A long-awaited solution to an environmental issue stalling thousands of new homes across Kent has finally been announced.

The government has revealed housebuilders can offset the damage caused by harmful substances seeping into the county’s rivers and lakes by buying ‘nutrient credits’ to fund mitigation measures, such as new wetlands or woodland.

It will allow developers to begin work on projects delayed since 2020, when Natural England discovered high water pollution levels at the Stodmarsh Nature Reserve, near Canterbury.

The issue has stalled housebuilding projects in a number of areas, including the city, Ashford, Thanet, Dover, Deal, Folkestone and Maidstone.

Since the Stodmarsh pollution issues came to light, Natural England has been instructing local planning authorities not to grant approval for new housing without mitigating measures.

The new nutrient mitigation scheme, launched by Defra (Department for Environment, Food and Rural Affairs) and Natural England, is designed to ‘unlock’ the barrier to building work.

Environment Secretary George Eustice says the plan “will protect England’s wildlife and precious habitats” from the impacts of nutrient pollution, while “ensuring communities receive the new homes they need”.

Developer Mark Quinn, boss of Quinn Estates, says he currently has 5,000 new homes on hold in Kent because of the Stodmarsh issue.

He cautiously welcomes the government’s new scheme – but says it will come at a hefty price to developers who have already endured costly waits for a resolution.

“This has been going on for almost three years and I know smaller developers who have gone bust because they haven’t been able to get on with their schemes,” he said.

“They have been saying things like this for years – but how much longer will it be before something actually happens?

“Obviously, for us, I hope and pray it does happen soon because we have more than 5,000 homes planned that we can’t crack on with.

“It also has to be remembered that developers have been paying connection fees to Southern Water that amount to millions of pounds, which is supposed to be spent on upgrading the network and capability.

“What they needed to be doing with that money is building bigger sewage treatment plants, which hasn’t been happening.”

Mr Quinn predicts the cost of ‘nutrient credits’ could be at least £3,000 per home, which will add a huge cost to developers at a time when interest rates on the money they borrow is rising.

“We will just have to take the hit, but I wholeheartedly welcome the scheme because we have been waiting three years for this to be sorted out,” Mr Quinn said.

“That’s three years in which no planning permissions have been granted. The amount of damage it has done to the economy is huge.”

There are fears the scheme could prove fatal for some redevelopments, and result in them continuing to be shelved.

It has thrown the future of two ambitious high street projects in Canterbury into doubt.

Both the former Debenhams and Nasons sites are earmarked for eye-catching retail and residential projects, but have stood derelict for years.

The mitigation scheme will add a significant cost to the plans for both projects, which together propose 150 flats, but are already said to be “unviable” due to the delays.

Architect Karl Elliott is managing partner of Clagues, which is involved in both redevelopments.

He says the extra financial burden on developers will simply make the projects even more challenging to deliver.

“We always assumed there would be an added cost per new dwelling,” he said.

“Obviously, the magnitude [of the credit cost] will be of interest, and also how such schemes as Debenhams and Nasons, which are already unviable, will be addressed, as any additional cost imposed makes the situation even worse.

“The projects will simply prove too difficult to fund and may require additional apartments to compensate.”

Another Canterbury residential scheme which has been delayed due to the Stodmarsh issue is the conversion of the former Inland Revenue offices in St George’s Place into 34 flats for rent.

Developer Ollie Davis, of Oliver Davis Homes, which is behind the project, said: “We don’t know the exact details yet, but it sounds promising – although it’s likely we will have to just absorb the extra cost, because the homes still have to rent at the market rate.

“But it is also good news for jobs in the construction industry, because you can’t have people standing around doing nothing.”

Mitigating measures that have been used to get developments approved, or work off the ground, include creating wetlands elsewhere to offset any environmental harm.

This solution has been seen in action in Ashford, where work on Quinn Estates’ previously blocked 725-home 'Large Burton' housing estate is due to start.

Another option is building an on-site wastewater treatment works, which the developers of the 4,000-home Mountfield Park estate south of Canterbury are now proposing.

