10% Greener and Pleasanter

The Environment Act 2021 will automatically insert into almost all planning permissions a condition requiring every developer to provide an increase in natural habitats as part of the delivery of their development. It’s called Biodiversity Net Gain. In this edition of IT’S THE LAW we look at how the new BNG requirements will work in practice.

From green and pleasant to extinction

In his famous poem, William Blake describes England as a ‘green and pleasant land’. But, for centuries, we’ve been a world leader when it comes to destroying that greenness and pleasantness. And, as a consequence, we’re one of the world’s most nature depleted countries. One in seven of our native species face extinction and more than 40% are in decline. The ‘dark Satanic Mills’ of the industrial revolution, urbanisation, the way we farm and our extensive reliance on roads are just some of the factors that have contributed to this ignoble position.

Waking up?

As a nation, we’ve been slow to grasp just what a problem this might be if we don’t reverse the trend. But, hopefully, we’re beginning to wake up. The Biodiversity Net Gain requirements of the Town and Country Planning Act 1990 (which, confusingly to non lawyers, are contained in the Environment Act 2021) have begun to come into force.

The Condition

These requirements, when fully in force, will automatically insert into almost all planning permissions a condition which says “the development may not be begun unless (a) a biodiversity gain plan has been submitted to the planning authority and (b) the planning authority has approved the plan”. We’ll get to what that actually means in a bit. But, first we’ll look at what planning permissions it applies to.

The BNG requirement will apply, subject to a small number of exceptions, to all planning permissions (other than those in respect of minor development) where the application was made on or after 12 February 2024. It will also, subject to the same exceptions, apply to minor development where the application is made on or after 2 April 2024. Minor development is less than 10 dwellinghouses, less that 1,000 sq meters of floor space and less than 1 hectare.

The exceptions

The exceptions to which we refer are detailed, but not extensive. So, whilst you should be aware of them, just in case, they are, in practice, unlikely to ‘save you’ from the BNG requirements if you are undertaking any development that requires planning permission. The exceptions include:

The requirements do not apply to certain retrospective planning permissions.
s73 Town and Country Planning Act 1990 allows you to apply to the Local Planning Authority to develop under an existing planning permission without complying with all of the conditions that had been attached to that existing permission. Technically, if the LPA agree to your application, they will grant a new planning permission – with modified conditions. But, if the BNG requirements didn’t apply to your existing permission, because your original application was made before the 12 February or 2 April 2024 deadlines, then they won’t apply to your new permission either. Even if your s73 planning application was made after those dates.
Approvals of reserved matters to an outline planning permission do not, in themselves, amount to a planning permission. So they, in themselves, do not get caught by the BNG requirements.
There is something called ‘permitted development’. This is development which requires planning permission but where that permission has already been granted by the Secretary of State by what is known as a development order. An example of a development order is The Town and Country Planning (General Permitted Development) (England) Order 2015. That order is, itself, planning permission for a whole host of types of small house extension. Technically, those extensions require planning permission - but rather than thousands of homeowners having to traipse off to LPAs to apply for permission, the Secretary of State has granted a blanket permission. Anyhow, the point here is that this type of planning permission is not caught by the BNG requirements.
Some high-speed rail work is excluded from the BNG requirements.
Something called householder applications are excluded. Very roughly speaking these are planning permissions relating to an existing home.
Some small self-build and custom housebuilding projects are exempted.
Nationally Significant Infrastructure Projects (such as new airports, power plants and large road construction projects) are treated differently when it comes to Biodiversity Net Gain. They’re a whole different ball game and we don’t touch on them in this edition.

The plan…

So, now we’ve looked at what planning permissions the Biodiversity Net Gain condition will be inserted into, lets turn to what the condition actually does. As a reminder, the condition states that “development may not be begun unless (a) a biodiversity gain plan has been submitted to the planning authority and (b) the planning authority has approved the plan”

As part of preparing the biodiversity gain plan, the applicant will make assessments of the biodiversity value of the site both before development is started and after it is completed.

If you build it, they will come

Biodiversity value is calculated using Natural England’s statutory biodiversity metric. This focusses on the amount and quality of habitats rather than actual presence of species. That is on the assumption that, if habitats are provided, species will live there. And also, on the pragmatic view that it is easier to identify, quantify and specify habitats than it is to keep a running total of how many animals, birds and insects have moved in (or plants grown).

10%

The biodiversity gain plan will need to show a overall gain of 10%, using the biodiversity metric – otherwise the LPA won’t be able to approve it and development can’t commence. The preference will be to meet as much as possible of that 10% by way of on site habitat enhancement. But, if the developer can demonstrate that it can’t do that, then it has options. It can either ensure biodiversity gain elsewhere (by undertaking its own project on different land or by buying what are known as Biodiversity Units) or, as a last resort, it can buy Biodiversity Credits from the Government. The critical point is that, overall, it will need to achieve a total 10% increase in biodiversity value.

30 years

The Government is wise to the possibility of developers providing a lovely nature reserve area within a new housing estate as part of the initial build, only to have it tarmacked over for parking shortly after the first residents (and their cars) have moved in. So, habitat enhancements can only be taken into account if they are secured for 30 years. That will be achieved in almost all cases by including relevant obligations within section 106 (Planning) Agreements or Conservation Covenants.

Section 106 agreements have been around for a long time. They are legally binding contracts made between landowners and the LPA. Their most fundamental aspect is that they can bind not just the landowner who enters into them, but also anyone else who subsequently owns that land in the future. So, the LPA will be able to enforce the planning obligations to maintain the habitats against the owners of the site, whoever that happens to be, in the years to come.

