Nutrient neutrality rules having ‘huge impact’ on sector’s ability to deliver homes
Rules introduced by the government to limit the pollution caused by new developments are pushing up the cost of land in some areas and forcing landlords to reduce the number of homes they deliver.
A number of housing associations have told Inside Housing that Natural England’s nutrient neutrality advice is “having a huge impact” on the sector’s ability to deliver new homes due the effect on land and other development costs.
As of last month, a total of 74 local authorities were covered by government nutrient neutrality advice, which means developments can only be given planning permission if they will not cause any additional pollution to the local area.
Inside Housing first reported on the issue in 2019, when the problem was largely confined to the Solent region, however the problem has now spread to affect more of the country. The Home Builders Federation (HBF) recently claimed that around 120,000 new homes are being delayed by the rules.
Amanda Williams, chief investment officer of Aster Group, said: “The guidance around nutrient neutrality is having a huge impact on the sector’s ability to deliver new homes across much of Southern England.
“The knock-on effect for providers of affordable housing is acute. Sites identified for development are essentially being put on hold with no solution in sight compounding the housing crisis.
“With routes to development narrowed, we are also finding ourselves competing against volume house builders considering smaller sites to deliver open market homes, effectively pricing us out of the market.”
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Ms Williams called on policymakers, councils, developers and housing providers to sit around a table “sooner rather than later” and reach an agreement that protects the environment and delivers new affordable homes.
Paul Breen, managing director at Living Space, said: “The costs associated with achieving soil neutrality are significant, so much so that any developer in possession of nitrate and phosphate-laden land will most likely have needed to cut the number of homes delivered to square the circle.
“It has created a situation where the supply and demand of land is wildly out of kilter. Viable sites are limited and securing them is a challenge – especially for affordable housing providers.”
A spokesperson for the HBF said there is growing evidence of land prices being driven up in areas not affected as companies prevented from operating in impacted locations look for sites where they can actually build.
Mike Shepherd, group development and new business director at Vivid, said housing associations can continue developing in affected areas through the government’s ‘nitrates credit’ scheme, which allows developers to buy credits to create new habitats that offset the impact of new development on the environment, however this costs “around £5,000 per plot”.
“In some cases we’ve been able to deduct this cost from the land when structuring a deal, but in others the issue has arisen later in the process and it’s been a direct development cost,” Mr Shepherd added.
A spokesperson for the Department for Environment, Food and Rural Affairs, which has responsibility for Natural England, said the rules are about making sure that pollution in rivers, lakes and estuaries is not made worse by new developments.
“Without mitigation, extra wastewater from new housing developments can contribute to the decline of our protected wetland and coastal sites and undermine our efforts to recover these sites back to the healthy habitats they should be,” they said.
The spokesperson added: “However, we recognise the challenges faced by local authorities. Nutrient neutrality is an interim solution and we must act to address the sources of pollution while tightening regulatory frameworks to prevent further harm to protected sites.
“We will continue to work closely with those in areas affected by excessive nutrients. We are committed to taking action to reduce the mitigation burden in order for communities to get the homes they need.”
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