LODGE: A Living Sector Update Winter 2025
What Legal Developments Can The Living Sector Expect As We Approach The End Of 2025 And Look Ahead To 2026?
By Mark White, Josh Risso-Gill, Sadie Pitman, Kate Knox and Laura Bushaway
LODGE: A Living Sector Update Winter 2025
What Legal Developments Can The Living Sector Expect As We Approach The End Of 2025 And Look Ahead To 2026?
By Mark White, Josh Risso-Gill, Sadie Pitman, Kate Knox and Laura Bushaway
As we near the end of 2025, the Autumn Budget Statement looms large on 26 November 2025 and stakeholders in the Living Sector will be awaiting the Government’s announcements which may impact development and financial momentum. However, there are many other potential opportunities and disruptors for the Living Sector on the horizon, with the Planning and Infrastructure Bill due to reach Royal Assent stage, possible reductions in BSR delays to gateway two applications and the Building Levy being implemented in Autumn 2026.
There is also increased regulation on the occupational and operational sides of the Living Sector with the Renters’ Rights Act 2025 and The Fire Safety (Residential Evacuation Plans) (England) Regulations 2025 which are likely to increase costs. This insight considers the key legal developments which will affect the Living Sector in terms of planning, construction, occupation and operations before considering how these may impact investment in the sector during 2026.
Planning
Planning is enjoying a moment in the national spotlight as the Government has shown real intent on changing the system to drive up growth. Most notably the introduction of ‘grey belt’ has almost immediately spurred a flurry of high profile permissions for data centres and housing. Consequently it has been a busy year for planning, and there’s no indication the Government is slowing down – with Royal Assent expected for the Planning and Infrastructure Bill (“PIB”) before the end of the year, and further consultations and secondary legislation anticipated next year for changes still to be brought forward under the Levelling Up and Regeneration Act 2023 (“LURA”). It will be interesting to see the final form of the PIB – with the Government recently proposing an amendment that would give developers a year longer to implement those planning permissions subject to a High Court legal challenge. This perhaps suggests that the Government is in listening mode and has acknowledged the catastrophic effect that judicial review challenges can have on completion targets and the need for flexibility to encourage delivery. In addition, the Government has promised viability guidance alongside an indication that it is looking at developing a holistic package to address the issue of Registered Provider uptake of affordable housing. This is intended to stop uncontracted homes sitting unoccupied – both of which will be key for growth in the Living Sector. The Build to Rent and co-living models are likely to remain core as we shift to more rent-based models. Indeed, it is likely there will be Mayoral support for residential alternatives in the new London Plan, a draft of which is expected to be published in 2026. UK PBSA remains undersupplied amid record student numbers, sustained high occupancy and strong rent growth. Investor appetite remains robust, but the planning system, construction costs and policy demands for affordable beds (e.g. the London Plan) impact viability and delivery. Supply still tends to be concentrated in the large cities, while affordability pressures and Private Rent Sector reforms shape demand. More on the private sector reforms can be found below.
Construction
Building Control Gateway Regime
Those BTR and PBSA blocks which are higher risk buildings (HRBs), have and will continue to be impacted by the delays being experienced in the building control gateway regime operating for the last two years in England. The Government plans to reform the Building Safety Regulator (“BSR”). In Building Control Approval application data published for the period to 1 October 2025, the BSR’s new Innovation Unit (a team created to speed up the processing of new-build gateway two applications) appears to be making headway, with the unit reportedly often now managing to meet the stipulated twelve week target to process gateway two applications.
Industry Reform – Grenfell Tower Inquiry Recommendations
The Grenfell Tower Inquiry’s recommendations to the Government are to be implemented by 2029. In the next twelve months, the Government intends to:
- Appoint a permanent chief construction adviser.
- Make recommendations to update Approved Document B (fire safety) along with a fundamental review of Building Regulations guidance.
- Publish a construction products white paper on regulation of the sector.
- Consult on the reform of the fire engineering profession and establish a funding mechanism for accreditation courses to regulate the fire engineer profession (subject to Spending Review).
- Consult on and, if required, develop secondary legislation requiring gateway two declarations from the principal designer and the principal contractor as to whether the building works will be safe on completion.
- In respect to the proposed licensing of principal contractors undertaking the construction or refurbishment of HRBs, publish findings of the dutyholder regime review.
- Commission an independent panel to report on whether all building control functions should be performed by a national authority.
Cladding Remediation
In England, the Government is intending to publish a Remediation Bill, to create a hard ‘endpoint’ for remediation, as part of its remediation acceleration plan. It intends to place on landlords a legal duty to remediate their buildings within fixed timescales or face criminal prosecution. The Government has said that, by the end of 2029, any landlord who has failed to remediate a building over 18 metres, without reasonable excuse, will face criminal prosecution, with unlimited fines and/or imprisonment.
Building Safety Levy
The levy is expected to come into effect in England on 1 October 2026. For works which constitute or form part of a major residential development comprising the creation of at least 30 new bedspaces for PBSAs, the levy will apply if the building control application or initial notice is submitted on or after that date, unless falling within an exemption.
