Construction & Engineering
Contents
- Legislation
- News
- Case law
Key contact
Chris Holwell
Partner & National Head of Construction & Engineering
Key anticipated events
January
- Consultation on Late Payments to be published
- 8 January 2026: Construction Products (Amendment) Regulations 2025 come into force. These changes align UK law with the new EU Construction Products Regulation, and allow continued recognition of CE-marked products in Great Britain. Removes the need for duplicate testing and certification, accepting both CE and UKCA marks for construction products
- 27 January 2026: Building Safety Regulator (Establishment of New Body and Transfer of Functions etc) Regulations 2026 will come into force
- Construction Products White Paper due to be published
- 30 September 2026: Higher Risk Buildings - second staircase comes into force
- Building Safety Levy regulations come into force in England
January
2026
Spring
2026
September
2026
October
2026
Legislation
Consultation on late payments
Recognising the need for reform on late payments in the UK construction sector, the Department of Business & Trade (DBT) recently concluded its consultation, seeking fresh perspectives and robust solutions to tackle the challenges.
Key proposals include:
- reducing maximum payment terms from 60 to 45 days
- enforcing a 30-day limit for disputing an invoice
- introducing mandatory statutory interest rate on late payments
- stricter reporting obligations on large companies
- penalties for businesses who persistently pay their suppliers late
- giving additional powers to Small Business Commissioner (SBC) to conduct investigations and impose financial penalties
- amending Part 2 of the Housing Grants, Construction and Regeneration Act 1996, to either prohibit the use of retention or to introduce requirements to protect retention funds deducted and withheld from insolvency and late or non-payment
Implications for businesses
These proposals signify a significant shift in contract administration. For example, in relation to the safeguarding of retentions, there may be more stringent requirements for depositing retentions into separate accounts, recognising interest as payable to the payee, and mandating automatic release of these sums unless appropriate notifications are submitted.
While such changes may be viewed favourably by contractors, they could present challenges for developers and funders who rely on retentions as security and incentives for performance and defect rectification. The changes would likely increase administrative responsibilities and costs in managing construction contracts.
DBT expects to publish outcomes by mid-January 2026, clarifying potential legislative reforms.
Actions for businesses to consider
Review how your business uses and/or is affected by retentions in the real world, i.e. your experience over the past few years, so that when the proposals are published you will be able to assess how they will affect your business and what steps you might take to avoid any potentially harmful effects of what is proposed.
Further details
For further details you can visit the consultation at the Government website here.
Author: Li Yen Lim
Building Safety Regulator (Establishment of New Body and Transfer of Functions etc.) Regulations 2026
The draft Building Safety Regulator (Establishment of New Body and Transfer of Functions etc.) Regulations 2026 (Regulations), which are currently before Parliament, will come into force on 27 January 2026.
The Regulations formally establish the Building Safety Regulator (BSR) as an independent body, transferring functions from the Health and Safety Executive (HSE).
The new BSR will have its own financial and operational framework, including the ability to charge for services, receive government grants or loans and borrow for short-term financial management.
The Regulations provide for a transition period by allowing the BSR to delegate functions back to HSE staff until the end of December 2026.
To ensure continuity, the Regulations stipulate that anything done by the HSE in its building safety capacity will be treated as done by the BSR. Ongoing legal proceedings can continue under the new body.
Actions for businesses to consider
Stay up to date with changes in the duties and powers of the new regulator, which may introduce new compliance frameworks, reporting obligations, and enforcement mechanisms.
Monitor any amendments to existing regulations that affect how building control approval, and safety are managed. This could impact project design, construction, and ongoing management of higher-risk buildings.
Watch the trade press to see what improvements there are in the timescales for getting Gateway approvals, which is one of the main reasons behind this change.
Further details
For further details please see the draft Regulations here.
Author: Li Yen Lim
Higher Risk Buildings: Second staircase requirement
The Government has taken a decisive step to enhance fire safety in higher-risk buildings (HRBs): all new residential developments over 18 metres must now include a second staircase. The move aims to provide safer evacuation routes and greater peace of mind for residents in high rise blocks in line with the views of the National Fire Chiefs Council and Royal Institute of British Architects.
