New housing estate: T.Eyre

Water restrictions are holding back new housing, warns lawyer

Andrew Gaved Editor at Large
08.01.2026

Water shortages could threaten new housing developments across the UK in the coming years unless urgent action is taken, according to a leading lawyer.

The Government’s pledge to deliver 1.5 million homes across the country is being hampered by the requirement to keep water neutrality – the principle that a new development should not result in an increase in the total demand for water from the public supply – said Nicola Sutton, a partner in the commercial property team at Clarke Willmott, which advises residential developers, housebuilders and landowners.

Nicola said:

To achieve water neutrality, new developments must first minimise their own water consumption through efficiency and re-use and then offset any remaining water demand by funding projects that save an equivalent amount of water elsewhere in the local area. A four-year moratorium on new development in the environmentally sensitive Arun Valley in West Sussex, for instance, has only recently been lifted [Natural England ruled in 2021 that groundwater abstraction by Southern Water may be harming internationally protected habitats in the local area].”

She added that this move effectively halted the approval of applications for any new development that required water in the area unless they could demonstrate water neutrality:

This has now been reversed, so that around 4,000 homes that were stalled for four years can now proceed, with a further 17,000 having been effectively unlocked.”

Nicola warned that addressing that the scarcity of water may require more stringent measures for new residential schemes in future, calling it ‘one of the biggest challenges that developers – and local authorities – will face in the coming years’. She said:

It casts more doubt on the Government’s ability to deliver on its ambitious housebuilding targets. We may be facing a situation where there is not enough water to cater for new housing developments, particularly in the south of England,”

This could see the imposition of limits on the amount of water usage per household an requirements for building more water efficient homes, she said.

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