Many water companies provide discounts to developers to incentivise building new homes that use less water and avoid letting surface water enter the public sewer system. To ensure water companies are doing what they can to incentivise developers, Ofwat reviewed the current incentives offered to developers.

Ofwat has released a review of water companies’ environmental incentives, such as charging discounts to support more water efficient new homes. The Review highlights a range of approaches that water companies use to encourage better environmental outcomes. The Review’s purpose is to strengthen their use and effectiveness and to inform how environmental incentives should be regulated from April 2025.

In the first two sections of the report Ofwat set out why we are undertaking this review and why environmental incentives are important. Section 4 sets out the results of the review of the current environmental incentives for developer services. The rest of the report provides examples of good practice in developer services as well as examples from other types of charges in the water and wastewater sectors.

Ofwat commented that: While we are pleased to see some companies have launched or improved the environmental incentives they offer, many companies do not offer effective incentives or do not communicate them effectively.

We are pleased to see that this year some companies have worked to launch or improve the environmental incentives they provide. For example, Thames Water has launched a new innovative discount scheme; Severn Trent Water’s new environmental discounts are clearly communicated on its web pages; and Affinity Water has worked to ensure that its bulk charges for new appointees are consistent with supporting water efficiency. We also recognise that companies are working through other means to deliver more sustainable new homes, such as Dŵr Cymru’s work on sustainable drainage, and the Enabling Water Smart Communities initiative, led by Anglian Water.

It is also clear from our review that much more can be done, with many companies not offering effective incentives or not appearing to communicate them effectively. We will therefore be engaging with industry on both the environmental incentives they can offer over the coming year and on how we regulate environmental incentives for developer services from April 2025.

The full report from Ofwat can be read here