Immigration Rule Changes 2025 – What London’s Construction Industry Needs to Know
Recent updates to the UK immigration regime, formalised in the Statement of Changes to the Immigration Rules (HC 1333) issued 14 October 2025, mark a significant shift in the labour-supply and skills landscape that the construction sector in London must navigate. For the London workforce market, where many roles depend on migrant labour, subcontractors, SME firms and main‐contractors alike must understand the practical implications now and prepare for the transitions ahead.
What’s Changing: Key Measures of Relevance to Construction
Here are the principal changes and how they may impact the sector:
➜ The requirement for a higher English language proficiency for new work-visas: as of 8 January 2026 applicants under the Skilled Worker, Scale-up and High Potential Individual routes must meet a CEFR B2 level standard (roughly A-level standard) rather than B1.
➜ The government is moving towards limiting overseas recruitment for roles below graduate (RQF 6) level, unless the role appears on a Shortage Occupation List / Temporary Shortage List (TSL).
➜ The Immigration Skills Charge (ISC) that employers pay when sponsoring migrant workers is set to increase significantly (reports suggest ~32%) from December 2025.
➜ The Statement of Changes also signals that some changes to settlement routes (indefinite leave to remain) and the eligibility period are under review, though not all are yet in force.
➜ The Shortage Occupation List / Temporary Shortage List (TSL) review means certain roles may lose eligibility for overseas recruitment unless explicitly included. For construction, this could affect roles historically filled from abroad.
Implications for London Construction Firms
Given London’s construction market characteristics (tight labour supply, reliance on subcontractor labour, mix of local and migrant workforce, high cost base), these changes will matter in several ways:
Recruitment & skills pipeline
With higher English language thresholds, some overseas recruits may no longer qualify under the Skilled Worker or affiliated routes unless their English is already up to B2. That means firms must assess their current and planned migrant workforce and consider whether additional language support or training is needed ahead of January 2026.
For mid-skilled roles that do not meet graduate (RQF 6) level, unless they are on the TSL or equivalent, overseas recruitment may become more limited. This particularly affects trades, operatives and support roles in construction where domestic supply is already tight in London. Firms will need to revisit workforce planning, skills-development strategies and maybe invest more in training local labour rather than relying on foreign labour.
The higher ISC cost increases the cost of sponsoring migrant labour. For smaller subcontractors operating on tight margins, this may push up the effective cost of overseas workers and thus require renegotiation of labour rates or reconsideration of logistics (favouring local workforce where possible).
Labour cost and margin pressure
These changes will likely lead to upward pressure on wages for eligible workers (domestic or migrant) because the scarcity of labour will increase if overseas recruitment is more restricted. For London contractors already under margin squeeze, this is a relevant risk.
Firms must factor in the increased immigration‐related cost (ISC, visa compliance, possible delays) into their cost models, subcontract price negotiations and project cashflows. Failure to do so may eat into margins or create delays.
Compliance and risk management
Firms sponsoring migrant workers must ensure their licence, compliance with the new English language requirement (for future recruits) and ensure that the roles they sponsor align with eligible job categories. Mistakes can lead to penalties, licence suspension or inability to recruit.
As the rules tighten, firms should review their internal HR processes to track eligibility of existing workers, planned extensions and verify that new hires meet the new standards. A small subcontractor may not currently have such administrative capacity, they may need external advice or partnerships.
Because the changes are phased (some coming into effect January 2026, others may follow later), firms cannot rely on business as usual. They must build migration risk into their workforce planning for 2026–27: what if a key overseas operative cannot be replaced quickly? what if wage inflation accelerates?
Strategic implications for London construction sector
The London market has a significant proportion of migrant labour, especially in operatives, skilled trades, support services. If overseas flows reduce, one consequence may be greater competition for UK‐trained labour, increased apprenticeship/training focus, and more need for retention strategies of existing migrant workforce.
For main contractors, this may increase emphasis on supply‐chain resilience. Subcontractors who cannot secure labour might default or delay, main contractors may need to ask more about labour supply chains in tendering.
There is an opportunity: companies that can demonstrate robust local workforce pipelines, investment in apprenticeship and training and compliance may gain competitive advantage in bidding. Also, with rising labour cost pressures, proactive firms may negotiate more favourable subcontract terms or specialise in higher‐skill trades less exposed to migrant labour constraints.
What London Construction Magazine Readers Should Do Now
Here are recommended actions for firms in the London construction sector to respond:
➜ Audit your current workforce: Identify how many migrant workers you sponsor (or are in sponsored roles), what visas they hold, when they need renewing and whether they meet future English language thresholds.
➜ Review your labour forecast for 2026–27: Especially for key trades and operatives, look ahead: if overseas recruitment becomes harder, what will you do? Expand apprenticeship intake, upskill local labour, or partner with labour providers?
➜ Budget for higher immigration costs: Include the increased ISC, visa processing time, increased English‐training cost if needed. Factor this into tender pricing, subcontract negotiations.
➜ Enhance language/skills capability: If you recruit from overseas, consider offering English language support now so workers meet B2 by January 2026. Consider training or partnership arrangements.
➜ Strengthen supply-chain resilience: Ask your subcontractors about their labour supply plans and immigration risks. Main contractors might include immigration compliance as part of supply-chain due diligence.
➜ Communicate internally: HR and operations teams should be briefed on the upcoming changes so that recruitment decisions made now are aware of the rule changes coming into effect.
Seek specialist advice: Immigration law is complex and changing. If you are sponsoring workers or plan to, you may benefit from a specialist immigration adviser to ensure compliance and mitigate risk.
For London’s construction industry, the latest immigration rule changes signal a shift from relatively open foreign labour flows to a more controlled, skills-focused regime. While this will not immediately transform the workforce overnight, the changes are material and the timing means firms must act now, especially those reliant on migrant labour in the capital’s highly competitive environment. Those companies which proactively adapt to the new regime, include immigration cost and risk in their workforce planning and build resilient local labour pipelines will be better placed to thrive.
As your partner in industry insight, LCM will continue to monitor how the rules evolve, how sectoral skills lists (TSL) are updated and how firms respond with best-practice case studies.
