In this issue of Connections, we’re highlighting the upcoming changes to the infrastructure charging structure which are set to be introduced next year. Here, our business development director, Dan Owen , shares an overview of the changes and what the impact could be for developers.
Financial implications Under the new rules, existing developments may see an increase in infrastructure charges if the new structure adjusts the fees retrospectively, or alternatively, introduces new levies. This could have a huge impact on project budgeting and profitability. Developers may also find that they need to invest in upgrades to meet new infrastructure standards. Income offset, also known as rebate or AV payments – which made it easier for developers to invest in new projects by lowering upfront infrastructure costs – is set to be abolished. This will lead to higher upfront costs, impacting project viability and timeframes. Any homes not connected and handed over on or before 31st March 2025 will not qualify for this incentive. In some areas, notably the North West and Severn Trent, this offset can be considerable. Legacy developments Plots connected after this date will not qualify for the rebate. This means the utility company will, in most cases, have to recover these costs, which were already factored into installation costs. How Aptus is working with its customers: • Aptus is encouraging developers to budget for, and consider, these changes. • In most cases, developers have asked us to calculate the rebate based on their build programme leading up to March 2025. • Some developers have requested no changes and plan to budget accordingly, whilst others are taking a more cautious approach and have asked us to omit any incentive altogether.
A development incurs infrastructure charges for the additional demand that a new connection puts on the overall capacity of the water supply and sewerage systems. For some time, the Water Services Regulation Authority (Ofwat) has been working with water authorities on fundamental changes to the infrastructure charging structure. Why are changes being introduced? The changes are being introduced with the aim of creating a more sustainable, transparent water sector which can meet current and future demands. From the end of March 2025 , many areas will be implementing new formulas for calculating infrastructure charges. This will have a wide- ranging impact on existing and upcoming developments.
04 APTUS CONNECTIONS // ISSUE 18
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