Water Neutrality: A Developer's Guide

What Is Water Neutrality?

Water neutrality is a planning concept that requires new development to demonstrate that it will result in no net increase in water abstraction from a given water supply source. In simple terms, every litre of water that a new development will consume must be offset by a corresponding reduction in water use elsewhere within the same supply zone.

The principle is analogous to carbon neutrality or nutrient neutrality: the development must not make an existing problem worse. Where a water supply source is over-abstracted — meaning that the volume of water being taken from rivers, aquifers, or reservoirs is harming the natural environment — permitting additional demand from new development would exacerbate the environmental damage. Water neutrality ensures that development can proceed without increasing the pressure on the water source.

Water neutrality is not (or was not, where it applied) a straightforward engineering exercise. It requires a calculation of the water demand that the new development will generate, the identification of measures to reduce that demand on site, and — where on-site measures are insufficient to achieve full neutrality — the securing of off-site offsets that reduce existing water demand by an equivalent volume. The process touches on planning policy, building regulations, water company infrastructure, and environmental law.

The Sussex North Situation

The concept of water neutrality entered mainstream planning practice in September 2021, when Natural England issued a position statement advising that new development within the Sussex North Water Supply Zone (SNWSZ) must demonstrate water neutrality before planning permission could be granted.

Background

The Sussex North Water Supply Zone serves approximately 400,000 people across parts of Horsham District, Chichester District, Crawley Borough, and the South Downs National Park. The water supply is primarily drawn from groundwater abstraction at Hardham, near Pulborough, which takes water from the Lower Greensand aquifer. This aquifer feeds the River Arun and its tributaries, which in turn support the Arun Valley Special Area of Conservation (SAC), Special Protection Area (SPA), and Ramsar wetland site — habitats of international importance protected under the Conservation of Habitats and Species Regulations 2017 (the Habitats Regulations).

Natural England’s concern was that the existing level of abstraction by Southern Water at Hardham was already having, or risked having, an adverse effect on the water levels and flows that sustain these protected habitats. Any increase in water abstraction — driven by population growth and new housing — would worsen the situation.

Under the Habitats Regulations, local planning authorities have a legal duty to ensure that plans and projects (including the grant of planning permission) do not have an adverse effect on the integrity of protected European sites, either alone or in combination with other plans and projects. Natural England’s position was that, unless a development could demonstrate water neutrality, the local authority could not conclude that the Habitats Regulations Assessment would be satisfied.

The Impact on Development

The effect was immediate and dramatic. Four local planning authorities — Horsham District Council, Chichester District Council, Crawley Borough Council, and the South Downs National Park Authority — were unable to grant planning permission for any development that would increase water demand, unless the applicant could demonstrate water neutrality.

For developers, this meant:

• Housing delivery stalled. Thousands of planned homes were put on hold. Local plan allocations could not be delivered. Housing targets were missed.
• Planning applications were frozen. Applications already in the system could not be determined. New applications were submitted but could not be approved without a Water Neutrality Statement.
• Costs increased. Achieving water neutrality required specialist assessments, the installation of water-saving technology, and in many cases the purchase of off-site water credits — all adding cost and complexity to development.
• Uncertainty prevailed. The policy was novel, the guidance was evolving, and neither developers nor local authorities had a clear playbook for how to achieve compliance.

The situation persisted for four years, from September 2021 until October 2025, during which time it became one of the most significant planning constraints in the South East of England.

The October 2025 Resolution

On 8 October 2025, Defra announced that an agreement had been reached between Natural England, Southern Water, and the affected local authorities to resolve the water neutrality impasse.

The resolution was based on new evidence from Southern Water’s Hardham Basin Environmental Study, which assessed the relationship between abstraction at Hardham and the ecological condition of the Arun Valley habitats. Natural England concluded that a new package of measures — including amendments to Southern Water’s abstraction licence (to be implemented by March 2026) and ecological mitigation works — would “decouple” new development from any potential adverse effect on the protected sites.

