In the year ahead, significant legal and legislative measures covering a range of areas including environmental sustainability, health and safety, financing and employment are set to come on stream in Scotland and across the UK. Given their direct impact on the Scottish construction industry, here is a helpful summary of the key points that lie ahead in 2025 and how they might affect the sector. 

Beginning with ESG (Environmental, Social, Governance) matters, Future Homes Standards will become compulsory during 2025. This brings with it a shift towards energy efficiency through low-carbon heating technologies (heat pumps and heat networks) and the implementation of stringent fabric standards. 

The UK Government is also expected to endorse the first two UK Sustainability Reporting Standards in early 2025. This will be based on the sustainability and climate-related disclosure standards, published by the International Sustainability Standards Board, which are designed to give funders greater transparency over borrowers’ climate and sustainability risks and provide opportunities to monitor standards within projects. 

From this year, Corporate Sustainability Reporting Directive Scope 3 Emissions Reporting legislation will require certain businesses, including many within the construction industry, to disclose their greenhouse gas emissions before and after a product is delivered or consumed. 

Meanwhile, the Energy Savings Opportunity Scheme Phase 3 Action Plan will require businesses with 250 or more employees or annual turnover of £44m or more to outline their plans to reduce energy consumption to the Environment Agency by 5 March.

Here in Scotland, the Scottish Government is expected to launch a consultation on changing standards to enhance energy efficiency and environmental performance in new buildings mandating more comprehensive evidence of compliance at design and construction stages. 

Under the provisions of the Aggregate Tax and Devolved Taxes Administration (Scotland) Bill, new taxes are being proposed on commercial exploitation of non-recycled primary aggregates.

The impact of the Circular Economy (Scotland) Act, which came into force in Autumn 2024, will also continue to be felt across the industry as construction projects are required to meet statutory targets for reducing material consumption while increasing reuse and recycling and minimising waste.

Looking beyond ESG measures, the Procurement Act 2023 is now due to come into effect in late February hoping to create a simpler and more transparent regime for public sector procurement. 

There are also a number of health and safety-focused measures due to come into force this year including amendments to Approved Document B of the Building Regulations 2010. Going into effect from 2 March, these changes will require construction companies to enhance their record keeping and raise performance standards for materials and products used in all buildings and mandatory sprinkler systems in care homes. Failure to comply could result in enforcement action or prosecutions with unlimited fines.

From the start of this year, goods, including construction materials, imported from the EU into Great Britain will now require a safety and security declaration.

Following last year’s publication of the final phase of the Grenfell Tower Inquiry Report, the UK industry can also expect substantial reforms to follow over the course of 2025 if Inquiry recommendations are to be implemented although the details of this are yet to be determined.   

Along with its proposed consultation for reforming the planning system in England and Wales, the UK Government has also introduced a number of changes to employment laws which will impact the construction industry. The Employment Rights Bill proposes significant changes to rights for employees including changes to working hours and patterns, dismissal practices, redundancy, parental leave, reporting requirements and trade union legislation. Consultation on the Bill will begin in 2025. 

Provisions for duties to prevent sexual harassment are already in place from 26 October 2024 representing a significant shift in the way in which employers must approach sexual harassment in the workplace with an emphasis on proactivity.

Further updates are also expected early this year on new requirements for UK companies to undertake modern slavery due diligence in their supply chains.

Wider administrative measures impacting the UK construction sector include changes to Joint Contracts Tribunal (JCT) standard form contracts. Contractors can expect to see increased use of the 2024 editions of the JCT contracts and should ensure that any standard schedules of amendments are updated.  

Returning to Scottish Government legislative matters, the Moveable Transactions (Scotland) Act 2023 is expected to come into force in Spring 2025 permitting securities to be granted against physical property such as machinery and plant whilst still allowing the transferee use of the property. It will also introduce an alternative to intimation by registering an assignation in a new Register of Assignations. This will make it easier for contractors to secure financing over equipment as collateral.

Finally, the Building (Scotland) Amendment Regulations 2024 have come into force from this year requiring buildings in Scotland to have the physical infrastructure capable of delivering broadband access services at speeds of at least 1000 MBPS with energy plants, piers, harbours and train stations exempted. 

Shona Frame is partner and construction law specialist at CMS