A possible end is in sight to the housebuilding moratorium covering swathes of east Kent which has blocked the delivery of thousands of homes.

The government has vowed to “get Britain building” and key to that is to solve - or at least ease - problems caused by pollution in our waterways.

In east Kent, this has had an impact on water quality levels at Stodmarsh National Nature Reserve, near Canterbury. It has seen excess nitrogen and phosphorous which impacts on wildlife and water quality.

To prevent the issue from deteriorating further, Natural England introduced a moratorium on housebuilding for developments in 2020.

It has had an impact on an area stretching across parts of Canterbury and Ashford - the two areas most affected - as well as Swale, Maidstone and Folkestone & Hythe.

According to figures from Kent County Council last month, some 7,145 homes have been held up by the issue.

Simple, however, the issue is most definitely not. It is, at times, fiendishly complex and current solutions are piecemeal at best, non-existent at worst. Here, we explain just what the issues are and why new legislation may finally see homes built again.

What is the issue at Stodmarsh - and why does it have such a broad impact on house building?

In 2020, excess nitrogen and phosphorus were detected in the River Stour, which snakes its way through the Stour Valley catchment area. It feeds into the Stodmarsh National Nature Reserve, near Canterbury. It is an area of nationally and internationally important wildlife sites. It has, for example, SSSI status - meaning it is a Site of Special Scientific Interest.

Excess nitrogen and phosphorous can cause a host of issues to waterways, including prompting damaging algae blooms which deplete oxygen levels, kill fish and block sunlight from reaching plant life. In short, it damages vital natural areas - such as Stodmarsh - and threatens the fragile ecological balance.

To protect the area and ease the problem, Natural England introduced a moratorium on any new housebuilding that would connect to wastewater treatment works (WWTW) which discharge into the Stour Valley, as well as numerous other local authorities elsewhere in the country with similar issues.

The consequence? An issue which has a significant impact on areas lying within Ashford and Canterbury’s borders as well as neighbouring Folkestone & Hythe, Swale and Maidstone.

So is housing to blame for the pollution?

Now this is a question which has prompted much debate. Speak to housing developers and they will very much point you in a different direction to them.

It certainly contributes to the issue, but the primary cause is thought to be agriculture. The European Commission says “excess nitrogen from agricultural sources is one of the main causes of water pollution in Europe”. Adding: “Nitrates and organic nitrogen compounds from fertiliser and manure enter groundwater through leaching and reach surface water through runoff from agricultural fields.”

The other key contributor is the water works which discharge into the river. And, as we are only too aware, investment in water treatment infrastructure has not been at the required levels for many years.

Steve Turner is executive director of the Home Builders Federation, which represents private-sector homebuilders. He explains: “Generally, our argument throughout on this has been that housebuilding - or at least the occupants of new homes - are a negligible contributor towards this issue.

“Scientific research shows that it's well under 1% that the occupants of any new homes delivered would add to the nutrient loading the water companies have got to deal with.

“By far the vast majority of the issue is agriculture and agricultural run-off in terms of nutrient levels in lakes and rivers. And the fact water companies haven't invested in their infrastructure sufficiently.”

It is, believe many, a predictable outcome but one which developers - under intense government pressure to deliver the homes it is demanding - have struggled to combat.

Says a spokesman for Quinn Estates, a developer which has seen a string of its schemes put on hold: “The key parties of Defra (the Department for Environment, Food and Rural Affairs), the Environment Agency and Natural England should have worked with water companies and the agricultural sector to resolve the issue – they would have known that the assets were degrading and the causes.

“The requirements for the water industry to invest in higher quality treatment plants has been an outcome of this problem. However, these upgrades will not be in place until 2030.”

Which makes solving the problem no easy task.

So it means no homes can be built in these areas?

Not quite. They can build, but to do so they must prove they have taken mitigating action. In other words, if there’s a chance of contributing to the underlying cause of the pollution (the ‘nutrient load’), they must prove they’ve taken steps to offset that elsewhere. Not anywhere, though - it’s got to be within that same catchment area, so there’s no additional strain placed on the situation or the wildlife.

Broadly, this practice of off-setting is known as nutrient neutrality.

So, for example, if a housing development would add to the nutrient load, steps must be taken to create new areas for nature to thrive or for the existing load to be eased.

It’s not as simple as saying you’re going to do something - steps must be taken first which generate approved ‘credits’. Think of it as a set of scales. If you’re going to add to the pollution then you need to balance it out by protecting waterways or nature elsewhere.

In very simple terms, if the number of credits generated amounts to off-setting any pollution generated, then building can go ahead.

For example, a broad brush approach, and one often recited, is you can create a wetland area nearby to offset any additional pollution.

What generates a credit and how much do they cost?

Now this is where things get a bit complicated.

According to Natural England, one nutrient credit mitigates one kilogram of nitrogen pollution. But each form of mitigation comes at a different cost to achieve.

Creating, for example, new wetland is no easy task. The land must be bought, permission to convert it into a wetland secured and long-term guarantees put in place that the new wetland will not become tomorrow’s housing site.

So, if taking the wetland approach, any such arrangement will see agreements in place to protect and monitor the new wetland in perpetuity - i.e. forever. In practice, this means at least 80- to 120-year contracts. And all that adds to the price which, of course, is in addition to any developer buying the land they want to build on, getting planning permission and constructing the properties. You can see why developers find it an additional strain.

Which is why various other steps are being taken. These can include generating credits by retrofitting water efficiency measures to existing homes within the catchment area; converting septic tanks to a sewage treatment system; agricultural land being reverted back to natural habitats; or creating floodplain meadows.

And the credits can then be bought and sold.

