From 1 April 2025, all UK water companies introduced updated charges for new infrastructure connections, with significant cost implications for developers nationwide. These changes will directly affect the cost of clean water and wastewater infrastructure on development sites, from one-off house builds to major housing schemes.
This update also marks a milestone change in how water companies recover costs, with the removal of the income offset, new environmental levies, and increased fees across pre-planning and non-contestable works.
What’s Changed?
Income Offset Removed Nationwide
For years, developers benefited from a water income offset, a deduction applied to infrastructure charges to reflect future revenue water companies would earn from new connections.
From April 2025, this has been removed across England and Wales. That means:
- You now pay the full cost of non-contestable infrastructure works
- No automatic discounts on sewer or water mains costs
- Applies to all new applications and Section 41/104 agreements from April onwards
This change aligns with Ofwat’s drive to simplify charging structures and ensure full cost transparency.
Introduction of Environmental Components
Alongside standard connection fees, many water companies now include a new environmental component in their infrastructure charges.
These are intended to help fund long-term goals such as:
- Improving the resilience of local water networks
- Reducing demand through water efficiency
- Managing wastewater more sustainably
- Supporting new drainage technologies like SuDS (sustainable drainage systems)
Although this might sound like a general improvement levy, it’s built into the regulated infrastructure charge, meaning it’s non-negotiable and applies per property.
Pre-Development Fees
Many UK water companies have introduced pre-development fees to cover the costs of early-stage services, including:
- Capacity checks to assess network availability
- Technical vetting of proposed connection designs
- Requests for sewer and water network records
- Pre-planning advice and feasibility assessments
These fees reflect the actual resource investment water companies make before any infrastructure work begins and are now charged separately rather than bundled within connection fees.
What this means for developers:
- Budgets must now include these non-contestable fees early in the project
- Pre-development fees are charged regardless of who completes the connection works
- Accounting for these costs upfront helps avoid unexpected expenses and delays later
What We’re Seeing
We’ve seen connection quotes increase significantly under the new charging rules. For example, one Yorkshire Water quote jumped from £21,000 to £56,000, a 167% increase. Severn Trent also showed a notable rise, with charges on one site going up by 47%.
Non-Contestable Charges Are Regulated
All non-contestable charges are regulated by Ofwat and must be passed on directly, meaning:
- All providers use the same rates for these works
- You should see no major variation in like-for-like quotes
However, we’ve seen errors where:
- Providers quote from outdated charging tables
- Cost estimates based on the current cost structure, even when the build programme extends into the next charging period
- Environmental levies are missed or duplicated
- The offset is incorrectly assumed to still apply
Let Us Handle It
As your project management partner for utility infrastructure, we: