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From 12 February, the UK's new BNG legislation imposes new obligations on property developments but also creates opportunities for land managers, developers and local authorities.
The requirement for (almost) all new housing, industrial, or commercial developments in England to deliver biodiversity net gain (BNG) of at least 10% will finally come into effect on 12 February 2024 and will apply to permissions granted pursuant to applications made after this date.
BNG's arrival follows several months of delay, which were largely welcomed by developers, land managers and local authorities, who have been grappling with the various administrative requirements of implementing a major new aspect of UK planning law.
Yet aside from the administrative burden, the introduction of BNG presents tangible commercial benefits to all affected parties, as well as wider social benefits and a leg-up towards achieving Net Zero obligations.
While BNG provision will be principally managed via the planning system, underpinned by six statutory instruments also expected to become law on 12 February, its introduction also paves the way for a substantial suite of new commercial contracts and arrangements for the sale and purchase of land and land rights, exclusively for the delivery of biodiversity gain.
What is BNG?
Introduced under the Environment Act 2021 (EA 2021), new BNG legislation places developers under a legal obligation to make a positive contribution to the local environment.
This could include creating new habitats and green spaces, that bring a measurable uplift in biodiversity.
Before development can commence, the developer must demonstrate in its planning application how it intends to enhance biodiversity and how it will maintain this gain for at least 30 years.
Developers can choose to deliver BNG on-site – i.e., earmark part of the development area for BNG projects – or off-site, by purchasing 'biodiversity units' from another land manager, who may then manage the BNG obligation on the developer's behalf, depending on the arrangement.
A very limited category of developments will be exempt from BNG, as set out in the Biodiversity Gain Requirements (Exemptions) Regulations 2023.
Opportunities for Land Managers
For land managers, such as landowners, farmers, local authorities and charities (like wildlife trusts) that manage areas of land, BNG presents the opportunity to create new sources of long-term income.
Land managers can create or enhance habitats on their land to generate 'biodiversity units', along with 'nutrient credits' which are created by reducing or capturing nutrients from environmental inputs that would otherwise run off into waterways.
These can then be sold to developers to be incorporated into their BNG plan.
The value of habitats is ascribed by the government using its biodiversity metric, based on the size, condition and distinctiveness of the habitats in question, with extra weight given to habitats deemed 'irreplaceable', as set out by the Biodiversity Gain Requirements (Irreplaceable Habitat) Regulations 2023.
Biodiversity units are recorded in the government's biodiversity gain site register, which is governed by the Biodiversity Gain Site Register Regulations 2023.
Nutrient credits can be applied for under Natural England's Nutrient Mitigation Scheme.
The buying and selling of biodiversity units will be facilitated by habitat banks or dedicated trading platforms – many of which have already been set up.
To get fair value for their biodiversity units, land managers will need to assess what they can offer in terms of habitat creation, weighed against the costs of habitat managing and monitoring plans (HMMP) as well as legal and other professional costs.
Land managers also need to consider whether the value of their units is best reflected via income (i.e. regular payments over time) or lump sum payments (where the developer pays a single fee upfront for the biodiversity unit).
Conservation covenants, introduced by the EA 2021 as private, voluntary agreements between a landowner and responsible body to conserve the natural or heritage features of land, also give land managers additional planning law tools to pursue biodiversity objectives.
Once entered into, the covenant is registered as a local land charge and is legally binding on future landowners, and on any responsible body that takes on the conservation covenant.
These are likely to be of particular interest to wildlife charities and heritage organisations who own land.
Opportunities for developers
Developers with sufficient land available, or the option to acquire more adjacent land, may find it more beneficial to deliver on-site BNG – a plus point that should be factored into commercial negotiations.
On-site BNG can enhance the attractiveness of a development to potential occupiers, carry more weight in the calculation of the biodiversity metric (which is calibrated to penalise off-site proposals) and will give developers full control over the habitats they have created.
Responsibility for BNG provision will however need to be appropriately allocated between the parties involved in developing the site via collaboration agreements.
Where developers have existing agreements negotiated prior to BNG coming into force, they may need to revisit these contracts to cater for the costs and liability for providing on-site BNG.
As outlined above, the opportunities for off-site BNG should be many and various. Although on-site BNG is preferred, the off-site option will give developers the choice to support key local or national biodiversity projects.
If neither on-site or off-site BNG provision is feasible, a developer can purchase statutory biodiversity credits – i.e. making a financial contribution to the Department for Environment, Food and Rural Affairs (DEFRA), which counts towards their mandatory 10% BNG. This contribution will be used to fund biodiversity enhancements across England.
Statutory biodiversity credits are intended to be the last resort and is an expensive option, with DEFRA setting prices.
Developers will need to ensure the cost of acquiring such credits is deductible from the purchase price being paid for the land.
In terms of the planning steps developers need to take, they will need to include planning conditions in their planning permission applications, or enter conservation covenants with a designated 'responsible body' (as approved by DEFRA, and may include a local authority, a public body or charity) or s106 planning obligations with the local planning authority (LPA) to ensure the land in question is designated for BNG purposes.
Opportunities for LPAs
The administrative burden of BNG has fallen most heavily on LPAs, which face the most onerous requirements for managing BNG via the planning system, as well as new commercial avenues.
How the new BNG framework sits within the development management process for planning applications is set out in the Biodiversity Gain (Town and Country Planning) (Modifications and Amendments) (England) Regulations 2024.
Despite these additional pressures on the planning system, BNG promises to deliver new and/or enhanced green spaces to local authority areas.
Greener neighbourhoods could lead to increases in property prices and deliver wider health and social benefits to communities.
LPAs will also be able to benefit from the new income streams springing from BNG, which will be a welcome source of additional funding that can be used to finance new and existing green infrastructure, contributing towards the Government's Net Zero targets.
This article summaries a series of BNG guidance notes published by the Fieldfisher Planning and Environment team. For more information, please see our detailed articles on land managers, developers, LPAs and planning law tools.