Building the future: what’s next for construction law in 2025 

2024 was a significant year for the construction industry. The Autumn Budget introduced ambitious new housing targets nationwide, reformed business tax policies, and saw labour costs rise for many firms. As we move into 2025, the pace of change shows no signs of slowing.

To help you stay ahead, our construction legal experts have shared their predictions for the year ahead, along with practical advice to prepare for what promises to be another dynamic and challenging year.  

Our construction partners have given their opinions on expected trends within the industry for 2025:

The rising use of the Construction Playbook 

“It seems that every month brings a new challenge to the construction industry – 2024 was no different with increasing numbers of contractor insolvencies, a tightening PI insurance market and market forces driving improved sustainability. 

“The trend I predict for 2025 is an increasing awareness and use of the private sector construction playbook (https://bethebusiness.com/our-thinking/trust-and-productivity-private-sector-construction-playbook/).   

“Increasingly, I find that contractors, project managers and quantity surveyors are referring to its contents – the industry seems to be awakening to the fact that the ‘non-negotiable priorities’ and ‘drivers for success’ contained therein set out real ways of working differently.   

“It is a practical guide for how to ‘do better’, created by ‘Be the Business’ – a not for profit that helps businesses improve performance in conjunction with construction contractors and professionals.  The ‘non-negotiable’ priorities include items that must form the focus of every development such as health and safety, value to society and sustainability.  The drivers for success include 9 themed chapters that include topics such as use of IT, adopting an outcome-based approach, forming partnerships and most importantly in my book, fair and appropriate allocation of risk. 

“My prediction (and hope) for 2025 is that the items it addresses (lack of openness, trust and innovation, fragmented supply chain and sustainability) start to be adopted across the industry to improve productivity and allow for more certainty in construction contracting.” 

Supply chain insolvencies 

“Although there is optimism about the prospects for the UK construction industry in 2025, rising material costs, shortages of skilled labour and the impact of Brexit remain in sharp focus. Many small and medium-sized enterprises that are vital to successful project delivery are particularly vulnerable to economic instability, as they often lack the financial resilience to weather prolonged disruptions or delays in payments from larger contractors. 

“Rising rates of inflation and interest rates have squeezed margins, forcing companies to increase prices or absorb costs and, where they are unable to do so (either practically or because of contractual restrictions) there is an increased risk of insolvency. A single insolvency can cascade throughout the supply chain, impacting employers, main contractors and other sub-contractors/suppliers.  

“Diversifying the supply chain through effective use of framework agreements helps reduce dependence on a single source and can also foster greater communication and collaboration, ensuring that potential issues are identified early.  2025 will also see the adoption of further technological advancements in supply chain management to more accurately programme and manage supplies and site requirements.  Main contractors will need to strike the balance between prompt payment to the supply chain and avoiding the risk of over-payment.” 

Promoting the use of mediation in international construction disputes. 

“Mediation has been used in construction disputes in England for decades, but its appeal is growing as costs and delays in litigation increase and pressure mounts from courts and legislative bodies to adopt alternative dispute resolution (ADR). 

“In the European Union, mediation is actively encouraged for cross-border disputes, with continued enforcement and promotion of the 2008 Mediation Directive requiring member states to implement mediation rules and guidance and encourage its use. 

“For international disputes, using mediation after referral to arbitration (“Med-Arb”) can mean that dispute resolution can be formalised as a Consent Award under the arbitration, so improving the enforceability of the agreed mediation settlement.  To facilitate this, countries have adopted a variety of protocols, including the addition of an independent mediator process in the arbitration timetable (Singapore), or allowing the tribunal to give considered suggestions for resolution (Switzerland, Germany, Austria). In China, an arbitrator can act as mediator in the same dispute, and this sees a large percentage of disputes settle.  

“The foundation for use of mediation is solid, and its benefits are evident. I anticipate a continued increase in its adoption for construction and engineering disputes throughout 2025.” 

Find out more about our Constuction team here: https://gunnercooke.com/industry/construction-engineering-infrastructure/  

Dan Hall, Construction, Engineering & Infrastructure Partner

“I’ve identified building safety as my standout prediction for the year ahead.  I expect to see the continued (and, indeed, increased) remediation of unsafe buildings alongside the introduction of significantly tougher penalties on those who delay or otherwise hinder the process.

“Under plans recently announced by the government, tough new targets to fix unsafe buildings in England (the Remediation Acceleration Plan) will be introduced:

• By the end of 2029, all 18m+ (high-rise) buildings with unsafe cladding in a government-funded scheme will have been remediated.    

• By the end of 2029, every 11m+ building with unsafe cladding will either have been remediated, have a date for completion, or the landlords will be liable for severe penalties.  

“The plans will require investment in enforcement although it remains to be seen whether the investment materialises given the pressures on government finances.”

Amanda John, Construction, Engineering & Infrastructure Partner

Sustainable building

“The government’s ambitious target of 1.5 million new homes over the next five years has raised both eyebrows and questions in the construction industry. Reaching the target would require 370,000 new homes each year, doubling the current rate.

“2025 will place this extraordinary demand in tension with developers’ sustainability goals as they balance the increasingly important need to reduce carbon footprints with the need for financial efficiency in their projects.

“A sustainable solution to the housing demand would be to redevelop existing vacant buildings for residential use. This will increase housing stock more rapidly than building from scratch, use less carbon, and still create jobs. However, with new regulations the difficulty and cost of retrofitting older buildings may be financially unattractive.

“Addressing this tension will be a key consideration in the year ahead, and gunnercooke‘s experienced construction team is ready to provide principled and commercially astute advice.”