Webinar round-up: Everything you wanted to know about Biodiversity Net Gain but were afraid to ask

A requirement to own the freehold, or even a leasehold interest is not necessary. The key is that the developer has sufficient control over the land/landowner for the requisite period of time so that it can meet the BNG requirements, and thus lawfully implement its scheme. The Consultation  Paper says (page 58) that:

‘biodiversity gain site enhancements will be secured through conservation covenants or planning obligations which can ensure that habitats are maintained even if the land is sold’

Conservation covenants are a creation of the Environment Act 2021 and have to be entered into by the landowner and a limited number of counterparties. Planning obligations are s106 agreements, which are well known already.

BNG will be secured through section 106 agreements and conservation covenants. However, s106 agreements and conservation covenants may not be enough for developers’ needs as they will not be party to them; such documents may only be enforceable against landowners by the Council or other relevant body. Developers will, therefore, prefer to have some legal interest in the BNG land to ensure that the BNG requirements can be complied with, and thus lawfully implement their permissions. Whilst a requirement to own the freehold, or even a leasehold interest is not necessary, what is key is that the developer some element of control over the land/landowner. An example we can add is on a site we bought recently in order to mitigate the impact of the development, an adjoining landowner was paid to enter into a deed of covenant with our developer client to plant trees when called upon. So the only interest in the land we had there was the benefit of a covenant, but that was enough control to satisfy the client, and indeed the local planning authority.

It is proposed that temporary planning permission will not be excluded from being required to deliver biodiversity net gain. However it is also proposed that the biodiversity metric allows for temporary losses to be disregarded when the original baseline habitat is restored to the same or better condition within 2 years of the loss. Therefore, your BNG requirements would depend on the nature of the baseline habitat and how temporary your proposed development was.

It is proposed that permitted development be exempt from BNG requirements. A specific exemption for permitted development is provided for in the Environment Act 2021 (via para 17(a)(i) of Schedule 14).

The Consultation Paper states (p58) that:

‘biodiversity gain site enhancements will be secured through conservation covenants or planning obligations which can ensure that habitats are maintained even if the land is sold’.

We expect developers will require the landowner delivering the BNG to enter into a planning obligation or conservation covenant so as to demonstrate to the planning authority that it can deliver the BNG requirement.

We also expect planning authorities will be required to set specific and proportionate monitoring requirements, to be secured by the planning obligation or conservation covenant. The landowner or developer must ensure monitoring and reporting obligations are fulfilled, or adequately delegated to another body with necessary funding. We expect monitoring to be depend on the nature of the site, but a medium sized habitat creation project might require reports in years 2, 5, 10, 20 and 30.

Ultimately the planning authority or beneficiary of the conservation covenant will actually enforce the obligation.

The BNG metric requires a factor of 1 to be applied where the BNG mitigation is provided within the LPA of the development and a factor of 0.75 where the BNG mitigation is provided in a neighbouring LPA for the development. At present, the BNG requirement for the development in each LPA area would be calculated separately. Further clarity is awaited in relation to the provision of BNG for nationally significant infrastructure projects which by their nature will often cross local authority boundaries. A subsequent consultation on the detail of the BNG requirement for NSIPs is expected.

The assessment of habitats will be the responsibility of the applicant with their consultant’s report to be approved by the LPA. Guidance on the assessment of different habitats which can be found here, on the ‘habitat condition assessment sheets with instructions’. Developers should be able to rely on suitably qualified experts’ opinions.

The consultation document recognises that compulsory acquisition of land to provide BNG may be necessary for some nationally significant infrastructure projects but is currently proposing not to make it a specific purpose for which land can be compulsorily acquired. The general expectation is that promoters will deliver BNG within the development boundary or through the purchase of off-site biodiversity units, rather than resorting to compulsory acquisition powers. Compulsory powers may be necessary where it is necessary to deliver a gain in close proximity to the development site but the promoter cannot secure the land by other means. There not planned to be a standalone compulsory purchase power for BNG (although respondents may call for one and so it may be brought in), so for now promoters will need to consider whether land can be acquired compulsorily under other existing enabling powers.

To oversimplify, Agricultural Property Relief (‘APR’) is available if and only if land or buildings are used for agricultural purposes as defined in the Inheritance Act 1984, broadly in connection with the production of food. If land can be used for such agricultural purposes as well as for delivery of BNG, then we think BNG will not necessarily mean agricultural property relief is not available.

However, the land will need to be improved to deliver the ‘net gain’. We suspect there may be relatively few opportunities to deliver habitats that increase biodiversity but which are still genuinely agricultural.

Business Property Relief (‘BPR’) may be available as an alternative, but only to the extent the land is not held as an investment, or where it qualifies under the Farmer case as part of the wider activity of an estate. Unless Farmer applies, we suspect it will be difficult to claim BPR unless the provision and maintenance of a BNG site can properly be called a business activity carried on for profit.

Government recognises that farmers need to understand these issues before committing land to habitat creation or enhancement and states ‘work is underway to provide clear guidance on this.’

This may be revised following the responses made to the consultation so should be monitored.

It is site-specific, and in particular depends on whether the parties feel that BNG should be secured (i) onsite, (ii) offsite, or (iii) through government credits. Your question relates to (ii) and in these circumstances, yes it would be expected that the developer takes the initiative to try to find mitigation land within the vicinity in the same way as offsite SANG – Suitable Alternative Natural Greenspace, and this may captured in a ‘reasonable endeavours’ obligation in the contract. The developer would wish to recover its expenditure for securing offsite BNG land though, for example as a deductible cost in a promotion agreement coming off the sum the landowner is to receive. If there is a management company monitoring costs could be secured by way of a rent charge payable by the house holders.

In terms of management and monitoring post-completion we reckon this could take different forms. The developer might be required to pay a competent body a hefty endowment as is the case for some SANG. There will

likely need to mechanism dealing with the management and monitoring costs post-acquisition, whether this be a service charge or endowment.

Government proposals envisage that biodiversity improvements are delivered soon after the implementation of the development (12 months is mentioned in the consultation paper) and capital costs paid at that time. We doubt that complex ecological systems can be fully delivered so quickly, thought they can of course be initiated. Under the proposals sites will be monitored, and (presumably) enforcement action taken if the monitoring reveals that the specified biodiversity has not been delivered, or if the site has declined. There must be provision for the cost of monitoring, but the scheme does not appear to envisage regular payments for improvement of biodiversity over the longer term, which looks like a missed opportunity.