Will stemming untreated sewage turn the tide for new housing?

For readers that have not been previously involved with our discourse around phosphate pollution or nitrate pollution, the core nutrient neutrality conundrum can be summarised as follows:

• Urban and agricultural land use each adds nutrient load to surrounding land and waterways.
• Excessive nutrient load in a region exerts harmful impacts upon human health and wildlife ecosystems.

In recognition of this conundrum and the landmark European Court of Justice ‘Dutch N’ judgment, since mid-2019 over 30 UK local authorities have increasingly denied planning permission to new housing developments that add nutrient load without mitigation. This year, Natural England (NE) further recommended that this list be expanded to 74 local authorities.

We have observed that nutrient neutrality requirements are not always consistently applied across all affected local authorities. However, by industry accounts, these consenting changes pose a significant obstacle to building new UK homes. After surveying its members and analysing local authority statements, in May 2022 the Home Builders Federation (the trade association which represents private sector housebuilders in England and Wales) estimated that nutrient neutrality requirements have delayed about 100,000 homes.

If formalised, this proposed legislation could significantly reduce such consenting delays. The Department for Levelling Up, Housing and Communities estimates that from 2030, the proposed obligations on water and sewage treatment companies could reduce phosphorus loads by approximately 75% and nitrogen loads by 55% in nutrient sensitive areas. This will reduce the amount of mitigation that will be required to offset new development. The likely result of this is significant boosts to the number of planning permissions that can be granted for new housing, and consequently, housebuilding numbers.

Foot Anstey’s Real Estate and PET (Planning and Environment) teams will monitor further Government-led discourse around the proposed legislation. In particular, the practical operation of exemptions under the proposed legislation will carry significant future implications for nutrient neutrality stakeholders. With 2030 still being a long way off, knowledge sharing within venues such as the Solent Stakeholder Forum on Nitrates and continuing to explore innovative methods of nitrate mitigation will remain key to meeting nutrient neutrality’s challenges. In particular, the latter point raises a further natural question.

Foot Anstey is proud to have supported several successful nutrient mitigation schemes that have unlocked new housing permissions. Whilst the concept of a nutrient mitigation scheme was relatively novel only three years ago, since 2019 we have acted on various schemes that were structured as follows:

• A developer partners with a farmer landowner.
• The farmer landowner contracts with the developer to stop farming land in exchange for a lump sum payment.
• A separate agreement between the relevant local authority, the developer and the farmer landowner is concluded. This second agreement ensures that: (i) the arrangement is regulated; (ii) relevant land charges will be registered in relation to the land where farming has stopped.
• Nutrient credits that are gained by the developer through this arrangement are put towards housing development.

On top of supporting housing need, such schemes have also diversified the potential of UK farmland. Readers with an interest in land diversification may wish to bookmark our recent ‘Experts in the Field’ podcast which discusses how viewing farmland through the lens of natural capital can support diversification.

However, it is recognised that there are limitations to this increasingly ‘standard’ approach that has developed in relation to nutrient mitigation schemes. First, for such a scheme to be possible, both the land that has been earmarked for housing development and its corresponding offsetting farmland must sit within the same local authority area. On a wider level, the finite nature of offsetting land in some local authority areas could limit the potential of such schemes and precipitate further developments in the nutrient mitigation arena.

Nutrient trading platforms represent one such corner of potential development. Two such schemes are in the process of being instituted.

The Solent Nutrient Market Pilot was funded by the Department of Environment, Food and Rural Affairs (DEFRA) to match eligible environmental projects in the Test and Itchen Catchment Area with local developments that require nutrient credits, biodiversity credits or carbon credits. The Solent Pilot is currently reviewing applications from landowners wishing to supply environmental projects and it is anticipated that their market platform will be formally launched in the next 12 months.

In parallel, last month Natural England formally announced its Nutrient Mitigation Scheme. Under it, DEFRA, DLUHC and NE will invest in projects such as new and expanded wetlands and woodlands to allow more planning permission grants in areas with nutrient pollution issues. Similarly, Natural England will imminently begin inviting landowners to bring land forward as potential nutrient mitigation sites.

It remains to be seen if nutrient credits on each platform will achieve planning authorities’ all-valuable recognition when future planning applications are determined. However, the Planning Inspectorate has indicated in a recent appeal decision that maximising the certainty of nutrient offsetting schemes will be key to achieving this. Foot Anstey will continue to monitor developments in this area.