On 31 October 2025, Natural England formally withdrew their position statement. This ended the requirement for Water Neutrality Statements in the Sussex North Water Supply Zone.

What Replaced Water Neutrality

The withdrawal of the water neutrality requirement did not mean that water efficiency was no longer a concern. Instead, the focus shifted from achieving “neutrality” (zero net increase in demand) to demonstrating compliance with the 110 litres per person per day water efficiency standard under Building Regulations Part G.

The four affected local authorities each updated their requirements:

• Horsham District Council removed the Water Neutrality Statement requirement but now requires compliance with the 110 lpd standard under Policy 37 of the Horsham District Planning Framework.
• Chichester District Council removed water neutrality requirements and reverted to the 110 lpd standard under Policy NE18 of the Chichester Local Plan 2021-2039. Non-domestic buildings must meet BREEAM Excellent standards within the Water category.
• Crawley Borough Council confirmed deletion of water neutrality and reversion to the 110 lpd standard under Strategic Policy SDC4 of the Crawley Borough Local Plan 2023-2040.
• South Downs National Park Authority withdrew their water neutrality requirement, though Policy SD48 continues to require water efficiency for projects increasing the building footprint by 100 square metres or more.

For Existing Permissions with Water Neutrality Conditions

Developments that received planning permission during the water neutrality period may have conditions or Section 106 obligations requiring water neutrality measures. These can be varied using a Section 73 application to replace the water neutrality condition with a simpler condition requiring compliance with the 110 lpd standard.

For undetermined applications, developers should contact their case officer to discuss the revised requirements. Where an application has already been considered by a planning committee, it may need to return to committee to amend the conditions. Some councils have advised that it may be faster to conclude the application with the existing conditions and then immediately apply to vary them via a Section 73 application.

How Water Neutrality Worked

Although water neutrality no longer applies in Sussex North, understanding how it worked remains relevant for two reasons: it may be applied in other areas in the future, and developments that secured permission under the water neutrality regime may still be delivering their neutrality obligations.

Step 1: Calculate the Water Budget

The first step was to calculate the total water demand of the proposed development — the water budget. This was based on:

• Number of dwellings and occupancy rates. The standard assumption was 2.4 persons per dwelling (the national average), though some authorities accepted site-specific occupancy rates based on dwelling mix.
• Per capita consumption. The baseline was the Building Regulations Part G Optional Technical Standard of 110 litres per person per day. Some authorities required a lower figure — 100 lpd or even 85 lpd — to provide a buffer and ensure that the development made a meaningful contribution to reducing demand.
• Non-residential water demand. For mixed-use developments, commercial and institutional water demand was calculated separately based on the type of use and the relevant BREEAM or industry benchmarks.

The water budget was expressed as a total daily demand in litres (or cubic metres) — the volume of water that the development would require from the public mains supply.

Step 2: Reduce Demand On Site

The second step was to reduce the development’s mains water demand through on-site measures:

• Water-efficient fittings. Specifying low-flow taps (maximum 5 litres per minute), dual-flush WCs (4/2.6 litres), aerated showerheads (maximum 8 litres per minute), and water-efficient appliances (washing machines and dishwashers with low water consumption ratings). These measures alone could reduce per capita consumption from the standard 125 lpd to approximately 100-110 lpd.
• Rainwater harvesting. Collecting rainwater from roofs and storing it in tanks for non-potable uses — WC flushing, garden irrigation, car washing, and laundry. A well-designed rainwater harvesting system for a typical dwelling could offset 20-40 litres per person per day, depending on roof area, rainfall patterns, and non-potable demand.
• Greywater recycling. Treating wastewater from showers, baths, and basins and reusing it for WC flushing and other non-potable purposes. Greywater recycling systems are more complex and expensive than rainwater harvesting but can achieve significant demand reductions, particularly in flatted developments with high occupancy density.

