There are less than 12 months until new mandatory biodiversity net gain (BNG) requirements are enforced as part of the Environment Act 2021. The legislation will require all new developments in England (bar a few exceptions) to deliver at least 10 per cent BNG – impacting both commercial and residential developers.
Although the Environment Act received Royal Assent in November 2021, secondary legislation is set to be introduced to enable the relevant provisions to take effect.
This legislation will require that the natural environment is left in a better state than it was pre-development. The UK has lost almost half of its wildlife and plant species since the industrial revolution, according to London’s Natural History Museum and is one of the least biodiverse countries in the world; such measures are critical to safeguarding habitats and encouraging biodiversity.
The government is ensuring that biodiversity is considered at the earliest stage of development; however, it will have financial and operational implications – posing challenges for developers at a time where many are dealing with market volatility, rising utility costs and interest rates.
The real estate industry must, therefore, be live to these changes and understand how biodiversity will be measured, as well as the various routes to delivering net gain.
The requirement to deliver at least 10 per cent BNG is currently not in force.
The National Planning Policy Framework does require local authorities to consider opportunities for contributing to and enhancing the natural and local environment in their plan making and decisions. This is a material consideration, which local authorities need to take into account when determining planning applications - however, it is ultimately capable of being outweighed by other material considerations on a case by case basis.
Despite there currently being no legal obligation, some local planning authorities are already embracing biodiversity policies and the target of achieving a 10 per cent minimum net gain.
Analysis from Cater Jonas in April 2022 revealed that one quarter of the 322 English local planning authorities had either adopted or were preparing BNG requirements in their local plans, and 23 per cent were recorded as having emerging policies that could be afforded greater weight in the decision-making process when adopted.
Once the new provisions are in force, the minimum 10 per cent net gain will automatically have legal effect and local authorities will not need to update their local plans to account for it. Some authorities may assess requiring more than 10 per cent net gain, with nine authorities - as at June 2022 - having already proposed a higher figure. This will need to be included in their revised policies, with appropriate justification for doing so.
BNG will be secured by a new standard planning condition. This will be a pre-commencement condition to submit a scheme to the local planning authority for approval.
The scheme will set out how the minimum BNG target will be delivered, either onsite or offsite, with provisions for ongoing monitoring and maintenance.
BNG must be maintained for a minimum of 30 years following completion of development. Section 106 obligations and conservation covenants - introduced by the Environment Act 2021 - will outline how schemes will be implemented and secured for the 30-year period.
Section 106 obligations are likely be used when delivering BNG offsite where the offsite land is within the local authority’s administrative area.
Conservation covenants, to be entered into between a landowner and a ‘responsible body’ designated by the government, will likely be used when a biodiversity scheme is located away from the main development site and outside a local planning authority’s area.
BNG will be evaluated using the ‘biodiversity metric’ – a tool created by the Department for Environment Food and Rural Affairs (DEFRA).
This tool will enable developers to calculate the biodiversity value of a site. This will be based on the distinctiveness, condition and extent of habitats at a particular site, translating any losses and gains resulting from a development into an overall score.
The pre-development biodiversity value of a site must be identified at the point at which a planning application is submitted. This will be compared to the post-development value, taking into account any measures a developer proposes to enhance biodiversity. The post development value must exceed the pre-development value by at least 10 per cent.
There will also be a simplified version for use on small sites - the small sites metric.
Local planning authorities will need to review these metric results and verify habitat surveys, with Natural England currently providing guidance on this.
The onus will, however, be on developers to monitor the delivery of BNG; local planning authorities will then have a duty to report on BNG delivery for their local area. Secondary legislation is set to provide more detail on how this process will work.
Delivering biodiversity net gain
Developers will be able to deliver BNG either onsite or offsite, or through a combination of onsite and offsite solutions. This follows the recognition that BNG cannot always be provided fully onsite.
The Environment Act 2021 introduces ‘biodiversity gain sites’ as a means of securing the delivery of BNG offsite.
A market is to be created to support bringing forward suitable sites for BNG purposes. This will provide a supply of ‘biodiversity units’ through a national register run by Natural England, whereby landowners will be able to enhance the biodiversity of their land to a sufficient standard and register it as a biodiversity gain site worth a certain number of units.
Landowners, which could include local planning authorities, will then have the opportunity to sell these units to developers to secure their BNG requirements.
Both Environment Bank and The Land Trust are already identifying suitable sites for BNG delivery and will likely bring forward and manage their own schemes.
Until this market is established, or where there remains a shortfall, developers will be able to purchase biodiversity credits from the government. This will enable development to continue without delay, though prices will likely be set higher to encourage onsite or offsite provision in the first instance.
Impact on developers
Developers need to be aware of and prepare for the new BNG requirements now. This planning must start with ensuring that the minimum 10 per cent provision will be met by any schemes likely to be consented from November 2023.
Communication is key to this. Developers should be working closely with local planning authorities, especially where BNG policies are already being adopted, to ensure an open discussion is had about how the requirement may be met.
Steps must also be taken to identify the BNG requirement of a site as early as possible, preferably at acquisition stage, whilst acknowledging that the baseline biodiversity value will not need to be calculated until application stage. By utilising the metric and working with an ecologist, developers can evaluate what will likely be required to achieve the 10 per cent requirement and whether it may be delivered fully onsite or may need an offsite solution; ultimately a site may not be worth pursuing if it is clear the requirement cannot easily be met.
This additional due diligence will come at a cost for developers. That is even before considering purchasing biodiversity units, or providing and managing net gain schemes.
By preparing now, developers can identify and respond to the impact BNG could have on project viability - minimising risk and ensuring schemes are compliant. A proactive approach is also key to being able to maximise the benefits of BNG.
Enhancing biodiversity onsite can allow developers not only to safeguard the environment, but also bolster placemaking efforts, creating more attractive schemes for customers. If developers overdeliver on a scheme, there may also be an opportunity to sell or bank surplus biodiversity units for other schemes, as indicated in DEFRA’s consultation.
Meeting the new BNG requirements could simultaneously enable developers to achieve other environmental benefits. This could prove critical when dealing with flood attenuation or nutrient neutrality – two major challenges currently affecting the industry.
The new BNG requirements will inevitably present a challenge to developers. But, rather than seeing this as a hurdle, the potential opportunities for the sector should also be recognised. These must be grasped in order to protect the environment, provide a better experience for residents, and ultimately, futureproof developments for years to come.
This article was first published in EG.