The change will be embedded into law by amending Approved Document B (Fire Safety), part of the building regulations. Announced on 29 March 2024, the new requirement was introduced with a 30-month transition period, officially taking effect from 30 September 2026. Compliance with this new safety measure will be scrutinised during the fire safety review process for any HRB both at the planning stage (Gateway 1) and building regulations approval stage (Gateway 2), ensuring these enhanced standards are met before occupation Gateway 3. The space which will be taken out of every floor by the additional staircase means that this requirement will have a significant impact on the viability of many schemes and on the mix of apartment types which is possible on the reduced available floorplate.
Actions for businesses to consider
- For developers and project teams already underway, there’s a clear timeline to bear in mind. Projects that secure building regulations approval before 30 September 2026 under the old rules - without the second staircase -must show significant progress by 30 March 2028 to remain compliant. What counts as ‘sufficiently progressed’ is defined in Schedule 3 of the Building (Higher-Risk Buildings Procedures) (England) Regulations 2023
- Reassess the viability and apartment mix of schemes which will not be ‘sufficiently progressed’ by the deadline
- Impose very clear obligations on consultants and contractors to get sufficient progress made by the deadline in those cases where the project is going to run close to the deadline - consider making acceleration payments where necessary
- Consider the impact on value (if any) of getting within the deadline and so developing a building with a single staircase - will single staircase buildings become harder to let or attract lower rents and so be reduced in value?
Further details
For further details you can visit the press release on the Government website here.
Author: Li Yen Lim
News
Higher Risk Buildings: Regulatory proposals set to unblock Gateway delays
The Chair of the BSR, Andy Roe, is leading a significant reform in the oversight of minor building works in HRBs. The BSR acts as the Building Control Authority for HRBs. These are defined as buildings at least 18 metres or seven storeys tall with two or more residential units, or any hospitals or care homes (design and construction stage) under the Building Safety Act 2022. This move aims to streamline processes and address delays that have impacted safety upgrades and maintenance across the sector.
Presently, any building work in blocks over 18 metres requires BSR approval, resulting in substantial delays - for minor tasks like fire door replacements and communal alarm installations. As of October 2025, there were 869 existing buildings awaiting a Gateway 2 decision compared to 152 new builds. Of the 869 buildings, 271 need external cladding remediation works; the remainder consists of minor and routine maintenance work to HRBs that fall under the definition of ‘building work’. More than half of the projects awaiting approval are minor works, overwhelming BSR’s resources.
To address these challenges BSR’s latest proposals include as follows:
- A key recommendation is to amend the law to exclude Category B (minor) works from the regulator’s scope, which will potentially return oversight to local authorities
- BSR is contracting large engineering firms to form multi-disciplinary teams (MDT), accelerating the approval process for major projects
- BSR’s specialist Innovation Unit has been introduced to fast-track new-build applications, meeting the 12-week statutory target for current cases. Additionally, batching systems and dedicated teams are being deployed to process both new-build and remediation applications more efficiently
- BSR is considering if Local Authority Building Control (LABC) could serve as its 'agent' for Category B work, as proposed by the Construction Leadership Council
- BSR is considering ways to better support high-volume work types/sectors such as the installation of telecommunication masts
- Targeting clearing the backlog of Gateway 2 applications for more than 20,000 new homes by January 2026. The BSR pledged to clear almost all legacy Gateway 2 applications by December 2025, with only three cases forecast to close in January 2026. These legacy cases cover 21,745 housing units. A bespoke closure plan has been drawn up for each remaining case to accelerate sign-offs
At the time of writing, the BSR has updated its guidance to allow a staged approach to approvals for single tower HRB, allowing work on foundations and structure of ground floor level to start before the full design of the building is finalised. See the link here: Building Safety Regulator: latest news and updates.
Implications for businesses
For businesses managing the maintenance and refurbishment of HRBs, change is on the horizon. With the proposed streamlining of approval processes for minor works, companies could soon see a welcome reduction in delays at the Gateways. This shift promises not only to speed up project delivery but also to free up specialist regulatory teams to concentrate on the most critical requirements for HRBs. While there is optimism about meeting the ambitious 12-week statutory Gateway 2 target, time will tell if this goal becomes a reality over the course of 2026. The potential for smoother workflows and more efficient project completions is an exciting prospect for the sector.
Actions for businesses to consider
- Review upcoming minor works to anticipate regulatory changes
- Prepare to engage with local authorities for Category B projects
- Monitor updates from the Building Safety Regulator for compliance requirements
Further details
For detailed information on the Building Control approval application data please see here.
