Core Five says building safety rules stalling projects by months and warns on firms willing to price jobs over £250m

London cost consultant Core Five says safety regulations are holding up starts on jobs by an average of three months as schemes are sent back to the drawing to meet the new rules.

In its latest update for Q3 this year, the firm said amendments to the Building Safety Act last year “prompted the mass return of schemes to the drawing board” and as a result “few projects in design and planning stages have made it through to construction”.

New standards require residential blocks over 18 metres to have a second staircase from October 2026 to gain building control approval.

And it said the new government’s plan to build 1.5 million new homes over the next decade could be held up by a shrinking labour force.

It warned: “Historically migration has played an important role in meeting the sector’s fluctuating skills needs but recent changes to migration policy reduces the viability of recruiting workers from overseas.”

Last week, the Labour government launched its promised new training initiative called Skills England which will be chaired by former Co-op boss Richard Pennycook.

In its update, Core Five said the industry needed to recruit an extra 50,300 people between now and 2028 to meet demand – a rise of 5,000 on last year’s number.

Meanwhile, it said M&E contractors were being buoyed by a date centre boom but the number of firms able to do the jobs was being hit by subcontractor failures.

And it said main contractors, who were jittery about subcontractors going bust on them, were learning from past mistakes and “pricing sensibly for tomorrow”.

But it warned clients there was a reduced pool of available contractors for jobs over £250m which it said was “creating a race for tier 2 contractors”.

It said insolvencies was the number one issue for many and added: “Financial difficulties due to the step change in construction costs were part of the story but this was compounded by supply chain failures, additional costs due to Brexit and an uncertain policy environment, along with cladding remediation costs in some instances.”

Core Five’s tender price forecast for this year remained unchanged at 1% and 1.5% respectively both for mainstream projects, which it said were sub-£100m, and major projects over £100m.

But it said these would increase to 3.5% for mainstream projects and 4% for major projects for both next year and 2026 reflecting an uptick in demand.