Thousands of previously stalled homes can now proceed in Sussex after four-year ban

The UK Government said families in north Sussex are ‘set to benefit from thousands of new homes’. It follows a ‘landmark agreement’ between government, regulators and industry – resolving a four-year pause on development, while ‘safeguarding local wetlands and wildlife’.

It said this marks a ‘major step forward’ in delivering homes for local families, ‘supporting community growth and protecting the natural heritage’ of the Arun Valley.

From November 1, planning authorities in areas including Horsham, Crawley, Chichester, and parts of the South Downs National Park – the Sussex North Water Resource Zone – will once again be able to approve new housing applications, following confirmation that the requirement for ‘water neutrality’ will be lifted.

Real estate company Savills welcomed the decision of the Water Delivery Taskforce, which comprises Defra, Natural England, the Environment Agency and Southern Water.

A spokesperson for Savills said: “In September 2021, Natural England issued a position statement stating that groundwater abstraction by Southern Water at Hardham, near Pulborough, may be harming internationally protected habitats in the Arun Valley and hence impacting adversely on the special protection area, special area of conservation and Ramsar wetland site.

"These sites support rare species, including the lesser whirlpool ramshorn snail.

“The issue in the WRZ stems from the habitats regulations, which state that any plan or project (including housing or commercial development) that may affect internationally protected sites must undergo a Habitats Regulations Assessment (HRA). The ‘precautionary principle’, i.e. that further water abstraction at Hardham could not be ruled out as having an adverse effect, remained a high bar to overcome, and it had proved nearly impossible to do so for four years.”

The situation ‘effectively put an immediate stop’ on the approval of planning applications for any new development that requires water in Horsham, most of Crawley and parts of Chichester and the South Downs – unless they demonstrated ‘water neutrality’.

The Savills spokesperson added: "Natural England defined water neutrality as the total water use after development must be no greater than before. This has had major socio-economic impacts on the areas affected, including not being able to meet the government’s targets for new homes.

"Horsham District [Council], who before the position statement had a strong housing supply position, is now only able to demonstrate a one-year housing land supply and has challenged the inspector’s initial findings on its emerging local plan on the basis that water neutrality has hampered its ability to allocate more sites for housing.”

According to Savills, local planning authorities have ‘sought to address the issue’ through applying Grampian planning conditions – which prevents the start of a development until off-site works have been completed.

They also formulated a mitigation scheme, which together require reduced water usage and introduces a tariff for developments in order to offset their water demand through local projects (called the Sussex North Water Certification Scheme (SNWCS).

"However, this has taken time and ultimately the licences that allow water abstraction from the source (in this case at Hardham) are operated by Southern Water and controlled by the Environment Agency under their statutory duties for the provision of sustainable water supply under the Water Industries Act (WIA),” the Savills spokesperson explained.

“The WIA requires Southern Water to prepare a Water Resources Management Plan (WRMP), the latest being the WRMP 2024, which has to take water neutrality into account and abide by the habitats regulations.

"This is being informed by the Hardham Basin environmental study being undertaken by Southern Water and reviewed and verified by the Environment Agency. This study began in 2023 and seeks to establish whether there is a sustainable level of abstraction from the Hardham source without impacting on the protected sites or if abstraction should stop.

"In an appeal, and subsequent legal challenge by Crest Nicholson, it was raised that by virtue of the fact that the WIA requires statutory undertakers responsible for water supply to operate under the habitats regulations and that the Hardham Basin environmental study would establish a sustainable level of abstraction (even if that were zero), that water neutrality should not be applicable to new development.”

Savills said the outcome of the environmental study has been delayed but ‘is now imminent’.

Around 4,000 homes that were previously stalled will now proceed while enabling a further 17,000 to be built, according to the UK Government.

This breakthrough builds on the government pledge to build 1.5 million homes by the end of this Parliament, a ‘core milestone of the plan for change’.

Environment Secretary Emma Reynolds said: “This breakthrough ends a broken status quo and shows how we can build the homes the community needs while protecting nature.

“Under the government’s Plan for Change, we are taking a win-win approach that unlocks growth while protecting and restoring the natural world we all depend on.

“We are getting Britain building again while securing a brighter future for our precious wetlands, wildlife and local rivers.”

It is now anticipated that Southern Water will formally change its abstraction permits with the Environment Agency and fund habitat restoration, with ‘no cost to consumers’.

Savills said it ‘remains to be clarified’ whether there will be ‘any cost or restriction to developers’.

The developer added: “New homes will be built to higher water efficiency standards to reduce environmental impact.

“Natural England will at least amend its Position Statement accordingly, before or by November 1, and, once measures confirmed are in place, will cancel it entirely as the need for water neutrality will cease to be a requirement.

“Presumably the SNWCS will cease to be a requirement on new development.”

Charlie Collins, planning director at Savills Guildford, said the housing needs in Crawley, Horsham and Chichester ‘are considerable’.

He added: “The reaction of local authorities to this news will be hotly anticipated as Chichester’s Cabinet only agreed to formally launch SNWCS in September and Horsham was due to do the same shortly after.

“Presumably, planning applications will no longer have to demonstrate water neutrality, rather demonstrate the required higher water efficiency standards. The reaction of the environmental lobby will also be of interest given the statement that had previously been put forward by Natural England regarding the implications of the Habitats Regulations.”

Sarah Beuden, planning director at Savills Southampton, adds: “The consequences will likely be felt for years, as the local authorities grapple with an anticipated increase in planning applications and development activity, given the extent of pent-up demand and need in an area which has traditionally been a focus for growth and investment.”

Marian Spain, Chief Executive of Natural England, said: "This type of sustainable development clearly shows how we can build the new homes this country needs while restoring and protecting nature.

“A thriving natural environment is at the heart of a strong economy and is vital to all of our health and wellbeing. We know that people want to live near nature and cases like this where sound nature regulations prompted innovative solutions mean we can continue to make that possible.”

Jennie Donovan, the Environment Agency’s director of nature and place, said: “The Environment Agency are committed to protecting the environment whilst supporting growth and sustainable development, ensuring new homes are built with adequate flood risk protection, supply of drinking water and sewerage services.

“This agreement shows how working together to manage our water needs can unlock development and enable new homes for local communities, whilst helping nature recover at the same time.”

Housing and Planning Minister Matthew Pennycook said: “The breakthrough achieved in Sussex North demonstrates how through smart policy interventions we can unlock precisely the kind of win-win for development and nature that this government is committed to achieving.”