Step 3: Offset the Remaining Demand

Where on-site measures were insufficient to achieve full neutrality — and for most developments, they were — the remaining demand had to be offset through measures that reduced existing water consumption elsewhere within the same water supply zone. The principle was simple: if the new development would consume an additional 10,000 litres per day, existing water use within the SNWSZ must be reduced by 10,000 litres per day.

Offsetting strategies included:

• Retrofitting existing homes. Installing water-efficient fittings in existing dwellings within the supply zone — replacing old toilets, taps, and showers with modern water-efficient models. Each retrofit was estimated to save a quantified volume of water per day, which could be credited against the new development’s demand.
• Fixing leaks on the existing network. Funding repairs to the water distribution network to reduce leakage, thereby freeing up supply capacity. This required agreement with Southern Water and evidence that the leak repairs would deliver a quantifiable reduction in water loss.
• Water credits. Some developers and local authorities explored the concept of tradeable water credits — a mechanism by which a developer could purchase credits from an entity that had delivered verified water savings elsewhere in the supply zone. This market was nascent and largely informal during the Sussex North period, but it pointed to a potential future model for water neutrality compliance.
• Rainwater harvesting on existing buildings. Retrofitting rainwater collection systems to existing commercial or institutional buildings within the supply zone.

The offsetting measures had to be secured before planning permission was granted — typically through a Section 106 agreement or planning condition. The developer had to provide evidence that the offset was real, quantifiable, and would be delivered within the same supply zone.

Calculating the Water Budget in Practice

The water budget calculation followed a standardised methodology, typically based on the water calculator within Building Regulations Part G.

Residential Water Budget

The Part G water calculator estimates daily per capita consumption based on the specification of each water-using fitting and appliance within the dwelling. The key inputs are:

Fitting/Appliance	Standard Specification (125 lpd)	Efficient Specification (110 lpd)	High Efficiency (approx. 100 lpd)
WC (flush volume)	6/4 litres dual flush	4/2.6 litres dual flush	4/2.6 litres dual flush
Basin taps (flow rate)	8 l/min	5 l/min	4 l/min
Shower (flow rate)	12 l/min	8 l/min	6 l/min
Bath (volume)	180 litres	170 litres	150 litres
Kitchen sink (flow rate)	8 l/min	6 l/min	5 l/min
Washing machine	60 litres/use	50 litres/use	40 litres/use
Dishwasher	14 litres/use	12 litres/use	10 litres/use
External use	5 lpd	5 lpd	5 lpd

By specifying water-efficient fittings across all categories, a developer could typically achieve a per capita consumption of 100-110 lpd without rainwater harvesting or greywater recycling. Achieving levels below 100 lpd required supplementary systems.

The Offset Calculation

The offset was calculated as:

Offset required = (Total development demand at mains) - Zero

Since the target was zero net increase, the entire mains water demand of the development needed to be neutralised. On-site demand reduction measures reduced the total demand, and the remaining balance required off-site offsetting.

For example, a 100-dwelling development at 2.4 persons per dwelling and 110 lpd:

• Total demand: 100 x 2.4 x 110 = 26,400 litres per day
• With rainwater harvesting reducing demand by 25 lpd per person: 100 x 2.4 x 25 = 6,000 litres per day saving
• Net mains demand: 20,400 litres per day
• Offset required: 20,400 litres per day of verified reductions elsewhere in the SNWSZ

The cost and logistical challenge of delivering 20,400 litres per day of off-site water savings was substantial, and it was this requirement that made water neutrality so difficult and expensive for developers to achieve.

Other Areas at Risk

While Sussex North was the first (and to date the most prominent) area where water neutrality was formally required, it is unlikely to be the last. Several factors suggest that similar requirements could emerge in other parts of England.

Water-Stressed Areas

The Environment Agency classifies areas of England according to their level of water stress. Much of southern and eastern England is classified as “seriously water-stressed,” meaning that the ratio of water demand to available supply is high and likely to worsen with population growth and climate change.