Canterbury City Council says it is already in a “very advanced” position in tackling the issue and will be taking advantage of the nutrient credits scheme in its planning process.

“The six Kent councils that are affected by the water quality issues at Stodmarsh are dealing with the issue as a priority and will ensure that we are in the best position to take advantage of the scheme,” said a spokesman.

“In the wider context, we in Kent are very advanced in our work to address this problem and are ahead of the majority of the 74 English councils that are now having to deal with similar issues in their areas.

“We are in discussion with Natural England and will take the opportunities it provides us with, both working towards achieving the long term objective of returning the water quality at the Stodmarsh lakes to ‘favourable condition’, and also delivering desperately needed housing as soon as we possibly can.”

What are the issues at Stodmarsh nature reserve?

In October 2020, housebuilders were hit by an environmental bombshell.

Government advisers at Natural England called for planned construction across swathes of east Kent to stop.

Experts had discovered high levels of nitrogen and phosphorous in the water at Stodmarsh Nature Reserve, near Canterbury. This causes excessive algae growth, which had started to harm the ecology at the site.

The pollution had been caused by wastewater entering Stodmarsh's lakes, which are fed by the River Stour.

As a result, Natural England said new developments must not "add the burden of nutrients such as phosphorus and nitrogen".

In basic terms, for every new house built, there is at least one new toilet being flushed on a regular basis.

Natural England put the onus on councils and developers to find a way of stopping that extra wastewater ending up at Stodmarsh.

What makes Stodmarsh so special?

Stodmarsh is made up of a series of wetlands and lakes that are internationally recognised for the habitats and the wildlife they support.

This includes water voles, two rare British birds (cetti’s warbler and bearded tit), and swathes of reedbeds and grassland used by breeding and wintering bird populations.

It is also home to some scarce wetland plants - like the greater bladderwort and bog bean mentioned above.

What has been the impact on plans for new homes?

As a result of Natural England’s advice, before gaining planning permission developers now need to show their schemes can achieve "nutrient neutrality" and therefore not add to the problem.

The issue has mainly impacted the Canterbury district and Ashford borough.

But it has also affected planning decisions for Dover District Council, Maidstone Borough Council and Folkestone & Hythe District Council as they also partly fall within the Stodmarsh "catchment area".

What has been done so far to tackle the issue?

Up till this point, developers have aimed to achieve “nutrient neutrality” by building on-site wastewater treatment works at new estates or creating new wetlands.

But building an on-site treatment works is far from cheap.

According to a report from Canterbury City Council's head of planning, Simon Thomas, the cost is "very roughly estimated to be in the region of around £1,500 per dwelling".

This approach has been agreed for the enormous 10,000-home Otterpool "garden town" near Folkestone, the reports says.

How will the government’s new plan work?

Developers will now be able to purchase “nutrient credits” which will remove the need for them to provide mitigation themselves.

Natural England will issue “nutrient certificates” to developers, who can use them for planning applications.

The certificates will give councils the assurance that additional pollution from new developments can be mitigated by the purchase of nutrient credits.

Conditions attached to planning permissions will ensure that any necessary credits are bought before the new homes are occupied.

Income from the sale of credits will be used to provide new mitigation, such as wetlands to “soak up” the impact of unavoidable pollution, and cover the costs of monitoring and maintaining them.

The scheme will be open to all developers, with priority given to smaller builders who are most affected. Developers can also continue to put their own mitigation schemes in place should they choose.

The scheme is due to open in the autumn.

What about Southern Water?

The councils affected are pushing Southern Water to bring forward an upgrade to Canterbury’s wastewater treatment works - currently not planned until the next investment period of 2025-2030.

In a document published online, Southern Water says it is "not feasible" for it to increase the nitrogen or phosphorus removal rate "beyond consented levels" at the treatment works.

The firm says "significant investment" would be needed, financed through income collected from customer charges, which would have to be increased - and this would require approval from regulator Ofwat.