Unlocking the circle: The UK’s four biggest barriers to a circular construction economy, and what to do about them

Circularity in the built environment remains one of the key issues that we need to address to achieve net zero. It goes beyond just reducing waste; we must adopt a long-term perspective that will encourage an industry-wide approach at scale that rewards circular practices.

As part of our ongoing campaign on circularity in construction, Mace recently brought together supply chain partners, consultants and clients to discuss and enhance circular practices across three critical areas: structures & demolition, envelopes, and fitout.

Together, we addressed current barriers and delved into how circular economy practices can be integrated throughout a building’s life cycle: From the initial brief and material selection to the end-of-life deconstruction and reuse, each stage presents unique opportunities to minimise waste and maximise resource efficiency.

Here are four key recommendations to create an environment where circularity is scaled.

1. Policy and Incentives
   

   
   Achieving a fully circular economy is often hindered by a lack of national policies in place. While local initiatives, particularly in London, show promise, the lack of central coordination complicates efforts for asset owners with diverse portfolios. Reclaimed materials often incur higher costs due to additional processing, with no financial mechanisms to offset these expenses. The tax system favours new builds with zero-rated VAT, while repurposing existing assets incurs a 20% VAT rate, making circularity more expensive. Current practices do not reward donor projects for material reuse, disincentivizing closed-loop schemes.

   To address these issues, nationalising circular economy policies across the UK is essential. Implementing planning policies – like those in the City of London and GLA – nationally and in the Devolved Nations could create a standardised framework for circularity.. This includes fast-tracking applications demonstrating high circularity and offering tax rebates for reclaimed or reused materials to offset higher costs. Updating building regulations to mandate material-reuse-and-lifecycle impact assessments will ensure sustainability is integrated into the construction process. Additionally, integrating the UK Net Zero Carbon Buildings Standard into planning policies will encourage the use of low-carbon materials, further supporting the transition to a circular economy.
   
   

2. Data, Metrics, and Processes

   
   One of the main barriers to a fully circular economy in construction is a lack of consistency in how circularity is measured. While Mace has developed a circularity measurement tool, this is not standardised across the industry.

   There is also limited understanding of buildings and materials at the demolition stage, often due to no digital records available for older buildings.

   It is essential to adopt standardised digital material databases – such as material passports – across the industry. This must come alongside robust pre-development and pre-demolition audits to support future re-use. In addition, establishing a national register for historic building information and mandatory digital waste tracking to assess the true value of materials remains crucial. Going forward, an industry manual on how to dismantle buildings can provide much needed guidelines to promote industry wide adaption of circularity practices.
   
   

3. Risks and Costs

   
   The absence of a long-term vision for material reuse hinders investment and R&D, while standard building contracts are ill-suited to the risks associated with material reuse, thus limiting adoption.

   Reused materials are often considered riskier than virgin materials, leading to higher costs due to warranty and insurance challenges. Reclaimed materials incur additional expenses due to extra processing time required and fixed budgets during design and specification often overlook the balance between cost and upfront carbon savings.

   To overcome these challenges, it is essential to implement fair risk allocation, extend warranties for reused materials, develop innovative insurance schemes, and incentivise circularity within contracts. Additionally, expanding cost and carbon models and increasing flexibility in building codes will further support circularity.
   
   

4. Designing for Circularity
   
   Design plays a pivotal role in achieving a circular economy in construction, in particular designing for deconstruction as it enables products to be easily disassembled, allowing components and materials to be reused, repaired, or recycled. But a lack of standardised guidelines and circular skillset often hinders the full potential of circular design.

Overcoming these challenges requires a shift in design thinking, policy support, and investment in recycling infrastructure to create a robust framework for sustainable deconstruction practices

Additionally, developing industry-wide guidelines for product design that streamline deconstruction and recycling is essential. Regulatory bodies and industry groups should create and enforce these standards, encouraging deconstruction-friendly designs. Suppliers should adopt take-back schemes, offering rebates for disassembled products.

Achieving a circular economy in construction requires a collective effort and multifaceted approach. By implementing these strategies, we can pave the way towards a sustainable, circular future.