Conservation Covenants are a shiny and new creation of the Environment Act 2021. As with section 106s agreements they are legally binding contracts made by landowners. And again, as with section 106 agreements, they can bind not just the landowner who enters into them, but also anyone who then owns that land in the future. Their principal difference, for practical purposes, is that rather than being with the LPA, they are made with a Responsible Body (as defined in the Act). The Secretary of State is a Responsible Body. In addition local authorities or, subject to meeting certain requirements, others can apply to be registered by the Secretary of State as Responsible Bodies. So, for example, a nature focussed charity might become one.

In the alternative

As referred to above, whilst the preference is for onsite enhancement, the legislation acknowledges that this will not always be possible. So, it provides alternatives.

Enhancement to land elsewhere can be taken into account. Again, that enhancement will need to be locked in for at least 30 years. One way of achieving that would be for a particular developer to acquire a piece of land and devise a particular habitat enhancement project and then covenant to maintain that project by way of a section 106 Agreement or Conservation Covenant.

The Government has realised that that may be quite fiddly. Their solution is to set up a mechanism intended to create a market for what are called Biodiversity Units. Landowners will be able, off their own bat, to devise habitat enhancement projects on their land, calculate the additional biodiversity gain those create and convert that into Biodiversity Units, which can then be sold to developers to offset any shortfall on a particular development. The theory is that the market forces of supply and demand will work to set a market price of Units.

Finally, there is a concept of Biodiversity Credits, sold by Government. These are intended as a last resort, where a developer can’t achieve the necessary gain on the development site and can’t find sufficient Biodiversity Units to acquire. They will then be able to buy Credits from central Government. The Government has specifically stated that the price of these Credits is always to be set at above the equivalent cost for Units, so as not to interfere with the creation of the free market in Units.

And now for our Ten Top BNG Tips

1. Get up to speed

Developers will need to get up to speed with the legislation and understand how the obligations in section 106 Agreements and Conservation Covenants work. Where they are entering into such agreements, they will need to be mindful of the fact that what they agree now will bind the land for at least the next 30 years. They will need to take into account how those obligations will impact future owners and their funders.

2. Control and influence

Those buying from developers by way of forward funding agreements will need to ensure their agreements with the developers give them control (or at least sufficient influence) on how the BNG requirement will be fulfilled as, as future owner of the land, they may be the ones delivering the habitat gain for the next three decades.

3. A covenant for life

Anyone buying property going forward will need to check for what obligations they may be taking on under section 106 Agreements and Conservation Covenants. Their funders will need to be happy too.

4. Opportunity knocks

Local Authorities, RPs and other large landowners should be considering whether there is an opportunity here. If they can devise habitat enhancement schemes on their own land, they may be able to both deliver for the environment and make some money at the same time. Having said that, a 30 year commitment is not to be taken on lightly. So, they should be extremely cautious to ensure that they can deliver on what they promise and that the costs of doing so don’t dwarf the income.

5. In the beginning

Landscaping and ecology requirements should be considered at the outset of the development process to see whether BNG can be accommodated on site whilst still making the scheme viable. Early engagement with local planning authorities (who are also still getting to grips with the concept themselves) is advised. Developers shouldn’t assume that their initial proposals will be acceptable to the LPA. It will be a matter for discussion.

6. Marry an Ecologist

The demand for Ecologists will skyrocket. They will be a scarce commodity. Developers, landowners and LPAs will all need them for advice. In this edition of IT’S THE LAW we have not really even scratched the surface of the complexity of using the biodiversity metric or devising biodiversity enhancement projects which work, are practical in the context of wider development and which tick the right boxes for the metric. So, in any project, make sure you get them on board as soon as possible. Otherwise, you may face delays at the last moment whilst you try to locate one with space in their work calendar.

7. Overgrown or home sweet home

If are looking to buy an overgrown and derelict industrial site for a bit of brownfield development, don’t assume that it starts with a zero biodiversity value. The clue is in the term ‘overgrown’. You may find that the site is home to a surprising range of little critters – and you’ll not only need to provide an equally happy home for them, you’ll need to do better. So, get the experts in early for an assessment and work out how much that new provision will cost before you agree a price for the land.

8. In addition, not instead

Remember that the BNG requirements are in addition to the existing laws and regulations protecting nature, not instead of them. You’ll still need to take care of protected species and your still not allowed to cut down a tree covered by a Tree Preservation Order.

9. Nature reserve v site compound

Don’t forget the development phase. The process of measuring biodiversity value before development starts and after it completes gives rise to a risk that you will forget the development phase. If your site has a small field at the back that you intend, post development, to retain as a ‘nature reserve’ be careful to make sure that your contractor hasn’t earmarked it as the perfect place for their site compound.

10. Look on the bright side of life

Look on the bright side, homeowners and workers like nature. This legal requirement is a real opportunity to create amazing places to live and work in harmony with a bit of nature. If done right, that will help drive property values and build brand loyalty.

This week's quiz

If you’d like a chance to enter our prize draw, be sure to take our new ITL quiz. Those who answer all three questions correctly will automatically enter the prize draw. You have until Wednesday 27 March at 17:30 to submit your answers.

Take the Quiz

Contact

For more information, please contact Hannah Langford, Neil Toner or Jonathan Jarvis.

Hannah Langford Partner

Real Estate & Projects 020 7880 4450

Neil Toner Senior Consultant

Real Estate & Projects 020 7065 1823

Jonathan Jarvis Partner

Real Estate & Projects 020 7065 1810

Tel: 020 7628 7576

www.devonshires.com

To receive more briefings and invitations from Devonshires, click here to join our mailing list.

Article created: 19/09/2023

This is one of a series of leaflets published by Devonshires' Real Estate & Projects Department aimed at our developer and commercial property clients. No action should be taken on the matters covered by this leaflet without taking specific legal advice.