Areas that abstract water from sources that also support protected habitats are particularly vulnerable. These include:

• Chalk aquifer areas in the South East. The chalk aquifer that underlies much of Hampshire, Kent, Sussex, Surrey, Berkshire, and Hertfordshire is a critical water source for both public supply and baseflow to chalk streams — habitats of high ecological value. Over-abstraction has reduced flows in many chalk streams, and Natural England is increasingly scrutinising the impact of further abstraction.
• East Anglia. The Norfolk Broads and other wetland habitats in East Anglia are sensitive to changes in water levels. Water companies in the region are already planning for significant supply deficits, and the combination of population growth and environmental protection could trigger water neutrality requirements.
• The Solent. The Solent area already has nutrient neutrality requirements for nitrogen and phosphorus. Water quantity is a related but distinct pressure, and any tightening of abstraction licences in the region could prompt a water neutrality approach.

National Policy Direction

The direction of national policy supports more stringent water efficiency standards. Key signals include:

• DEFRA consultation on Building Regulations water efficiency. A consultation on reducing the standard residential water consumption target from 125 lpd to 100 lpd in water-stressed areas has been under consideration, with the 110 lpd Optional Technical Standard becoming the mandatory baseline in those areas.
• Water Resources Management Plans (WRMPs). Water companies are required to publish 25-year plans for managing water supply and demand. Several companies in the South East — including Southern Water, South East Water, Thames Water, and Affinity Water — have identified significant supply-demand deficits that will require demand reduction, leakage reduction, and new supply infrastructure.
• Environment Agency abstraction reform. The EA is progressively reforming abstraction licensing to better protect the environment. Where abstraction licences are reduced to protect habitats, the resulting reduction in supply may increase pressure on water neutrality or water efficiency requirements for new development.
• National SuDS guidance. The emerging national standards for sustainable drainage recognise rainwater harvesting as a measure that should be “considered” in water-stressed areas, signalling a policy direction towards integrating water supply management with drainage design.

Developers operating in southern and eastern England should monitor these developments closely. Water neutrality may not be required today in most areas, but the underlying pressures — population growth, climate change, habitat protection, and supply constraints — are intensifying.

Water Efficiency in Practice

Even where water neutrality does not apply, designing for water efficiency is increasingly a planning requirement and a commercial advantage. The key tools available to developers are:

Water-Efficient Fittings

The simplest and most cost-effective approach. Specifying low-flow taps, aerated showerheads, dual-flush WCs, and water-efficient appliances adds minimal cost to the build (typically less than £200 per dwelling for the uplift from standard to efficient fittings) and delivers measurable water savings. For developments in water-stressed areas, achieving the 110 lpd standard is now a planning requirement.

Rainwater Harvesting

Rainwater harvesting systems collect roof runoff, store it in a tank (typically underground), and distribute it to non-potable outlets — WC cisterns, washing machines, and external taps. A typical residential rainwater harvesting system costs £2,500-£5,000 per dwelling installed, depending on tank size and distribution pipework.

The dual benefit of rainwater harvesting is significant: it reduces mains water demand and it reduces surface water runoff. A rainwater harvesting system that diverts roof runoff to a storage tank before reuse is, in effect, a SuDS feature — it attenuates peak flows and reduces the volume of discharge to the drainage network. Some LLFAs and water companies are beginning to recognise this dual benefit in both drainage design and water efficiency assessments.

Greywater Recycling

Greywater recycling systems collect wastewater from showers, baths, and washbasins, treat it to an appropriate standard, and reuse it for WC flushing. These systems are more complex than rainwater harvesting — they require treatment units, storage, a separate distribution network, and ongoing maintenance.

Greywater recycling is most cost-effective in larger developments, particularly flatted schemes where the ratio of greywater generation to WC demand is favourable and the cost of the treatment system can be spread across many units. For individual houses, the cost-benefit case is less clear, and rainwater harvesting is generally preferred.

