The Government published its response on 21 February 2023 to the January 2022 Mandatory Biodiversity Net Gain (BNG) Consultation, along with further guidance ahead of secondary legislation following on from the Environment Act 2021, due November 2023. The consultation received 590 responses, the majority being from local planning authorities. The legislation encompasses PM Rishi Sunak’s plan to “provide the blueprint for how we will deliver our commitment to leave our environment in a better state than we found it…reversing the decline of nature,” as it mandates all new developments, both commercial and residential sites (save for those that are exempt) that result in loss of habitat to provide a mandatory BNG of 10% (although local authorities reserve the right to increase this) to be maintained for a period of at least 30 years secured via obligations or conservation covenants. B P Collins’ property team looks into how the recent Government guidance impacts developers and landowners.
Mandatory Biodiversity Net Gain for developers
The lack of clarity on how mandatory BNG is to be implemented and enforced by local planning authorities (LPAs) has created an uncertain environment for developers. In addition to the planning application, a Biodiversity Net Gain Statement is to be submitted along with the outline planning application for all stages of the development, the contents of which remain uncertain. The secondary legislation is expected to provide further details of what is required. However, prior to acquisition of a site, the developer is required to undertake enhanced due diligence to assess whether a BNG is achievable. This involves ecologist reports to calculate the biodiversity baseline, and if the biodiversity obligations are to be offset off-site, this may incur costs for entering into agreements for off-site biodiversity units (even before the unit has been registered in Natural England’s register which is highlighted below). A developer is likely to incur additional costs at the outset, with the possibility that planning consent is not granted. The uncertainty of whether Mandatory BNG will be applicable to outline permission granted before November 2023 creates a state of confusion for developers submitting applications now. We assume the LPA’s will assess applications on a case-by-case basis in conjunction with the Government guidance (further to Government funding of £16.71 million to assist with the implementation of mandatory BNG), however the lack of clarity and enforcement leaves room for inconsistent decisions and potential delays leading to litigation or appeals.
An additional hurdle for developers, is the registration of off-site biodiversity land with Natural England. Developers may commit to the mandatory BNG on-site; off-site or a combination of both. The Government guidance provides that although on-site is preferable, off-site is permitted, but should, where possible, be acquired locally. The guidance provides that Natural England will maintain a Biodiversity Gain Site Register to be ready by the time secondary legislation is enforced, recording any land delivering off-site BNG (whereby a s106 undertaking or conservation covenant legal agreement will be put in place to secure the obligations for up to 30 years). The off-site units recorded on the Register will be those which have been allocated to developers and will be used by LPA’s when assessing whether a planning application, and its proposed enhancements, meet the eligibility criteria for delivering the biodiversity obligations. Deposits may be requested by sellers of biodiversity units and return of the deposit should be considered if the biodiversity units cannot be registered – alongside obligations relating to registration of the units by the seller. These are additional issues developers will need to consider.
Delayed start for smaller developers
A small positive for small-scale developers is that there is a delayed start for mandatory BNG on small sites until April 2024 (guidance has provided a small site being residential sites, including up to 9 dwellings of up to 1 hectare or if dwelling numbers unknown then sites up to half a hectare; and non-residential sites where the floor space is less than 1000sqm or site area is less than one hectare). Nationally Significant Infrastructure Projects also have a further extension until November 2025.
Otherwise, mandatory BNG will apply to s73 T&CPA 1990 applications where the original planning permission is granted after November 2023 (date to be confirmed).
The guidance also indicates that developers with excess on-site biodiversity units will be able to sell them as off-site biodiversity units to other developers (provided they are registered with Natural England), or account for the excess as off-site biodiversity units towards their own further developments.
Mandatory Biodiversity Net Gain for landowners
It is unclear exactly how much BNG sites are or will be worth, but undoubtedly this will become market driven as the price of biodiversity units supplied by the off-site market will be determined through negotiations between landowners and energy banks or developers, depending on: supply, demand, quality of habitat, location and hectares.
The value of the BNG site will be dependent upon many factors, including on its potential to introduce features such as wetlands, wildflowers, and woodland. These single nature based interventions can allow landowners to generate multiple payments (“stack payments”) where they can then sell biodiversity units and/or sell nutrient credits (but not carbon credits).
For land to be recorded on the Biodiversity Gain Site Register (when this is set up), it is likely that it will need to be secured for at least thirty years with ongoing maintenance costs via planning obligations or conservation covenants. It is expected that there will be a fee charged to process register applications and Government guidance provide approximate costs of £100-£1000 for off-site habitat banks and a turnaround time of up to 6 weeks from application. A long-term agreement spanning over 30 years of compliance by landowners to processes and protocols, means landowners will also need to consider how their land can be used after the thirty years and whether it will still be viable for its previous use.
Natural England comments that BNG sites provide opportunities for landowners ‘to move towards nature positive outcomes and contribute to nature’s recovery as well as providing an alternative, long-term source of income’.
Conclusion
The Government guidance has given us additional food for thought on Mandatory BNG, but it is only guidance at this stage and is therefore not legally binding. We await further developments and variations of implementation and enforcement across LPA’s. Developers and landowners will need to consider the evolving legislation, which B P Collins’ property team can advise on, in this new area of legal practice when it comes to entering into acquisition agreements, s106 undertakings, conservation covenants and other such arrangements for site developments.
For further information, please contact our property team on enquiries@bpcollins.co.uk or 01753 889995.
