PFAS: An emerging risk for housebuilders

PFAS (Per- and polyfluoroalkyl substances) are a family of over 10,000 so-called “forever chemicals” that have been used for decades in household products such as clothing, carpets, upholstery, food packaging, non-stick cookware, cosmetics and fire-fighting foam. They are resilient and do not readily break down.

PFAS travel easily in water, so can enter the water supply and the soil around the factory facilities that make and use them. Exposure to PFAS has been linked to increased cholesterol levels, weakened immune response, liver damage and an increased risk of kidney and testicular.

The regulatory landscape is evolving rapidly. The Environment Agency is currently undertaking a project to identify and prioritise sites with potential PFAS risks. It has identified over 10,000 “high-risk sites” in the UK that pose a higher risk of PFAS contamination including airfields, fire training facilities, industrial sites, waste facilities, landfills and certain historic industrial sites.

The Department for Environment, Food and Rural Affairs has also published a national strategy to understand PFAS sources, tackle PFAS pathways and reduce ongoing exposure.

PFAS will therefore attract increasing regulatory, environmental and transactional scrutiny across a wide range of development sites as well as exiting properties. 

Why does PFAS matter to housebuilders?

For housebuilders, PFAS presents both environmental and commercial risks in relation to land acquisition, development viability, planning, environmental permitting, lender due diligence and potential future claims, for example:

• Planning delays and increased development costs where local planning authorities require PFAS investigations, monitoring or remediation as part of site redevelopment.
• Additional due diligence requirements from lenders, investors and purchasers.
• Increased remediation liabilities, including the potential for future regulatory intervention where contamination is identified after development.
• Third-party claims relating to alleged contamination or exposure.
• Insurance challenges, including restrictions in available cover and increased premiums.

 We are likely to see:

• Further PFAS-specific regulation and guidance at both UK and international level.
• Increased investigation of PFAS as part of environmental due diligence exercises.
• Greater reporting of PFAS data within environmental search products and desktop assessments.
• More detailed requirements from planning authorities, funders and environmental regulators.
• An increasing focus on contractual risk allocation in development, acquisition and disposal transactions.