Author: Li Yen Lim
Navigating Construction Cost Escalation in international construction projects
The global construction industry has faced unprecedented volatility over the past five years, due to events such as COVID-19, trade tariffs, and supply chain disruptions. With uncertainty set to persist into 2026, it is vital that parties to construction contracts manage cost escalation risks effectively.
Standard form contracts such as those produced by the International Federation of Consulting Engineers (FIDIC) permit parties to include cost escalation clauses. These should be used. Where the standard form clauses are too broad, parties may negotiate tailored ‘rise and fall’ provisions tied to certain commodities, risk sharing and/or certain triggers. Whether cost escalation provisions will be accepted is market specific. In the Middle East, for example, contractors lack bargaining power to include such provisions.
Where cost escalation clauses cannot be agreed, contractors may mitigate their risk by:
- building escalation risk contingency into contract sums
- stockpiling materials if obtainable at favourable prices
- securing early fixed price agreements with suppliers; and
- sourcing materials locally to reduce reliance on fragile global supply chains
Those contracting under English law should beware that without cost escalation provisions there may be limited relief. Cost increases rarely, if ever, justify termination or frustration of a contract. In contrast, parties contracting under civil codes may be entitled to relief where the underlying economic conditions fundamentally change.
Parties are advised to view construction projects as shared investments rather than adversarial engagements. This mindset fosters collaboration, and may enable fair allocation of cost escalation risk, and keep the focus on ensuring the project’s viability and success.
Actions for businesses to consider
- Ensure cost escalation risks are addressed in the contract if possible
- If not, consider practical strategies to mitigate escalation risks
Further details
To read more about this topic please see our article on our website here.
Author: Alex Johnson
Developments in Offshore Wind contracting
The International Federation of Consulting Engineers (FIDIC) was aiming to publish a new contract for offshore wind projects by the end of 2025, but this has not yet been published so can be expected in 2026.
Historically the offshore construction sector has used heavily amended versions of the existing FIDIC forms, particularly the Yellow Book for offshore wind, or other types of contract such as LOGIC and BIMCO. Once FIDIC’s new contract is unveiled, it will be the first specific standard form construction contract designed for the offshore wind sector.
It will be interesting to see how the contract will approach the unique and substantial risks involved in offshore contracting, such as:
- the use of multi-contracting models as opposed to EPC/turnkey terms because the risks involved are too great for one party to bear, but which as a side effect creates liability gaps
- specific offshore considerations that existing FIDIC standard forms do not cover, such as vessel availability, subsea conditions and weather delays; and
- the ever-evolving issue of tariffs and pricing and how to deal with market volatility on materials such as steel and aluminium which raise procurement costs
We should know in 2026 whether FIDIC’s offshore wind contract finds favour with the industry in place of the contracts that have been developed over time in the absence of a specific industry standard form.
Actions for businesses to consider
- Keep up to date with FIDIC’s timetable for issue of the contract
- Once released assess whether to adopt it and whether amendments are required
Further details
To read more about this topic please see our article here.
Author: Alex Johnson
Data Centres: Managing complexity and mitigating disputes
Data centres are critical for the modern digital economy, supporting cloud computing and AI to financial services and government infrastructure. With new AI-driven products emerging and legacy systems being retrofitted with AI capabilities, the demand for hyperscale data centres continues to accelerate.
However, this demand is emerging against a backdrop of significant challenges such as grid capacity limitations, volatile supply chains and evolving regulatory requirements (which include environmental concerns arising from the considerable electricity required to power and cool data centre servers). This makes data centre projects particularly susceptible to costly disputes, given the potential risks around design changes, procurement delays, unplanned downtime and project delays. As a result, delivering data centre projects is expected to become increasingly complex in 2026 and beyond, and we anticipate this heightened complexity to lead to a rise in disputes.
Implications for businesses
Whilst all construction projects present inherent complexities, the development of data centres is particularly challenging due to the integration of highly sensitive interdependent systems. This means that even a small design change or defect can escalate into major operational issues on data centre projects. Such disruptions can result in substantial financial losses, particularly if these disruptions result in unplanned downtime.
Actions for businesses to consider
To minimise losses resulting from unplanned disruptions, it is crucial to engage in thorough planning and maintain strict adherence to project schedules. Nevertheless, it is important to recognise that achieving perfect control is rarely feasible in practice, and unforeseen events can arise, potentially impacting project outcomes despite best efforts. Clear contract drafting ensures parties understand their obligations and the allocation of risk.
