UK: Top 5 most significant legislative changes, regulatory developments or trends affecting the construction industry

1.1. Building safety has been a key area of focus for the UK construction industry in the wake of the Grenfell Tower tragedy and subsequent inquiry. The Building Safety Act 2022, which was granted Royal Assent on 28 April 2022, remains one of the most significant legislative reforms of a generation.

1.2. This year, we expect to see further legislative and regulatory developments surrounding building safety in the UK which will likely increase the administrative burden and cost of compliance imposed on market players. The key upcoming reforms or developments in the UK are:

1. As of 27 January 2026, the Building Safety Regulator (BSR) is no longer a part of the Health and Safety Executive (HSE) but is an arm’s length, independent body corporate with responsibility for the HSE’s building safety regulatory function.¹ This is intended to bolster accountability, reinforce operational independence and address delays in the Gateway 2 and 3 processes for higher-risk buildings. Under this new arrangement, the BSR will be able to levy charges for advice, research and associated services.
2. The Building Safety Levy will be implemented in England on 1 October 2026. The levy will be charged by local authorities at the time a building control application is made on developments that comprise of at least 10 new dwelling units or 30 new bedspaces in purpose-built student accommodation. As the aim is to fund the rectification of unsafe buildings and achieve compliance with current building safety standards, omissions in payment will result in severe criminal penalties.
3. In July 2025, the Government announced its intention to bring forward the Remediation Bill as soon as parliamentary time allows it, which could well be this year. The Bill is aimed at accelerating the remediation of unsafe cladding in residential buildings.² Crucially, the Bill imposes a statutory legal duty on landlords to remediate unsafe buildings which is supported by strict deadlines and criminal sanctions for non-compliance.
4. Finally, recent decisions like Triathlon Homes LLP v Stratford Development Partnership & Ors [2025] EWCA Civ 846 (which is due to be appealed to the Supreme Court this year) affirm the policy aims of the Building Safety Act 2022, that developers and their associated companies should bear the primary responsibility for the costs of remediating defective buildings. This is likely to have various effects:
   1. Lenders are unlikely to be subject to a Remediation Contribution Order, Building Liability Order or Remediation Order, even if they were to take a share of security over a company. However, the practical implications of any of these orders are relevant to the value of the security and should be addressed prior to the facility being concluded.
   2. Companies involved in building transactions are responding to the risk of Building Liability Orders (BLOs) (which extend potential liability for the cost of remedial works beyond the original contracting party to its associated companies) in various ways including:
      1. Amending to third-party rights provisions to allow a company which is potentially liable to a BLO to have the ability to recover these costs directly from culpable members of the supply chain.
      2. Undertaking enhanced due diligence in M&A and Real Estate deals to scrutinise these long ranging historic liabilities and group structures more closely.
      3. Exercising greater caution in corporate structing and investment decisions. Fundamentally, investors are now aware that using shell companies is not sufficient protection against this liability and they must factor in long-term safety obligations and corporate structure risk when investing in companies that have undertaken development and construction work.

1.3. To mitigate the risk of falling foul of the new legislative and regulatory environment and keep costs down, businesses should take account of the shifting landscape at an early stage or re-visit budgets and programmes that are already underway.

¹ The Building Safety Regulator (Establishment of New Body and Transfer of Functions etc). Regulations 2026.
² Remediation Acceleration Plan update, July 2025 - GOV.UK.

2.1. Following the Grenfell Tower tragedy, the Government commissioned two independent reviews relevant to construction products: one by Dame Judith Hackitt on the fire system, and one by Paul Morell OBE and Anneliese Day KC on the testing of construction products. Both of these reviews concluded that there are systemic issues requiring improvements in the product safety and accountability regime.³

2.2. In response, the Government carried out a consultation on reform to construction products which came to an end on 21 May 2025.⁴ The Government published its white paper on the Construction Products Reforms on 25 February 2026 which promises to introduce “a programme of long-term ambitious reforms” for “system-wide solutions”, namely:

1. Risk assessments and mandatory compliance for construction products;
2. Enhanced transparency and traceability over product information and testing data including through the use of Digital Product Passports;
3. Strengthening the pathways for individuals to seek redress from manufacturers and encouraging regular engagement with stakeholders; and
4. Greater coordination, enforcement mechanisms and powers afforded to regulators to impose sanctions including proactive market inspections and surveillance of products at an early stage or stringent sanctions for providing misleading information.⁵

2.3. Despite the far-reaching nature of the proposed reforms, we are already seeing greater certainty in this segment of the market. On 8 January 2026, the Government issued a statutory instrument confirming that products that comply with the EU Construction Products Regulation 2024 will comply with UK law too, lowering the administrative burden on manufacturers and suppliers working across the two regions.⁶

2.4. Building on existing reforms, section 149 of the Building Safety Act 2022 created a new cause of action against manufacturers and suppliers of cladding products that have caused or contributed to a dwelling becoming unfit for habitation and introduced a retrospective 30-year limitation period.⁷ Although section 149 remains untested, 2026 might yet be the year the courts provide clarity over this provision and liability for construction products.