Second Staircases
Whilst second staircases are already a requirement of the Greater London Authority for all new tall residential buildings in London, following a 30-month transitional period, residential buildings over 18 metres will be required to have two staircases from 30 September 2026 unless the works are “sufficiently progressed” by that date.
Future Homes Standard (“FHS”)
Regulations to implement the FHS are expected in Autumn 2025, with implementation in late 2026, subject to a transitional period. The FHS is intended to reduce carbon emissions and improve energy efficiency of new homes. A new energy calculation methodology, Home Energy Model (HEM), is intended to be released alongside the FHS.
Payments and Company Reporting
Regulations making changes to the reporting requirements in the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 are expected to come into force in the UK on 1 January 2026. This is intended to include a requirement for large companies to report information about their payment practices and performance within Directors’ Reports.
Occupational and Operational Matters
Occupational and Operational Matters
Renters’ Rights Act 2025 Renters’ Rights Act 2025Renters’ Rights Act 2025
This Act has received Royal Assent and the Government has announced a phased implementation with the commencement date for conversion of ASTs to assured periodic monthly tenancies to be 1 May 2026. This is the largest change to the private rented sector in over 35 years and will undoubtedly significantly impact the operation of BTR and PBSA accommodation. For more details on the impact of the Act on BTR and PBSA, please see articles on Renters’ Rights and Build to Rent: Top 5 key changes operators and investors need to know about and Renters’ Rights and Student Accommodation: What is the latest as the Act obtains Royal Assent?
The Fire Safety (Residential Evacuation Plans) (England) Regulations 2025
These will come into force on 6 April 2026 and involve a greater understanding of the evacuation needs of certain residents within Living Sector buildings. More detail can be found in our Insight: Understanding the Fire Safety (Residential Evacuation Plans) (England) Regulations 2025: The Living Sector.
Renters’ Rights Act 2025
This Act has received Royal Assent and the Government has announced a phased implementation with the commencement date for conversion of ASTs to assured periodic monthly tenancies to be 1 May 2026. This is the largest change to the private rented sector in over 35 years and will undoubtedly significantly impact the operation of BTR and PBSA accommodation. For more details on the impact of the Act on BTR and PBSA, please see articles on Renters’ Rights and Build to Rent: Top 5 key changes operators and investors need to know about and Renters’ Rights and Student Accommodation: What is the latest as the Act obtains Royal Assent?
The Fire Safety (Residential Evacuation Plans) (England) Regulations 2025
These will come into force on 6 April 2026 and involve a greater understanding of the evacuation needs of certain residents within Living Sector buildings. More detail can be found in our Insight: Understanding the Fire Safety (Residential Evacuation Plans) (England) Regulations 2025: The Living Sector.
Investment Outlook
Looking ahead to 2026, confidence remains in the UK as an attractive market for investors into the Living Sector. Many of our clients are bullish on the UK’s medium term prospects and we continue to hear from our international clients a desire to gain access to the sector. The key impediment has been access to quality product at the right price, with limited margin for error. That is not expected to change over the next 12 months, albeit a continued under supply of stock and a build-up of undeployed capital suggests that the dam could burst at any time. Pricing dynamics will remain driven by financing costs, construction inflation and execution risk and a question will be whether there will be a coming together between buy and sell side on pricing expectations. Two themes that we hear time and again from our clients are a desire to access scale, and a desire to access strong operating platforms – preferably both. Clearly those opportunities are few and far between, but with the legislative environment changing and continued economic uncertainty, it is difficult for institutional capital to justify risk taking. We would therefore expect to continue to see core-plus remain a strategy for most and development to be targeted by funders with a solid operating platform. From our perspective, we continue to see the practical challenges of compliance with Building Safety Regulation affecting investment decisions (which again are driving interest in built and stabilised assets over development sites). As the Government appears to be throwing resource into the building safety regulator some of those challenges should ease and whilst it is not expected for things to change hugely in 2026, we hope to see a momentum shift towards the back end of the year with growing confidence in development timetables. In the PBSA sector, visa policy tightening continues to impact near term student intakes, but the underlying demand for UK higher education is robust and there is a strong domestic demographic trend to underpin occupancy. Unsurprisingly the focus remains on Russell Group and research-intensive universities, particularly with growing uncertainty over the future of some of the newer or smaller institutions. The key question, that will be answered at the end of November, will be whether property taxes and the rest of the Government’s agenda will support development momentum, or undercut it. There appear to be a wide range of possible outcomes from the Autumn Budget statement, which will have a big impact on the outlook for 2026. There are green shoots of recovery if you look in the right places, the question is whether the Autumn Budget statement will create too much of a winter chill for them to survive into 2026. Overall, the message from clients seems to be that they would love to invest in the UK, if it was a bit easier for them to do so. We are expecting (or should we say hoping…) that 2026 will present a turnaround that allows some of the capital that we know is waiting to be deployed, to enter the market.