In order to minimise risks, businesses should consider the following:
- Develop detailed project plans, monitor progress rigorously, and build in contingencies for key risks
- Ensure contracts clearly define scope, change management, and risk allocation, with robust force majeure and delay clauses
- Regularly review whether costs for unplanned downtime are contractually recoverable. Many contracts exclude recovery of consequential losses or limit liability for downtime, especially if caused by force majeure events
- Negotiate for downtime cost recovery where possible and consider whether your current insurance provides sufficient coverage for any unrecoverable lost income or expenses
- Clearly define force majeure in contracts, specifying qualifying events and notification requirements
- Ensure project teams are working closely together, encourage open communication and conduct frequent risk reviews, to prevent risk escalation and to ensure the whole supply chain is fully prepared
- Stay up to date with regulatory changes and invest in staff training to assist with risk management and the prevention of disputes
Further details
To read more about this topic please see our dedicated page here.
Authors: Eleanor Folger & Charlotte Molloy
Case law
The Building Safety Act 2022: Developers and associates beware
In a landmark ruling that is set to shape the future of building safety litigation, the Court of Appeal in Triathlon Homes LLP v Stratford Village Development Partnership and others [2025] EWCA Civ 846 provided crucial guidance on the reach and application of Remediation Contribution Orders (RCOs) under the Building Safety Act 2022 (BSA). The dispute arose from fire safety defects in five residential blocks at the East Village Estate, Stratford, originally built for the 2012 Olympics. Triathlon Homes LLP, the long leaseholder, sought RCOs against the developer Stratford Village Development Partnership (SVDP) and its current owner (Get Living plc) to recover costs for remedying these defects.
Overview of the issues
The main issues before the court were:
- whether the First-tier Tribunal (FTT) had correctly interpreted the ‘just and equitable’ test under section 124 BSA when granting RCOs
- the relevance of public funding (the Building Safety Fund) already covering some remedial works
- whether the motives or identity of the applicant, or the need to exhaust other remedies, affected the FTT’s discretion
- whether RCOs could cover remediation costs incurred before section 124 came into force (that is, retrospective costs)
Summary of the decision
The Court of Appeal dismissed the appeal, confirming that:
- The ‘just and equitable’ test is flexible and fact-specific, but there is no presumption that RCOs should always be granted
- Developers and their associates bear primary responsibility for remediation, regardless of whether the associated company was involved in the original works or there were changes in company ownership
- Public funding is a last resort
- Applicants’ motives are generally irrelevant if statutory criteria are met. Equally, the granting of an RCO does not imply fault or wrongdoing on the Respondents
- RCOs can include retrospective costs, ensuring leaseholders are not left without recourse for historic defects
Implications for businesses
- Purchasers of companies may inherit unknown or historic liabilities
- Director appointments may create associate liability for other companies
- The risk profile for company ownership and directorships has increased
Actions for businesses to consider
- Conduct enhanced due diligence on legacy liabilities before acquisitions
- Review director appointments and cross-directorships in connected companies
- Assess and document risk exposure under the BSA
- Seek legal advice on potential RCO or BLO exposure
- Update internal policies to reflect the expanded scope of liability
In 2026, the Supreme Court will hear the Respondents’ (SVDP and Get Living plc) appeal to consider whether costs incurred before the BSA 2022 came into effect are recoverable under the relevant provisions of the BSA 2022. The Supreme Court did not grant permission to appeal the question of whether the Court of Appeal took the wrong approach to whether it was ‘just and equitable’ to make a remediation contribution order.
Further details
To read more about this topic please see our article here.
You can access a copy of the full judgment here: Triathlon Homes LLP v Stratford Village Development Partnership & Anor [2025] EWCA Civ 846 (08 July 2025)
For more information on other BSA cases that are due to be heard in the courts during 2026 please see the Real Estate section here.
Author: Li Yen Lim
Termination for Repeated Default under JCT: Supreme Court reverses Court of Appeal
The Supreme Court in Providence Building Services Ltd v Hexagon Housing Association Ltd [2026] has overturned the Court of Appeal’s decision and restored the previously understood limits on contractors’ termination rights under JCT Design and Build Contract.
Facts and the Court of Appeal’s decision
Hexagon engaged Providence under a JCT Design and Build Contract. After remedying a missed payment in December 2022, Hexagon defaulted again in May 2023, prompting Providence to terminate under clause 8.9.4 for repeated default.
