Tens of thousands of new homes blocked by failure to build wastewater capacity
Almost 30,000 new homes are currently blocked, including 7,000 Affordable Homes, due to supposed concerns over inadequate wastewater infrastructure, exacerbating the housing crisis, according to new research by the Home Builders Federation.
The new report, A Drain on the Nation, highlights that developers have paid almost £2.3bn to water companies since 2020 to support infrastructure enhancements, yet planning permission is still being refused or delayed over perceived sewerage capacity issues, even where water companies have not raised objections.
National planning policy dictates that responsibility for wastewater infrastructure lies with water and sewerage undertakers, not individual planning applicants. Additionally, the National Planning Policy Framework (NPPF) makes clear that local planning authorities (LPAs) should assume infrastructure providers will meet their legal duties. However, a growing number of councils are refusing to grant permission or discharge planning conditions due to perceived uncertainty over sewerage provision.
This disconnect is creating serious delays across the housing sector, particularly for smaller developers with vital associated community investment also being held back. The 30,000 stalled homes would generate an estimated £900m in Section 106 contributions, funding schools, roads, green spaces, and public amenities.
Ofwat has made an effort to take an active role in shaping and standardising the charging regime for water companies’ infrastructure fees, but the 2024 Price Review has exacerbated the situation for home builders, with changes to the way infrastructure charges are calculated. Since March 2025, average wastewater charges for developers have risen by 52%. This is despite developers having already paid nearly £2.3bn to the water sector between 2020/21 and 2024/25, including £600m in payments and £1.72bn in assets such as sewers and pumping stations.
Some of the companies receiving the most in developer contributions are also those raising the most concerns. Thames Water, for example, has received over £440m in combined payments and assets in five years but has objected to numerous housing applications across London and the South East, where housing affordability is most challenged and new homes are most needed. Meanwhile, Anglian Water, which received around £330m over the same period, is also linked to significant delays across its region.
The findings come as the government increases scrutiny of water companies and infrastructure preparedness. The recent Cunliffe Review by the Independent Water Commission underlined the urgent need for systemic reform in the UK water sector, but offered no immediate solutions to the challenges facing home builders. Issues such as nutrient and water neutrality, and uncertainty around water supply and sewerage, remain unaddressed in the immediate term.
HBF is calling on the government to act urgently. It is urging ministers to reaffirm existing planning policy, remind councils of water companies’ statutory responsibilities, and ensure housing targets are properly reflected in long-term water resource management and wastewater infrastructure plans.
Without swift and decisive intervention, the number of homes delayed due to infrastructure issues is expected to grow, further worsening the housing crisis and eroding confidence in the planning system.
David O’Leary, executive cirector at the Home Builders Federation, says: “These delays are yet another example of how misalignment between planning authorities, utility companies, and national policy is choking off housing supply.
“Water companies are legally responsible for ensuring network capacity and have received £2.3bn from developers over the past five years to do so. Yet in the absence of clear national direction, planning permissions are being blocked, tens of thousands of homes delayed, and billions of pounds of community investment withheld.”
“With each passing month, the government’s ambitious housing supply targets are slipping further out of reach as public bodies and utility companies impose new barriers to deliver.
“While the Cunliffe Review rightly calls for long-term reform of the water sector, new homes are needed now. Government must reassert the statutory role of water companies, clarify how national policy should be applied, and ensure infrastructure investment reflects housing supply.”