Beware the new biodiversity burden for developers

The Department for Environment, Food and Rural Affairs (DEFRA) recently published a consultation on the future regulations, under the Environment Act 2021, for the much-heralded biodiversity net gain requirements on new developments in England.

All express planning permissions, subject to exceptions, will contain a general condition requiring a biodiversity gain plan to be approved before a development commences. The biodiversity gain plan will need to assess the value of the existing habitats on a site and ensure that, after a development has been completed, such value has increased by at least 10%. The valuation of habitats will be through Natural England’s biodiversity metric.

The statutory requirement for 10% gain will come into force by November 2023. The consultation covers the scope of the biodiversity net gain requirement, how it will be applicable to different types of development and how it will operate in practice.

Delivery of biodiversity gain

Developers already, as part of the planning application process, need to consider and mitigate environmental impacts of developments, including harm to habitats. The 10% gain that will be required by the proposed regulations goes much further than developments have previously needed to deliver.

The 10% gain requirement does not affect the weight to be given to other planning considerations which will continue to apply, for instance on protected species, landscape impacts, and environmental impact assessment.

The consultation sets out that biodiversity net gain is to be achieved on site and if this is not possible then it can be delivered by offsite enhancements. If those cannot be secured then it will be possible to buy biodiversity credits from the government. These credits will be set at a price that ensures they are only used as a last resort.

On-site or offsite enhancements are to be maintained for at least 30 years, and they are to be secured by planning conditions, section 106 obligations or by conservation covenants.

All planning permissions will need a biodiversity gain plan to be approved

The possibility of providing offsite habitat improvements is likely to create a secondary land market in sites unsuitable for development, where developers can provide the 10% habitat enhancement needed to secure planning permissions elsewhere. Either this enhancement could be done directly by the developer or it might pay the secondary landowner to do so.

While this could present great opportunities for some landowners, for developers it is likely to add to the complexity and cost of delivering a development. That said, some developers are already becoming used to delivering offsite land improvements. For example, offsite land is sometimes being used to mitigate the harmful impacts of nitrates and phosphates on certain vulnerable river systems. It will be possible for developers, where their development site exceeds the net gain requirement, to sell excess biodiversity units as offsite gains for other developments.

Exemptions

The consultation proposes fewer exemptions than previously envisaged. Merely being brownfield development will not be an exemption. However, permitted development, developments impacting habitat areas below a de minimis threshold, changes of use and householder applications will be exempt. The government is considering whether the creation of biodiversity gain sites and self-build and custom build sites should also be exempt.

Even without formal exemption for brownfield sites, the form of a particular site may make it easier to achieve a net gain, making it in practice exempt. For example, if the site is wholly on hard standing or the scheme is for an existing building, it will not have an existing biodiversity value. Land of poor habitat quality may become more marketable as it is easier to improve.

Phased developments

The consultation sets out proposals to deal with outline permissions and for larger, phased, developments. Developers will need to show at the outset how biodiversity gains will be delivered across phases.

It is proposed that biodiversity gains should be secured within 12 months of development commencing or, where not possible, before occupation. Longer delays, under the metric, will reduce the biodiversity units generated. The usual development phasing may make up-front biodiversity gains difficult to deliver, particularly with a development ongoing around the biodiversity elements. It could also impact on development finance, with such biodiversity elements needing to be paid for at an early stage.

Nationally significant infrastructure projects (NSIPs) will also be required to deliver biodiversity net gain although the procedure will differ from planning applications for development.

Impact on delivery of development

While there is a logic to the proposals, the concern remains that the new biodiversity net gain requirements, and the bureaucracy they will create, will enhance development costs and slow the development process. In addition, will already overstretched planning authorities have the resources and expertise to deal with the new regime?

The consultation period on the proposals closes on 5 April 2022.

Jason Towell is a partner at law firm Cripps Pemberton Greenish