Hexagon argued termination for repeated default should only apply if the first breach was unremedied, reflecting a ‘waterfall’ of protections. Providence maintained clause 8.9.4 operates independently, allowing termination whenever a default is repeated, even if the first was cured.
The Court of Appeal agreed with Providence. It held that the wording of clause 8.9.4 was broad enough to cover any situation where the contractor has not given that notice, regardless of reason. Therefore, the right to terminate was triggered by repetition of a specified default, even if the previous default had been remedied.
The Supreme Court’s decision
It was held that a contractor cannot terminate under clause 8.9.4 unless it previously had an accrued right to terminate under clause 8.9.3. This requires the initial specified default to have continued unremedied for the contractual period of cure before any later repetition can trigger 8.9.4.
In the Supreme Court’s view, the Court of Appeal’s findings to allow contractor termination for minor repeated late payments would produce an “extreme outcome”, analogous to providing a “sledgehammer to crack a nut”. This is because it would permit termination for trivial repeated late payments, even where the employer had cured the first breach promptly.
Additionally, the Supreme Court clarified a point not addressed in the first instance judgment, confirming that employers can terminate for repeated contractor defaults under clause 8.4, even if no accrued right previously arose.
Implications for businesses
For employers: Employers may miss payment deadlines without termination risk, so long as they make payment within the specified period however they must adhere closely to the notice and timing provisions set out in their contracts.
For contractors: Whilst repeated payments may give rise in some circumstances to termination at common law, contractors may consider negotiating amendments to mitigate such practice and any potential impact on cash flow.
Both parties should be aware that failing to comply with the contractual notice and timing requirements may mean that a purported termination is ineffective and could itself be repudiatory.
Further details
Need advice on JCT contract compliance or managing termination risks? Contact our Construction Disputes team today for guidance.
You can access a copy of the full judgment here: Providence Building Services Ltd v Hexagon Housing Association Ltd [2026] UKSC 1
Author: Oliver King
Adjudication: when does the residential occupier apply?
The case of RBH Building Contractors Ltd v James [2025] EWHC 2005 (TCC) concerned the enforcement of an adjudicator’s award. The defendants relied on the ‘residential occupier exception’ under section 106 of the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act 1996) to challenge the adjudicator’s jurisdiction.
Overview of the issues
The dispute arose from an oral contract for site and project management services for the construction of a luxury house. The defendants had sold their previous home, moved to Devon, and taken steps consistent with intending to occupy the new property as their residence. The Claimant argued that the use of a commercial loan (with declarations against occupation) undermined this position.
The main issues before the court were:
- Whether the defendants had a real prospect of establishing that the residential occupier exception applied, thereby depriving the adjudicator of jurisdiction
- The validity of the defendants’ pay less notice in response to the contractor’s payment application. In the pay less notice, certain heads of claim were rejected without referring to specific figures
- Whether the court could review the adjudicator’s decision regarding liability for adjudicator’s fees
Summary of the decision
The court dismissed the contractor’s summary judgment application, finding that the defendants had a real prospect of establishing the residential occupier exception. There were two separate grounds where the exception may arise:
- where a party occupies the property as their residence; or
- where they intend to occupy it
The Defendants had never occupied the house. They demonstrated that at the time of the contract and until around November 2022, it had been their intention to occupy it, but their financial position changed such that they were compelled to sell it. The judge adopted a ‘common sense’ approach, focusing on the parties’ intentions at the time of contracting. The pay less notice was held to be valid on the basis that it identified which elements of the payment application were withheld and why, thereby setting an adequate agenda for an adjudication. The court decided against taking an overly prescriptive approach to the contents of the pay less notice. The court confirmed it could not review the adjudicator’s decision on fees.
Implications for businesses
This decision highlights the importance of the residential occupier exception in construction adjudication. The courts will look closely at the parties’ intention at the time of entering the contract. It confirms that adjudicators’ decisions on fees are not subject to court review.
Actions for businesses to consider
- Carefully document the parties’ intentions at the time of contracting, especially regarding occupation of residential properties
- Ensure pay less notices identify disputed elements and reasons for non-payment
- Review funding arrangements and declarations to ensure consistency with intended use of the property
In October 2025, the Court of Appeal granted leave to appeal. We await the forthcoming judgment with keen interest.
Further details
You can access a copy of the full judgment here: RBH Building Contractors Ltd v James & Anor [2025] EWHC 2005 (TCC).
Author: Li Yen Lim
Key contact
Chris Holwell
Partner & National Head of Construction & Engineering
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