After a year of major shifts across construction, the industry now turns its attention to the challenges and opportunities poised to define 2026.
As we close out 2025 and look toward the year ahead, it’s a good time to reflect on and learn from the significant changes that shaped construction in 2025. It is also an opportunity to consider the trends and developments set to influence the industry in 2026.
Observations and learnings from 2025
The year was a busy one, but stand-out developments included:
- The build-to-rent uptick – alongside the government’s ambitious housing targets, there was a rise in build-to-rent investment, which means more work for the construction industry. However, note that the challenge is in how to deliver this, as developers and funders increasingly prioritise building sustainably (more here).
- Energy surge – the government prioritised energy in its UK Industrial Strategy and 10 Year Infrastructure Strategy, which set out a bold vision for economic growth, net zero and regional development (more here). In light of this, we’ve looked at energy construction projects in the context of the Construction Act, insolvency risks, legal differences in England and Scotland, immigration and labour shortages, and contracting for energy projects.
- New JCT approach – the JCT published its first Target Cost contract suite, suitable for larger projects where traditional fixed-price contracts may not offer enough flexibility. While it is largely based on the JCT Design and Build, there are significant differences around cost mechanisms and collaboration, plus challenges around administration (more here).
- Messaging platform pitfalls – one significant construction case highlighted the dangers of forming construction contracts through casual communications on instant messaging platforms. Beware, even emojis and one-word messages could constitute a legally binding agreement (more here).
- New high street rental auctions caution – new powers now allow councils to reopen closed high street commercial properties through high street rental auctions. However, be warned, the legal process and timescales are very challenging from a construction works perspective (more here).
- ESG (environmental, social and governance) interest – we saw increased interest in including ESG drafting into construction contracts. There is not much detailed industry standard ESG drafting yet – but keep an eye out, we expect ESG to appear in contracts more frequently, as public bodies often include ESG requirements at the tender stage, and the private sector is likely to follow suit (more here).
What to expect in 2026
In addition to the pointers above, some further developments we expect include:
- Late payment and banning retentions? – persistent payment challenges and high insolvency rates have troubled the construction industry for years. In 2025, the government consulted on late payments with proposals to improve cashflow through supply chains and support small businesses with payment disputes. For the construction sector in particular, it asked about banning retentions. The government plans to respond on the consultation in early 2026 (more here).
- Renters’ Rights Act 2025 – this has now completed its passage through parliament and received Royal Assent. There will be a material impact upon the private rented sector from 1 May 2026 as ‘no fault’ evictions are abolished, assured periodic tenancies become the norm and rent increases are limited to once a year. At some point in the future, Awaab’s Law will also be extended to the private rented sector, ensuring homes are properly maintained and significant hazards dealt with quickly.
- Goodbye JCT 2016 – in March 2026, the JCT has said its 2016 editions “will be withdrawn and will no longer be available to purchase either in hard copy or digital format from the JCT online store”. Ian Atkinson, partner in the construction and engineering team at Womble Bond Dickinson (WBD), commented: “Businesses should act now to move to the latest JCT 2024 contracts and understand the changes, unless there are good reasons not to do this. Using older contracts off-the-shelf can expose projects to serious legal and commercial risks, unless those contracts are amended to reflect current law and best practice. So, review your contracts and your procurement processes as soon as you can.”
- Scottish contracts – the Scottish Building Contract Committee (SBCC) has said it is “adapting the most commonly used JCT 2024 contract suites to produce contracts compliant with Scottish law and practice. Some key themes that SBCC will be adopting include modernising and streamlining, future proofing updates and some legislative changes affecting Scotland.” Lisa Dromgoole, partner in the WBD construction and engineering team in Edinburgh, said: “The SBCC has explained that it is working on the Minor Works suite first, and will then focus on the Design & Build and Standard Building contract suites in early 2026, with other suites to follow in 2026 and early 2027. Watch out for these to make sure you are using the most up-to-date SBCC contracts for your projects, particularly in light of legal developments since these were last updated in 2016.”
- Using AI intelligently – AI is a game-changer and disrupter across all industries, including construction. The sector is starting to navigate its complexities, with guidance and reports emerging, but this is a fast-moving area. Joseph Perkis, solicitor in the WBD construction and engineering team, explained: “2026 will likely see increasing integration of AI, for example into design, project management, and risk assessments – but careful questioning, extra scrutiny and new training will be needed to ensure ethical and regulatory compliance. Also, watch out for new industry guidance as it emerges, and quickly review this and incorporate relevant updates into your own processes and policies.”
- Regulatory change – a great deal is likely to change, particularly from a building safety perspective (including around construction products, the building safety levy, and building control. For more, keep an eye on our Building Safety Hub).
‘New hurdles and significant opportunities’
Simon Rowland, head of the WBD construction and engineering team, said: “The construction sector has faced another demanding year, marked by persistent economic uncertainty, slow growth and evolving regulation. However, the industry continues to demonstrate hard-working resilience in navigating these complexities.
“Looking ahead to 2026, there will be both new hurdles and significant opportunities – whether through expansion of housebuilding, the growth in the energy sector, the continued shift towards more sustainable construction, or the increasing adoption of digital and AI-driven solutions. The key for construction in the new year will be in learning quickly and staying adaptive to legal and regulatory developments.”
Simon Rowland is head of the construction and engineering team; Michelle Essen is a legal director at WBD.
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