This briefing focuses on issues for developers to consider in view of the emerging Biodiversity Net Gain (BNG) legislation.
This is the third in a series of briefings prepared by Fieldfisher's Planning and Environment Group on the different aspects of BNG. Our previous briefings looked at opportunities for land managers and duties of Local Authorities.
The Environment Act 2021 introduced a new mandatory planning condition, which subject to exceptions, requires a biodiversity gain plan to be submitted and approved before development may lawfully commence.
The condition will be imposed on permissions granted pursuant to applications after a date to be confirmed (anticipated to be in January 2024). The condition will be deemed to be imposed if it is not expressly included on the face of the planning permission.
Before development may commence, the developer must demonstrate that it will deliver biodiversity net gain of at least 10%, which will be maintained for 30 years or more.
This is in addition to the existing base, for example if the site already has significant existing biodiversity, the 10% net gain is in addition to that baseline.
To meet this requirement biodiversity gains will be measured using a biodiversity metric.
The calculation tool and user guide for the biodiversity metric are published on Natural England’s website.
DEFRA has issued a draft Biodiversity Gain Plan template and draft guidance for developers. To demonstrate deliverability of the 10% gain, the plan should contain an assessment of the value of natural habitats before development and after development.
The gain itself can be provided on-site, off-site by purchasing off-site units from a responsible body, by purchasing credits from Natural England, or a combination of those options.
The proximity of off-site provision to the location of the development will carry weight for the purposes of the metric, which penalises off-site proposals where they are far away from the site of impact.
The Local Planning Authority (LPA) has to be satisfied that the habitat enhancement will be maintained for at least 30 years after the development. This may be achieved by means of:
- A condition subject to which the planning permission is granted; or
- A planning obligation (section 106 Agreement); or
- A legally binding conservation covenant between the landowner and a responsible body. Such a body may be a local authority, a public body or charity, where at least some of its main purposes or functions relate to conservation; or, a private sector organisation, where at least some of its main activities relate to conservation. Defra have published the criteria (see link below) they will use to decide whether an organisation can become a responsible body.
Issues for developers to consider
Developers will need to consider an appropriate strategy for approaching BNG which has regard both to the likely requirements of the local planning authority (LPA) and to the terms of any contract or option for the acquisition of the development site.
This will need to be considered in relation to new agreements, and developers will also need to review their existing arrangements in the light of the new BNG requirements.
Each of the three ways to deliver BNG will have implications for their commercial position.
On-site BNG provision
To deliver on-site provision, sufficient land must be available. The additional land requirement for BNG may lead to a need to acquire more land where feasible or may lead to a reduction in the extent of the available developable areas.
The effect of the BNG requirement will need to be factored into the commercial negotiations. Where developers have existing contracts conditional on planning or option agreements, they may wish to consider whether they need to revisit these contracts to negotiate appropriate provisions for on-site biodiversity on any retained land or third party land which was previously not necessary.
Developers may also need to review the cost of BNG provision in the context of whether their existing commercial arrangement is based on an open market valuation or includes a fixed or minimum price.
Off-site BNG provision
Where developers secure off site BNG provision this will be either by purchasing more land as part of the existing development or by agreement with a regulated body (off site provider).
If it is being secured through provision by a regulated body Developers will need to procure the delivery of a conservation covenant or s106 obligations.
Developers will also need to consider the overall cost to them in securing the necessary provision including in relation a contribution to the costs of maintenance by the regulated body.
BNG Statutory Credits
This is intended to be the last resort and is an expensive option. Indicative pricing has been issued by DEFRA as a guide.
The final confirmed pricing will be released when BNG becomes mandatory. Developers using the indicative published credit pricing to forward plan their sites should note that two credits are the equivalent of one off-site unit for the purposes of calculating the biodiversity metric.
Developers will need to ensure that the cost of acquiring such credits is deductible from the purchase price being paid.
Purchasing serviced parcels
Where Developers purchase serviced parcels a master developer may have discharged the BNG condition and as such the approved BNG plan will need to be reviewed by an ecologist as well as by the developer's legal team.
The key elements to review will be:
- The approved BNG Plan (including any timetabling for delivery); and
- Conservation covenant/s106 obligations.
The responsibility for delivery of BNG will also need to be agreed with the master developer.
Collaboration and equalisation
The provision of BNG on site will need to be considered in the context of collaboration agreements where the need to allocate parts of the development site for BNG may lead to a need for equalisation between collaborating parties or other cooperation to ensure that responsibility of BNG provision is appropriately allocated between the parties.
By the end of November 2023, the government will publish all guidance and the regulations. This will include:
- The statutory biodiversity metric, critical for calculating the correct biodiversity net gain It is intended to provide a clear and consistent document for the developer to demonstrate how their proposals meet the biodiversity net gain objective.
- The draft biodiversity gain plan template and guidance was published on 26 October 2023 for use with standard permissions for major developments. It is subject to change, however, and we are advised that the final template will be published before BNG becomes mandatory. A different template will be provided for phased developments (and as of the date of this briefing has not yet been published in draft or otherwise). Draft guidance for developers to prepare their biodiversity net gain plan has also been published.
- The Habitat Management Monitoring Plan template – Natural England will make these available in advance of the commencement of the mandatory BNG regime; and
- BNG guidance that sets out further advice for developers, landowners and LPAs.
We regularly work with developers and land managers on the legal aspects of the delivery of BNG and the LPA requirements and obligations in the context of planning and property transaction for strategic and allocated sites.
To discuss BNG in the context of existing and/or future property transactions or if you would like us to come and talk to you about this topic, please contact a member of Fieldfisher's Planning and Environment Group.
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