Close to 30,000 new homes, including around 7,000 affordable units, are currently stalled due to concerns over inadequate wastewater infrastructure, according to new research from the Home Builders Federation (HBF).
The report, A Drain on the Nation, warns that that these delays are further deepening the housing crisis. This comes despite developers having contributed £2.3bn to water companies since 2020 to fund infrastructure improvements.
The HBF says planning applications continue to face delays or refusals over perceived sewerage capacity issues – even in cases where water companies have not raised objections.
Under national planning policy, responsibility for wastewater infrastructure lies with water and sewerage undertakers, not developers. The National Planning Policy Framework (NPPF) also instructs local planning authorities to assume infrastructure providers will meet their legal obligations.
However, a growing number of councils are reportedly withholding planning permission or delaying decisions based on uncertainty around sewerage provision, despite national policy guidance.
This disconnect is creating serious delays across the housing sector, particularly for smaller developers with vital associated community investment also being held back, the report added.
The HBF estimates that the 30,000 stalled homes would generate an estimated £900m in Section 106 contributions, funding schools, roads, green spaces, and public amenities.
The report explains that 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 £2.3 billion to the water sector between 2020/21 and 2024/25, including £600m in payments and £1.72 billion in assets such as sewers and pumping stations.
According to the HBF, some of the companies receiving the most in developer contributions are also those raising the most concerns.
It highlights Thames Water, for example, which it says 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 HBF says the number of homes delayed due to infrastructure issues will almost certainly grow, further worsening the housing crisis and eroding confidence in the planning system.
David O’Leary, executive director at the HBF, said: “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 £2.3 billion 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.”
