The UK construction sector is facing its most turbulent period since the financial crisis. In the 12 months to April 2025, 4,032 construction firms entered insolvency. This accounts for 17% of all business failures across the country, according to the latest data from the Insolvency Service.
This figure puts construction at the top of the UK’s insolvency league, ahead of wholesale and retail, hospitality and manufacturing. The sector, central to government infrastructure ambitions, is cracking under pressure.
Key Takeaways
- The number of construction firms entering administration in the first half of 2025 hit 150, slightly higher than the 147 reported during the same period last year.
- Business optimism slumped to a two-and-a-half-year low as new orders fell for the sixth consecutive month
- Corbyn Construction and Fosseway Transition Limited have filed for insolvency
- Smart buyers are acting fast—using pre-pack deals, strong due diligence, and non-bank financing to close transactions
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Why Are Construction Businesses Going Under?
A combination of financial and operational pressures is pushing an increasing number of construction businesses over the edge. Skyrocketing material and labour costs have eroded already thin margins, while increases in National Insurance and the minimum wage have added extra strain to payrolls. Planning delays continue to stall project starts, creating cash flow headaches, and regulatory uncertainty. Paired with rigid fixed-term contracts, this recessionary environment is making it harder for businesses to sustain.
Housebuilders, in particular, are feeling the squeeze. Margins remain tight, and with demand still sluggish, many are struggling to stay afloat. Smaller and specialist contractors are suffering the most. In June 2025, our platform tracked more than 100 construction SMEs that filed for financial distress. That’s not a one-off, this pattern has been consistent for months, pointing to a deeper structural vulnerability within the SME segment of the sector.
Administrations Keep Climbing
The number of construction firms entering administration hit 150 in the first half of 2025. This is higher than the same period last year (147). June alone saw 28 administrations, matching May’s total and remaining well above April’s count of 21.
While June’s figure is marginally down from 31 in June 2024, the broader trend is clear: construction insolvencies are rising, and there are no clear signs of this momentum slowing this year.
The Overall Construction Output Continues to Shrink
Apart from the increasing insolvencies noted across the sector, the UK’s construction industry continued to contract in June, marking the sixth consecutive month of declining activity.
Commercial construction took the biggest hit, recording its steepest decline since May 2020. This was largely driven by weak economic sentiment and a pullback in investment from clients. Civil engineering also underperformed, making it the weakest segment for the month. In contrast, housebuilding edged into positive territory for the first time since September 2024, though the recovery remains fragile and slow-moving.
Employment across the sector also fell, as companies worked to cut overheads in response Concerns around lacklustre enquiry levels and broader economic instability continue to weigh heavily on sentiment, leading to the lowest optimism levels since late 2022. The industry’s ongoing challenges suggest that insolvency pressures are unlikely to ease any time soon. especially for smaller contractors who remain exposed to delayed projects, tight margins, and rising operational costs.
Which Construction Businesses are Facing Financial Distress Currently?
The news of 2 well established construction businesses going under has surfaced since last week. These include
Corbyn Construction: Corbyn Plant Hire Ltd is preparing to offload its entire equipment fleet following the administration of its sister company, Corbyn Construction. While the plant hire business itself remains solvent, the decision to sell has been triggered by the collapse of the £33m-turnover groundworks and concrete frame contractor.
Euro Auctions has been instructed to manage the disposal, which includes a significant range of heavy equipment. Excavators, dumpers, tower cranes, concrete trucks, tippers, low-loaders, and specialised delivery vehicles are all up for sale. Also available is an extensive collection of formwork systems from major manufacturers such as Peri, SGB, and K-Guard, as well as a complete suite of concrete placing equipment.
Fosseway Transition Ltd.: Two Bath-based residential construction and development firms—Fosseway Transition Limited and Fosse Way Court (Management) Limited—entered administration on June 27. Gary Shankland and Irvin Cohen of Begbies Traynor have been appointed as joint administrators.
According to the most recent financial statements, Fosseway Transition reported fixed assets worth £7.3 million and current assets of £2.1 million, with net assets standing at £6.8 million for the year ending March 31, 2024.
Fosse Way Court (Management) Limited’s accounts for the year ending September 29, 2024, showed fixed assets of just over £73,000 and current assets of £7.8 million. Net assets were reported at approximately £50,000.
Strategic Insight for Distressed Business Buyers
This environment creates fertile ground for buyers to capitalise on key distressed opportunities.
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Acquire tangible assets at below-market rates
With plant hire and subcontractor companies offloading fleets, there are ample opportunities to acquire high-value equipment at significantly discounted prices, avoiding inflated supply chain markups.
Read more about buying IP assets here
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Look for half-completed projects with strong upside potential
Distressed developers often leave behind partially completed sites – already approved, already started, but stalled due to financial mismanagement. For buyers with operational bandwidth and liquidity, these projects present rare value: the groundwork is done, the market has been tested, and the return can far outweigh the risk if completion is strategically executed. In regions with housing demand, especially, this is a golden entry point.
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Turn around companies with strong fundamentals but poor cash flow
Not every business going under is broken. Many suffer from liquidity mismanagement, delayed payments, or margin compression on key contracts. With smart restructuring and better working capital controls, these companies can rebound quickly.
Read more about how to successfully turn around a struggling business
FAQ: What Buyers Are Asking Now
What are the risks of buying distressed construction businesses?
Plenty—but they’re manageable with the right strategy. Risks include undisclosed liabilities (think unpaid subcontractors), damaged reputations, or operational chaos. That’s why forensic due diligence is key.
Can I buy just the assets without taking on the debts?
Yes, and in many cases, that’s the smart move. Through asset-only sales or pre-pack administrations, you can acquire plant, equipment, vehicles, and even client lists without the baggage of historic liabilities. In this way, you get to buy the valuable bits of the distressed business.
How do I spot these distressed opportunities early?
Timing is everything, and this is where Administration List comes in. We real-time alerts on UK insolvencies, including winding-up petitions, liquidations, and administrations, days or even weeks before they hit mainstream channels. A single subscription can help you stay ahead of your competitors.
What to read next:
- Due diligence guide
- Funding acquisitions
- Buying businesses with existing employees
- Minimising risk in insolvency acquisitions
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