Construction’s long year: why 2026 must deliver

”A frustrating year” sums up 2025 for many in construction – not due to outright disaster, though industry insolvencies tell their own story, but because the promised economic revival never arrived. As the sector looks to 2026, it is split between those braced for more slog and those who sense a turn is finally coming.

Three persistent headaches defined the year: regulatory delay, planning gridlock and fiscal chop‑and‑change. Nowhere has the strain been sharper than in the Building Safety Regulator’s (BSR) gateway 2 approvals. Decisions promised within 12 weeks stretched into months; some applications languished for more than a year, putting a heavy brake on London’s housing pipeline and souring relations between the industry and the regulator.

Meanwhile, the Building Safety Act’s extended liabilities forced many firms to pour money into legal defence of historic projects. Ardmore Construction’s collapse was the starkest warning – its leadership pointed squarely to the 30‑year liability extension as a decisive factor.

There are, at last, signs of improvement on one front at least. New BSR chair Andy Roe has set out how he intends to tackle the approvals backlog, and optimism is building that gateway 2 waiting times are beginning to fall. That confidence is fragile, but it matters: every week shaved from approvals gets projects back on programme.

Developers and contractors still face a system that too often creates delay rather than certainty

Planning remains the other running sore. Ministers have promised streamlining for major infrastructure schemes, committed extra funding for planning departments, and pushed the Planning and Infrastructure Bill to its final stage through parliament. All welcome, on paper. Developers and contractors still face a system that too often creates delay rather than certainty. Until shovels reach site faster, impatience will keep growing.

Then there is the fiscal story. In the summer, Rachel Reeves’ pledge to allocate £113bn for capital investment offered a shot of confidence and a clear line about “delivering Britain’s renewal.” But the autumn deflated the mood: Budget leaks, reversals and prolonged speculation created a fog that firms blamed for slowing decisions and damping growth.

When the measures finally landed (albeit 45 minutes prematurely thanks to an OBR slip-up), many in the public and regulated sectors were relieved capital budgets had not been raided and welcomed the renewed emphasis on skills – apprenticeships especially. Even so, business leaders – and housebuilders in particular – questioned the logic of higher property taxes amid weak demand and the absence of a targeted housing stimulus.

All of this is the backdrop to Building’s Top 150 Contractors & Housebuilders rankings, published today. The picture is mixed. Headline numbers look upbeat: combined revenue for the top 150 rose 6.4% year on year to £113.5bn. Drill down and the gloss fades. Contracting turnover climbed 9%, but among the top 50 housebuilders revenue rose just 5% – effectively flat once inflation is accounted for.

Profits tell a blunter story: operating profit for the top 50 housebuilders fell by an average of 42%, with 11 firms reporting losses. Many also built fewer homes, with the overall increase in completions driven by a handful of large players while most others went backwards.

Housebuilding bosses have been clear about the culprit: soft demand, stretched affordability and fragile consumer confidence. With no demand‑side support in the Budget – nothing resembling Help to Buy – it is hard to lift volumes quickly. Without effective demand from private purchasers and registered housing providers, even well‑capitalised firms will struggle to justify ramping up output.

Against that backdrop, Steve Reed’s “Build Baby Build” mantra is under scrutiny. Delivering 1.5 million homes by 2029 always looked ambitious; with housing starts and completions at stubbornly low levels since Labour took office, the hill looks steeper than ever. Many in the industry doubt the target was ever achievable; others believe political necessity will force a reset. As the next general election draws closer, the lack of visible progress risks becoming a liability, and that pressure could yet unlock bolder reforms.

There are green shoots. Inflation has eased and interest rates have begun to taper, bringing a degree of price stability back into tendering and delivery through the second half of this year. A cautious but hopeful view is emerging: 2026 may begin slowly, but further rate cuts and a more predictable planning environment should start to feed through to order books, with momentum more evident in the second half of next year. If that happens, confidence can rebuild.

Major transport upgrades, clean‑energy schemes, retrofitting programmes and wider infrastructure – along with investments that improve regional connectivity – can underpin activity in the year ahead. These are precisely the types of projects that reward certainty. The prize is not just short‑term workload; it is the productivity gain that comes from steady, sequenced pipelines rather than sporadic, cliff‑edge funding.

So what must change? First, speeding up decision-making from the BSR. Visible progress has already been made, that needs to continue. Second, an end to planning drift. Third, fiscal and policy stability: a Budget cycle that informs rather than alarms. If promises turn into action, 2026 can be the year confidence returns.

Chloë McCulloch is the editor of Building