Smart Water Metering

Universal water metering, combined with smart metering technology that provides real-time consumption feedback to residents, has been shown to reduce water consumption by 10-15%. While metering is increasingly standard for new developments, the “smart” element — real-time feedback, leak alerts, and consumption analytics — adds a further layer of demand reduction.

Landscaping and External Use

Water-efficient landscaping (xeriscaping) reduces external water demand by using drought-tolerant planting, mulching, and efficient irrigation systems. For developments with communal landscaping, specifying rainwater-fed irrigation systems rather than mains-connected sprinklers can deliver meaningful savings.

Lessons from Sussex North

The Sussex North experience offers several important lessons for developers, local authorities, and the wider planning system.

Early Engagement Is Critical

Developers who engaged early with the water neutrality requirement — commissioning specialist assessments, exploring offsetting strategies, and working proactively with the local authority — were able to secure planning permissions, albeit slowly and at additional cost. Those who waited for the policy to be resolved lost years of development time.

The lesson applies to any emerging environmental constraint: engage early, understand the requirements, and develop a strategy rather than hoping the problem will go away.

Integration of Water and Drainage Design

Water neutrality highlighted the connection between water supply and surface water drainage that is often overlooked in development design. Rainwater harvesting reduces both mains water demand and surface water runoff. Greywater recycling reduces mains demand and foul water volumes. These synergies should be exploited in all development design, not just where water neutrality applies.

At Aegaea, we routinely consider water efficiency alongside drainage strategy design, ensuring that rainwater harvesting and other water management measures are integrated into the overall scheme from the outset.

Policy Can Change Rapidly

The Sussex North situation demonstrated how quickly a policy constraint can emerge and how significantly it can affect development. The Natural England position statement was issued with limited warning and had an immediate effect on planning across four local authority areas. The resolution, when it came, was equally sudden — a four-year constraint was lifted within weeks.

Developers should maintain awareness of emerging environmental policy and build flexibility into their programmes. Where a development is in an area that could be subject to future water neutrality or similar requirements, building in water efficiency measures from the outset is a prudent strategy that reduces the risk of future policy constraints causing delay.

The Role of Water Companies

The resolution of the Sussex North situation ultimately depended on action by Southern Water — amending abstraction licences and implementing ecological mitigation. This underscores the critical role that water companies play in enabling development. Developers cannot solve water supply constraints alone; they depend on the water company to manage the supply system sustainably.

Building a constructive relationship with the local water company, understanding their Water Resources Management Plan, and engaging early on water supply and drainage capacity are all part of responsible development planning.

How Aegaea Helps

Aegaea worked extensively on water neutrality during the Sussex North period, achieving a 100% success rate on Water Neutrality Statements and helping clients secure planning permissions throughout the four-year restriction. Our experience covered:

• Water budget calculations for residential and mixed-use developments
• Specification of water-efficient fittings to achieve 100-110 lpd
• Rainwater harvesting system design and integration with drainage strategies
• Off-site offsetting strategies and Section 106 agreements
• Engagement with Natural England, Southern Water, and local planning authorities

While the water neutrality requirement in Sussex North has been lifted, the underlying issues of water efficiency, water stress, and environmental protection remain. We continue to provide:

• Water efficiency statements for developments in water-stressed areas, demonstrating compliance with the 110 lpd standard (or lower where required by local policy)
• Integrated drainage and water management strategies that combine SuDS design with rainwater harvesting and water efficiency measures
• Nutrient neutrality assessments where nutrient loading to protected waterways is a constraint
• Monitoring of emerging policy to advise clients on potential future water neutrality requirements in other areas

If you are developing in an area with water stress concerns, or if you need to demonstrate water efficiency for a planning application, get in touch. We will give you a clear assessment of what is required and how to achieve it efficiently.