Biodiversity Net Gain: Summer Update

We understand that around 100,000 planning applications per year may fall under the obligation to provide BNG. With just over 4 months to go until the introduction of the Biodiversity Net Gain (BNG) regulations in November 2023 (with some exceptions – see Bob Sadler's article on the delayed introduction for small sites here), the government is gradually bringing the regulations into sharper focus. The long-awaited response to the government's biodiversity net gain consultation was published on 21 February 2023, and further guidance was published on 2 May 2023 (the "May Guidance").

In its response to the consultation, the government confirmed that a further £16.71 million will be provided to Local Planning Authorities to prepare for mandatory BNG between now and November 2023, in addition to the £4.18 million which it committed to provide in January 2022. Furthermore, it has confirmed that mandatory BNG will only apply to section 73 applications under the Town and Country Planning Act 1990 if original permission is granted after November 2023.

How will BNG work in practice?

The consultation response shed light on how developers will be required to demonstrate that they have satisfied BNG:

1. Developers will be required to provide a BNG statement alongside any planning application; and
2. They must also provide a biodiversity gain plan, which will need to be approved by the LPA prior to the commencement of development. 

However, it still remains unclear what exactly the statement and plan will need to contain.

Exemptions

The government has confirmed that it intends to use regulations to make exemptions for:

• Development impacting habitat of an area below a 'de minimis' threshold of 25m2, or 5m for linear habitats such as hedgerows;
• Householder applications; and
• Biodiversity gain sites (where habitats are being enhanced for wildlife).

Small scale self-build and custom housebuilding (where an individual, an association of individuals, or persons working with or for individuals or associations of individuals, build or complete houses to be occupied as homes by those individuals) are also proposed to be exempt, although the government has confirmed that the definition of this exemption is to be kept under review, to prevent the risk of exempting large sites made up of many custom plots. However, it is important to note that whilst the above are likely to be exempt from the need to provide statutory BNG under the regulations, the Department for Levelling Up, Housing and Communities (DLUHC) is planning to develop planning policy for minor development, so proportionate on-site biodiversity enhancements are possible.

The government has also confirmed that the following will not be exempt:

• Previously developed land;
• Change of use applications;
• Temporary applications;
• Developments which would be permitted development but are not because of their location in Conservation Areas, AONBs, or national parks; and
• Development on statutory sites designated for nature conservation.

What counts towards Biodiversity Net Gain?

The May Guidance provided clarification on what will count towards a development's biodiversity net gain.

Developers will be pleased to hear that they will be able to kill two birds with one stone, as habitat required as part of a development to:

• comply with a statutory obligation or policy;
• provide river basin management plan mitigation and enhancement; or
• provide mitigation or compensation for protected species or sites

can all count towards a development's BNG. However, at least 10% of BNG provided needs to be secured through other activities, i.e. on-site habitat creation and enhancement.

It is important to note that any BNG units must be registered before they can count towards BNG.

Habitat creation required for:

• restocking conditions relating to a tree felling licence or a restocking notice;
• marine licensing; and
• remediation under the environmental damage regulations

will not count towards BNG.

What happens after the thirty year period ends?

Habitat enhancement works must be maintained for a period of at least thirty years after the completion of the works to create or enhance the habitat (though it is not specified in the current legislation or guidance at what point in the development process the habitat enhancements need to be completed by). The government has implied in its consultation response that it wants to disincentivise landowners from taking sites out of conservation management at the end of the required period. It has suggested that it may be possible for a new biodiversity baseline to be taken at the end of an agreement, and the land re-entered into the BNG market to create further habitat enhancements. It is also considering factors to incentivise retention of biodiversity sites such as tax incentives, and securing longer term management through investments bonds or other financial instruments.

Off-site units:

The government has confirmed that it will continue to incentivise a preference for on-site gains over off-site gains, but has not confirmed how this will take place in practice. Natural England will be the "Register Operator" for the off-site register. They will be responsible for establishing and maintaining the registry for off-site biodiversity gain sites. We are still awaiting the specific eligibility criteria for registering sites, which is likely to be confirmed in secondary legislation.

Selling Biodiversity Units - Opportunities for Landowners:

The government has also confirmed that any landowner or land manager will be able to create or enhance habitat to sell biodiversity units, and will be able to sell these to developers anywhere in England, provided that the use of those units is appropriate for the development in question. The distance between the development and the off-site habitat will also be accounted for in the biodiversity metric. This opens up lucrative alternative land use opportunities for landowners, who could sell biodiversity units to developers across the country.

The May Guidance provided further advice for land managers on selling biodiversity units.

By land manager, the government is referring to any of a landowner, a farmer (but note if a tenant farmer there may be other issues), an estate owner, a local authority, a habitat bank operator, a facilities, property or estate manager, a land agent or a land adviser. Biodiversity units created by land managers can be sold to developers directly, in partnership with a local authority, through a habitat bank operator, through a broker or on a trading platform.

The guidance suggests land managers take the follow steps to prepare their sites:

1. Finding out what habitats are needed in the local area by liaising with the local authority for documents such as biodiversity action plans, green infrastructure strategies etc.
2. Consider how to combine biodiversity net gain with other environmental payments, for example combining biodiversity units with nutrient credits.
3. Calculate how many biodiversity units you will have on your site. This will require using a qualified ecologist.
4. Securing the land by a legal agreement. As the habitat will need to be managed for at least 30 years, a section 106 agreement with the LPA or a conservation covenant with a responsible body will need to be entered into. A habitat management and monitoring plan will need to be agreed with the LPA.
5. Pricing the units. This will involve the costs of ecologists and experts, monitoring and reporting and the management of the land for at least 30 years. It will need to be agreed with the developer whether payment will be by lump sum, staged payment, or results based. The Land Trust has mentioned that BNG units have recently been quoted at around £10-£25,000 per unit, although Knight Frank anticipate that pricing the units will ultimately come down to local demand and supply.
6. Registering the site. The land will need to be registered as a biodiversity gain site from November 2023. Biodiversity units, however, can be sold and allocated to a development before or after you register.

Conclusion

Whilst there are still lots of elements of BNG which need to be clarified, such as what constitutes "irreplaceable habitat", and how BNG should be applied to phased developments, councils are already gearing up for the changes ahead. Many local authorities have already incorporated BNG into their local plans and policies, some requiring more than the statutory minimum of 10%. In fact, over 40% of all English local planning authorities have specific biodiversity net gain (BNG) policies in their adopted or emerging local plans, up from 28% the year before, according to research by consultancy Carter Jonas. It will therefore be important for developers to keep track of how these policies marry up with (or diverge from) the regulations coming into force later this year. For further information please don't hesitate to contact a member of the Planning team.