2.5. The second major response by the Government was to create the power to bar certain manufacturers of construction products from being considered for major infrastructure or other Government-led projects under the Procurement Act 2023. This has, however, been put on hold at the request of the Metropolitan Police and Crown Prosecution Service. In July 2025, the Government announced it had paused its debarment investigations into the seven manufacturers, pending the conclusion of the criminal investigations commenced by the Metropolitan Police on 14 June 2017.⁸ The Metropolitan Police has suggested that it will be in a position to make a final decision on any criminal charges by the end of 2026, although an exact date has not been provided.⁹ This gives businesses that are concerned about the risk of criminal charges and/or non-criminal debarment of their products an opportunity to assess current or previous construction products on the market.

³ Construction Products Reform Green Paper - February 2025, Executive Summary, paragraph (vii).
⁴ Construction Products Reform Green Paper - February 2025, Chapter 12: Next steps, paragraph 12.3.
⁵ Construction Products Reform White Paper.
⁶ Practical Law Construction: what to expect in 2026, accessed on 12 February 2026.
⁷ Building Safety Act 2022.
⁸ Debarment investigations into Grenfell suppliers paused to safeguard integrity of criminal proceedings  - GOV.UK.
⁹ Campaigners dismayed after Grenfell Tower bans probe is paused - BBC News.

3.1. Questions of late payment and cash flow issues have long plagued the UK construction industry. The Government carried out the “Late payments consultation: tackling poor payment practices” between 31 July 2025 and 23 October 2025.¹⁰ Although the Government proposed to publish the results of the consultation within 12 weeks of its closing, as at the date of this update, we are still awaiting the publication.

3.2. The relevant legislative proposals for the UK construction industry include the following:

1. Amendments to the Late Payment of Commercial Debts (Interest) Act 1998 to limit payment terms between UK businesses to a maximum of 60 days and limit the opportunity to raise a dispute in relation to an invoice to 30 days.
2. Making the statutory interest rate (currently 8% above the rate set by the Bank of England) under the Late Payment of Commercial Debts (Interest) Act 1998 mandatory, preventing businesses from negotiating lower interest rates on late payments.
   Both of these measures will undoubtedly add pressure to businesses who operate on the basis of longer payment terms and can be mitigated by considering payment policies and/or proactively updating existing contractual terms on payment and interest.
3. Amendments to Part 2 of the Housing Grants, Construction and Regeneration Act 1996 to preclude the use of retentions (which the Government has made clear is its preference) or to introduce a requirement for the retention to be protected.
4. This is a story we have heard a number of times before as retention reform has been a long-standing item on the agenda, but without any substantial change to date. If the Government does proceed with reform, businesses will need to consider alternative contractual mechanisms to manage performance and risk during delivery and any remedial works, given the role retentions have traditionally played in that context.

¹⁰ Late payments consultation: tackling poor payment practices - GOV.UK.

4.1. There are two trends to look out for in relation to infrastructure in the UK in 2026:

1. Expiry and handback – Of the over 700 PFIs currently underway, 21 contracts are due to expire this year, followed by a further 14 in 2027. Given that only a handful of PFI contracts have undergone expiries, handback and, in some instances, terminations, this is unchartered waters. To ensure a smooth transition to handback, it will be crucial for parties to try to maintain good records and data of the condition of the asset(s), a strong working knowledge of the project agreement and ancillary contracts and a collaborative relationship to the extent possible.
2. PPP/PFIs – The Government has been willing to re-consider the role of PFIs and PPPs in supporting the UK’s infrastructure pipeline starting with the creation of the National Infrastructure and Service Transformation Authority (NISTA) and publication of “UK Infrastructure: A Ten-Year Strategy”. While NISTA continues to develop the infrastructure pipeline, we expect to see a greater drive in social and healthcare related infrastructure this year in line with the Government’s commitments in the autumn budget.

5.1. Construction firms amounted to 15.7% of all insolvencies in England & Wales and 10.8% of all insolvencies in Scotland in November 2025.¹¹ Tying together much of what has been discussed above, companies in the UK construction sector are facing intense commercial and financial pressures and regulatory and planning uncertainty which impact the overall outlook in the market. For example, RICS’ “UK Construction Monitor” for quarter 4 of 2025 shows that financial constraints and planning pressures remain acute in the UK, as compared to other jurisdictions, resulting in a subdued level of construction activity.¹²

5.2. The UK is likely to suffer an increasing number of insolvencies both in terms of construction firms and their supply chain throughout 2026. It will be crucial to ensure that contractual and other safeguards remain in place to protect businesses from the impact of an insolvency within its supply chain. An easy way to mitigate against this risk would be to:

1. Check any existing contractual arrangements surrounding insolvency, and if none have been agreed, to implement some by way of variation; and
2. Carry out comprehensive due diligence on the financial health of other firms, not just at the beginning of the relationship but periodically.

¹¹ Construction insolvencies and profit warnings | BCIS.
¹² Rics UK Construction Monitor Q4 2025.