Despite a modest uptick in output forecast for 2025 – the Construction Products Association expects a 1.9% rise this year and 3.7 % in 2026 – developers face a more complex risk landscape than at any point since the financial crisis. Below are six forces reshaping project viability, programme and profitability.

1 . A historic skills gap

The industry is short almost one million skilled workers over the coming decade, pushing wage inflation into double digits for key trades and jeopardising delivery schedules. Competition for talent is no longer regional; it is pan-European, so early supply-chain engagement and targeted apprenticeship pipelines are becoming board-level priorities.

2 . Regulation in flux – the Building Safety Act and beyond

The Building Safety Act 2022 has moved from theory to daily reality, with new Gateway checks, remediation contribution orders and a growing body of case law sharpening liabilities for developers and principal contractors. Expect the cost of compliance – from digital “golden-thread” record-keeping to resident-engagement duties – to keep rising as secondary legislation rolls out through 2025–26.

3 . The sustainability ratchet

By 2025 all new homes must meet the Future Homes Standard, cutting operational emissions 75-80 %. Embodied-carbon reporting is also accelerating via the voluntary Net Zero Carbon Buildings Standard, signalling future mandatory limits. Early optioneering on low-carbon materials, MMC and whole-life-carbon modelling is fast becoming a prerequisite for planning approval and institutional finance.

4 . Volatile input costs and finance constraints

Material prices remain 37 % higher than pre-2020 levels, even after the recent easing of producer-price inflation. Meanwhile, tighter credit conditions and higher risk premia mean that contingency allowances and cost escalation clauses are back in vogue. Transparent cost benchmarking and collaborative contracting (e.g. NEC option C) are mitigating some volatility but require cultural change.

5 . Planning and building-control bottlenecks

Post-Grenfell safety checks are lengthening pre-construction timelines; developers report months-long delays at the Building Safety Regulator, stalling thousands of units nationwide. Pro-active engagement with regulators and design-for-manufacture principles that minimise high-risk elements are becoming critical route-to-market tools.

6 . Digitalisation and MMC move centre stage

Labour shortages, sustainability targets and margin pressure are catalysing adoption of modular/off-site manufacturing, now a feature of social housing, healthcare and PBSA pipelines. Contractors report a year-on-year rise in MMC content and falling resistance among clients and design teams. Coupled with AI-enabled scheduling, wearable safety tech and BIM 7-D asset twins, digital transformation is shifting value from on-site labour to data and supply-chain integration.

Take-away for developers:

2025 rewards those who treat compliance, carbon and capability as strategic design parameters rather than cost add-ons. The winners will embed regulatory foresight, people investment and digital delivery into every stage from land bid to hand-over.

Construction in 2025: Six Strategic Headwinds Every UK Developer Must Plan For