The regulator said this new approach marks a “significant change” and is expected to deliver “major benefits” to developers and other customers.
The new rules will come into effect in April 2018, a year later than proposed in the consultation. This is to allow the industry “enough time to plan” for the transition.
As part of the new rules, water companies will offer more fixed charges. They will also make sure developers do not pay for pre-existing issues, and only pay on a pro-rata basis for assets that benefit a wider set of customers.
Ofwat said there will also be “more effective competition” from self-lay and new appointees which can “drive down costs and improved service and choice”.
The changes should result in faster connections, because water companies will set charges which are simpler and quicker to calculate, for which developers can more easily and accurately plan.
In addition to the new rules, Ofwat has established transitional arrangements to safeguard business cases for any existing developments.
Ofwat senior director David Black said: “Water companies provide a vital service for new housing developments. That is why we are leading the way in reforming the charging structures to connect new sites to the water network.
“These new rules give developers more clarity and certainty and are fairer for all. What’s more, they could result in developments progressing more quickly – which is good news for everyone.
“Throughout our recent consultation, we heard widespread agreement about where we are trying to get to, but there was some concern that we are pushing ahead too quickly. We have listened to those concerns and built in an extra 12 months into the change process.”