Given this has been a situation which has delayed housebuilding for five years now, you would assume a central bank of credits was in place to allow developers to easily access them. You would, of course, be wrong.

Currently, they are sold on the open market which means prices fluctuate and there are, rarely, enough to unlock the building blockage.

According to Steve Turner of the Home Builders Federation, there are “moratoriums in 74 local authorities and about 160,000 homes on hold” nationwide.

To that end, Ashford and Canterbury councils have created a not-for-profit company to tackle the issue, locally. Stour Environmental Credits (SEC) Ltd aims to ultimately accrue credits from various mitigating efforts to sell them to developers at a fixed cost and be, as Boris Johnson used to love saying, ‘oven-ready’. In other words, know they will pass the tests of the likes of the Environment Agency, Natural England and local planning committees, to permit housing to be created.

They are, like all local authorities, under increasing pressure to deliver on housebuilding targets. They are significantly hamstrung by the nutrient issue.

SEC is currently finalising its operation - but expects to be able to buy and sell credits this summer.

Tracey Butler is chair of SEC and a senior director at Ashford Borough Council. She explains: “Should a developer come to us, they will know what they're buying is going to be able to secure their planning permission on the assumption it's only nutrient mitigation that's holding it up.”

As to the price of a credit? Well, that depends on demand and the sort of mitigation. Creating a wetland, for example, can be hugely expensive, while other measures less so.

Looking nationwide, a credit can range from anywhere between £2,500 to £6,000. So we’re not talking peanuts here.

Adds the SEC chair: “At the moment there is no fixed price for a credit. But that's what we're trying to aim to do.

“So if we undertake mitigation that we turn into credits for something that is going to be slightly more costly, we're going to try to offset that with credits generated from something slightly cheaper. So we get to the position where developers come to us and know what they're paying for a credit.”

What has the government done so far to help ease this issue?

The previous Conservative administration - firstly under Boris Johnson - set up a nutrient mitigation scheme.

The first round of £57 million in what’s known as the Local Nutrient Mitigation Fund, saw money distributed in 2023 - of which Kent County Council bid and was awarded £9.8 million.

A second round of £45 million of funding, under the Labour administration, was distributed at the end of last year.

Explains Tracey Butler: “KCC is holding that funding and is going to make it available for local authorities.

“When we have decided what mitigation we're going to pursue to begin with, we will be putting in an application to the Local Nutrient Mitigation Fund (LNMF). They will then assess whether or not they believe that mitigation is going to be solid and is going to be able to generate credits that will be able to get development underway.”

In other words, fund the various mitigation projects outlined above.

SEC aims to use the fund to generate credits which it sells to developers which, in turn, generates more money to fund more mitigation measures.

However, changes are on the horizon as today’s government has plans to tackle the issue. Not a moment too soon, says the construction industry.

“We've been imploring the previous government for years to find a solution,” says Steve Turner of the Home Builders Federation, “so we welcome the fact that this government has come in and is looking to tackle it.”

According to the Ministry of Housing, Communities & Local Government, which is responsible for the funding, the LNMF, will continue to provide support to affected areas while bigger changes are afoot in the Planning and Infrastructure Bill, which is currently making its way through parliament.

In December, the Ministry - which says it “recognises the challenges nutrient neutrality presents for development, particularly in Kent” - published a working paper on proposals “for developers to pay into a fund for improvements to nature, as a quicker and simpler way of discharging environmental obligations like nutrient neutrality”, adding “this approach has huge potential to improve the environment while also accelerating development”.

That fund is known - for now at least - as the Nature Restoration Fund. This would effectively mean developers pay into a fund which would generate mitigation for each affected area through larger, more significant nature-protecting measures.

Details on the proposed scheme are scant and many involved in the construction industry are awaiting the government putting some meat on the bones.

However, it is believed it could see a Kent Nature Restoration Fund set up - allowing mitigation outside of the immediate catchment area.

Many are simply relieved something could finally be coming down the road to ease the issue.

Explains Steve Turner: “We are very positive about the fact we've got a potential solution after five-and-a-half years of a lack of political engagement.

“I think the principle works. Having to go through the complicated process of trying to find mitigation schemes or buy credits that are not available, wasn't working.

“This will provide a solution whereby developers effectively pay a tax to get their development moving.

“But the key point will be at what level they set the tax. And until we've seen that it's difficult to be too positive because if they set the tax too high developers may consider sites become unviable and pull out of their plans.”

The government says the Planning and Infrastructure Bill will “provide the necessary legislative underpinning to unlock that win-win outcome for the economy and for nature”.

For developers such as Quinn Estates, it’s been an excruciatingly frustrating issue.

“We know the costs of nutrient neutrality massively impact the viability [of development sites], as well as affordable housing levels, many of which were identified by local authorities before these mitigation costs were factored in. This is especially true for sites that already have permission, and the problem has applied retrospectively.

“Broader mitigation measures in east Kent are not yet in place – in fact, the only credit scheme that is functioning at this time is the one we have set up to utilise the spare capacity in the Conningbrook Wetlands [in Ashford] and we are helping other small developers and house builders with these credits.

Housebuilding can't wait; the massive impact on the construction industry and on people just needing a decent place to live, can't wait

“It is good to see progress being made. However, a credit bank that will unlock the thousands of homes with planning permission is years away.”

SEC is monitoring the developments carefully - after all, it could ultimately replace it.

Adds Tracey Butler: “Whatever happens, this is not going to come in for some time as they're going to have to make some changes to fundamental statutory legislation to enable this. So in the meantime, we can't wait. Housebuilding can't wait; the massive impact on the construction industry and on people just needing a decent place to live, can't wait.”