UK construction and property
- Collateral warranties | The Supreme Court has unanimously decided that a collateral warranty is not a construction contract and therefore cannot be subject to adjudication. Third parties wanting to make claims over a breach of a collateral warranty can do so under arbitration or litigation, but these typically take longer and can cost more.
- Water investment plans | The Water Services Regulatory Authority published its draft determination for the regulatory period April 2025 to March 2030 which details what it expects from water companies. It proposes £88bn of total expenditure, which is £16bn lower than the announced spending plans of the water companies. £35bn of that spending is to tackle pollution, improve river and bathing water quality, and create greater resilience to climate change.
- Civils costs | The Building Cost Information Service (BCIS) latest forecast expects civil engineering costs to rise by 14% over the next five years, and that tender prices will rise by 22% over the same period, and output by 16%. Labour will be the largest driver of increases.
- Competencies | Under the new Building Safety Act, building inspectors need to be registered and to prove their competencies, however too few inspectors have registered despite the deadline being extended by three months. The Local Authority Building Control has warned that a “significant number of authorities” will be unable to perform building control and the rules have had to be changed to allow some class two or three inspectors who are still awaiting their results to inspect buildings unsupervised.
- Output – The latest data from the ONS shows that total output in May 2024 was 1.9% higher than the month before, following a fall of 1.1% in April. Both new work and repair and maintenance rose.
- Contract rollout | JCT released 13 documents in its Intermediate Building Contract last week. Critics have voiced views that it leaves key aspects of the Building Safety Act unaddressed.
- Construction lag | Housebuilders have warned that an increase in housing supply will take at least a year and completions are not expected to rise until the second half of next year despite it being a focus of the new government. Savills estimates that new homes for private sale will fall to 100,000 in the year to March 2025, much lower than the 300,000 target, and Barratt has warned of low output this year due to buying less land in the past two years.
- Social housing | Lloyds Banking Group is to convert its unused offices into social housing, having reviewed its office portfolio post-Covid. It will also expand its Citra Living private rental arm and become the first UK bank in the affordable housing market. Under the plans, Citra will become the landlord while local authorities take on the everyday management.
- Planning challenges | A Freedom of Information request by Bloomberg has found that housebuilders are increasingly using planning performance agreements (PPAs) to get their proposals looked at promptly. Whilst PPAs are not legally binding and there are no penalties if the deadlines are missed, their increased usage is seen as an indication of the poor state of the planning process.
