The funding follows an £11 million allocation to the Department for Infrastructure in June’s monitoring round – Stormont’s process for reviewing and reallocating budgets.

Infrastructure Minister Loz Kimmins announced the funding during a visit to Derry, stating it would help “release capacity” in the system and support new housing developments. A recent report highlighted serious deficiencies in Northern Ireland’s wastewater infrastructure, warning that capacity issues were hindering both housing and economic growth.

Kimmins said she is committed to resolving the crisis: “I’m determined to do all I can to unlock wastewater capacity across the North. By working with NI Water and key partners, I want to ensure that new developments can access the infrastructure they need.”

The funding will support the connection of 1,000 homes in Derry’s Waterside, 2,000 more in the cityside – including the Cashel development near Coshquin – and smaller projects in Strabane (100 homes and Sion Mills (30 homes. The Cashel, developed by The Braidwater Group, sits close to the Donegal border.

Patrick McGinnis from Braidwater welcomed the announcement and urged swift action: “The focus now must be on moving forward quickly to deliver these much-needed homes.”

Northern Ireland remains the only UK region where households do not pay water charges. NI Water is funded through a government subsidy, diverting over £300 million annually from the Executive’s budget. However, chronic underinvestment has left wastewater systems outdated and at capacity, with NI Water warning last year that development in 23 towns was being stalled as a result.