By Oliver Bussell, Partner
The likelihood is that they will be far-reaching and developers of land should take note.
It was the Government’s 25-year plan on the environment for England in 2018 that first set out how the Government will seek to embed a ‘net environmental gain’ principle for development. The aim being to ensure that development delivers measurable environmental improvements, locally and nationally, to enable housing and infrastructure development – but without increasing overall burdens on developers.
That may be hard to square with the considerably more ambitious terms of the act now in force and it’s worth taking a step back to contextualise net gain within the traditional planning system.
Neutrality to net gain
Since the birth of development control in England, it is only the measurable negative consequences of development that a developer has had to give any thought to: mitigating harms, not requiring an overall improvement.
Development, which inevitably lead to increased levels of nutrients from waste water - is a topical example: leaving the situation no worse than it was before the development occurred. Irrespective of the causes of high nitrate levels in the land, development control only requires neutrality overall, not an overall improvement.
Similarly, other consequences of development require mitigation but only to a ‘net’ standard. While some development (such as care homes for example) have little or no impact on the need for school places, housing development generates a great deal of demand. Greater use of the highway; of hospitals, recreation grounds, play facilities and libraries – all flow from development. Contributions towards all of these can be required as part of the price of obtaining planning permission.
What the development control regime has never – until now – required, is for development to do more than mitigate. That has changed with the introduction of schedule 7A of the Town & Country Planning Act, inserted by the Environment Act 2021.
This is the cornerstone of the Act as far as biodiversity net gain is concerned. It proposes that the biodiversity value attributable to any development must exceed the pre-development biodiversity value of the onsite habitat by at least 10%. (And anti avoidance measures impose a baseline calculation to be carried out retrospectively.)
It is worth pausing here to emphasise that the requirement is not a 10% contribution towards mitigation; or a 10% mitigation: it requires that the biodiversity value of a site which has been developed will be 10% higher post-development than it was pre-development. That is a very challenging requirement for built development of any scale.
Enforcing the 10%
Enabling this, the legislation has existed since its enactment so that, from November 2023, a planning condition is imposed on the grant of nearly all new planning permissions preventing any development from being carried out until a biodiversity gain plan has been submitted to the planning authority; and the planning authority has approved that plan.
There is a three-month delay on that requirement for smaller schemes, which are classified as under 10 dwellings or less than 0.5 hectares for residential.
This is the basic mechanism which ensures that the process of measuring the site and quantifying the net gain required will be rolled out – of which more below. And because all the administration around net gain is via the mandate of a planning condition the regime comes ready-made for enforcement by the local planning authority. Subject to an authority’s usual manpower shortages, planning officers will be able to serve breach of condition or stop notices to prevent the development from going forward – and, of course, in practice the mere existence of this sanction will encourage compliance.
Failure to adhere to a condition precedent leaves the entire planning permission vulnerable to being regarded as not lawfully implemented. Nor can any development subject to finance disregard a condition precedent without the risk that it may breach the terms of its loan facility. The mechanism put in place represents a very high bar for developers. But how is the 10% net gain assessment carried out?
The means of assessment
The assessment is a complex algorithm referred to as the biodiversity metric (‘the metric’). This has been in development for several years and it is now at version 4.0. At heart this is an accounting tool for use in calculating biodiversity net gain. It has been developed by Natural England and Defra and enables calculation of biodiversity losses and gains (and it is supplemented by a small sites metric for use at developments of 10 dwellings or less).
What are the consequences of this new legal framework? Seeking positive overall gain as opposed to mere mitigation is the really arresting thing, because that is not the way the consenting process has worked since the planning regime was instituted in this country. The effects and impacts of that have yet to be seen. But on another view the legislative changes in many ways just follow the direction of travel.
A growing number of local authorities have been seeking biodiversity net gain for a number of years, based not on a legal requirement but either on the National Planning Policy Framework or even more compellingly through their own planning policies. It is the scale of biodiversity net gain prompted by the legislation that is the most noteworthy thing.
Consequences for sites
What does this mean for developers, either in terms of their proposed sites or for incidental pieces of land in their landbanks? Sites which include room for significant biodiversity improvement will more readily pass the tests set out in the metric because of a preference for the net gain to be committed as close geographically as possible to the development it is being given in respect of. This means two things.
Firstly, development with associated landscaping could become more difficult, unless it had a more significant green space attached to it. And the green space attaching to a site may need to be designed in a more complex manner to accommodate a number of requirements: not just creation of a pleasant and peaceful environment, but in such a way as to actively enhance the biodiversity levels on the site. That could mean that parts of the development are not available for direct use by its occupants.
Secondly, landowners may want to consider what opportunities there may be for any surplus land in their possession. It may not be suitable for development, but as part of the biodiversity objective their land if not the subject of any other obligations may now be part of an emerging market of mitigation land for development projects.
Mitigation as a market
The traditional means of establishing off-site mitigation was an agreement under section 106 of the Town & Country Planning Act 1990. That establishes a covenant as a local land charge, enforceable by the local planning authority in perpetuity; and crucially it enables positive as well as restrictive covenants to run with the land (ordinarily in English law only negative covenants run with the land). A section 106 agreement is only enforceable by the local planning authority within its authority area.
Sitting alongside section 106 we now have the conservation covenant.
A conservation covenant is similar to a section 106 agreement - with the differences that it may be enforced by a potentially much wider range of bodies; and the term of the agreement can be limited also. The responsible bodies who can receive a conservation covenant include local planning authorities, other public bodies and charities with relevant expertise in the aspect of conservation with which the covenant is concerned.
Conservation covenants mandate the conservation of the natural environment and heritage assets for the public good on land; and, like section 106 agreements, the benefit and the burden of the agreements will run with the land, binding future landowners. This ensures that the conservation objective can be maintained in the long term. In the case of conservation covenants relating to biodiversity net gain a conservation covenant must last for at least 30 years, and its presence on the local land charges register means that it will still be enforceable even after the original owner has sold the land.
From the 2018 plan for the environment to the first statutory environmental improvement plan - the changes brought about by the Environment Act are significant – so significant indeed that the current Government seems to be running scared of them, as it approaches its reckoning with the electorate after some especially turbulent years.
The way those changes are going to play out in the months and years ahead is very unpredictable. Not only is the legislation new and in the process of being rolled out, but the Government’s position on environmental matters can itself be said to be in flux – the ongoing uncertainty about biodiversity net gain is mirrored by the recent botched attempt to exempt developers from the nutrient neutrality requirement flowing from the Habits Directive.
The ambition and scope of the Environment Act 2021 introduce a tough new regime for developers, who may be encouraged, as a result, to design-in more biodiversity enhancing measures into their development proposals than was previously the case. And the importance of scoping a development site to take account of the need for biodiversity net gain improvement is going to be particularly important for any medium- or large-scale development.
If there is a silver lining to that cloud, it is the opportunities offered by conservation covenants as a means of giving off-site provision for your own development; or for marketing as a separate income stream for purchase/optioning by other developers.
This blog is not intended as legal advice that can be relied upon and CooperBurnett LLP does not accept any responsibility for the accuracy of its contents.