Updates in UK Construction: Progress and Innovations in the Building Sector for June 2025
In a significant move, the UK government has announced a comprehensive spending review for the housing and infrastructure sectors, allocating substantial funds to address key challenges and stimulate growth.
The review, unveiled in June 2025, includes a ten-year £39 billion Affordable Homes Programme, prioritising social rent, with an additional £2.8 billion in funding for Affordable Housing for the years 2025-26 and 2026-27. A £1 billion fund from 2026/27 to 2029/30 has been set aside to remediate social housing, with housing providers given equal access to safety schemes as private owners.
Moreover, a Local Authority Housing Fund of £950 million has been allocated for new temporary accommodation, and the creation of a government-backed National Housing Bank, backed by £16 billion of financial capacity, aims to accelerate housebuilding.
The infrastructure and housing sectors will receive a combined £4.65 billion, including a £2 billion increase for social and affordable housing. This long-term commitment provides housing providers with much-needed certainty and a platform to significantly increase affordable housing delivery, particularly in social rents, addressing chronic housing shortages in the UK.
However, concerns about rising costs, labour shortages, and regulatory burdens have been raised, which could potentially undermine delivery unless effectively managed. For instance, a proposed levy on new homes to fund building safety remediation may place additional financial strain on developers, potentially impacting new housing supply if costs escalate.
In addition to the housing sector, significant legal reforms are expected to affect various areas, including residential long leasehold and commonhold, renters' rights, planning system support, and security of tenure reform. The commercial real estate market in England's second half of 2025 is anticipated to be significantly impacted by these reforms.
The spending review also addresses urgent building safety and regulatory compliance issues, especially important post-Grenfell crisis, with the £1 billion remediation fund and equal access to safety schemes. The establishment of the National Housing Bank is designed to unlock private finance and accelerate housebuilding, potentially catalysing increased development activity.
The UK government's focus on housing and infrastructure sectors is a clear indication of its commitment to stimulate affordable housing construction, improve safety standards, and support infrastructure. The success of these initiatives will depend on translating funding into effective delivery amid challenging market conditions and regulatory environments.
[1] HM Government (2025). Spending Review 2025: Delivering a Stronger Economy and Fairer Society. [Online] Available at: https://www.gov.uk/government/publications/spending-review-2025/spending-review-2025-delivering-a-stronger-economy-and-fairer-society [2] HM Government (2025). Spending Review 2025: Housing and Infrastructure. [Online] Available at: https://www.gov.uk/government/publications/spending-review-2025-housing-and-infrastructure [3] HM Government (2025). Spending Review 2025: Levelling Up the Regions. [Online] Available at: https://www.gov.uk/government/publications/spending-review-2025-levelling-up-the-regions [4] HM Government (2025). Spending Review 2025: Building Back Better. [Online] Available at: https://www.gov.uk/government/publications/spending-review-2025-building-back-better
- In light of the UK government's announcement of a comprehensive spending review, investors may want to consider the impact of changes in employment law, particularly in the housing sector, as the focus on addressing housing shortages and improving safety standards could potentially create new job opportunities.
- The creation of the government-backed National Housing Bank, with a financial capacity of £16 billion, could attract investors in the finance sector, as it aims to unlock private finance and accelerate housebuilding, potentially leading to increased real-estate development. However, regulatory burdens and rising costs could pose challenges that need to be managed effectively.
