds, introducing a new debarment list which is managed centrally by UK government. There is also a shift from identifying the ‘most economically advantageous tender’ to ‘most advantageous tender’ as part of the evaluation exercise. From a transparency perspective, the act introduces various notice publication requirements throughout the life of the contract, including in respect of the procurement and contract management. There are also new implied contract terms relating to prompt payment and rights of termination. The extent of these changes is likely to particularly influence dispute resolution strategies, as already evident within contract drafting on public construction projects.
Meanwhile, inflationary pressures and material shortages continued to affect project delivery in 2025, driving up costs and extending timelines. We have seen these challenges lead to increased reliance on contractual mechanisms such as price adjustment clauses and force majeure provisions to manage risk. As this volatility persists, contractors and employers will have to review their supply chains and dispute resolution strategies, ensuring that contract terms reflect continuing market realities.
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